On May 6, preeminent thought leaders, global standards setters, practitioners, auditors, issuers, and investors gathered in New York for the First Annual Sustainability Investment Leadership Conference to discuss developments in sustainability reporting and assurance. This issue is devoted to coverage of this event. Starting on page 18, you will find coverage of the highlights of the conference. The future of our profession, its very health and vitality, is integrally tied to this new and evolving practice area.

In 2000, it was estimated that 51 of the largest 100 economies in the world were not countries but multinational corporations (Jane Gleeson-White, Six Capitals, or Can Accountants Save the Planet? W.W. Norton & Co., 2015, pp. 105). In 2013, just 2,000 of the largest publicly listed companies employed 87 million people and generated around half the world’s GDP. Companies affect countries, communities, shareholders, investors, vendors, suppliers, and employees, impacting the environment, global prosperity, and more.

Reducing the GAAP Gap

There has also been major change in the way corporations are valued. In 1975, intangible assets made up 17% of the market value of an S&P 500 enterprise (“Annual Study of Intangible Asset Market Value from Ocean Tomo, LLC,” Mar. 4, 2015, http://bit.ly/1SV58AA). Today, over 84% of the value of a company lies in its intangibles, which are not traditionally measured in the financials and not likely seen on balance sheets. These elements—or capitals, as Gleeson-White refers to them—can create or destroy value in today’s corporation. They include the traditional financial capital and manufactured capital, as well as intellectual capital (patents, trademarks, copyrights), human capital (skills, institutional knowledge), natural capital (renewable and nonrenewable resources), and social capital (community relationships, health, safety, human rights). Intangibles like intellectual capital, human capital, natural capital, and social capital are not traditionally measured in the financial statements.

Outside the United States, sustainability reporting and assurance has gone mainstream. Ninety-two percent of the G250 companies report on sustainability (KPMG Survey of Corporate Responsibility Reporting, 2015, http://bit.ly/1SXv9T4), and 63% of these companies undertake external assurance. Importantly, outside of the United States, ⅔ of companies choose a major accountancy firm to provide the assurance.

Sustainability Is Critical to the Future

I believe that a more socially responsible company that practices an ethic of sustainability will, over the long term, carry a higher value, deliver greater permanence, achieve long-term stability, and be a much more viable and healthier entity than one that does not. From a societal perspective, the practice of sustainability is critical to humanity’s collective well-being.

There is a strong connection between sustainability and our raison d’être as CPAs. As I have written, “Public accounting firms hold one of the most critically important and unique roles in our democratic society as the principal watchdogs of corporate enterprise. Isn’t it time to lead rather than follow?” (“Auditors’ Responsibility for Detecting Fraud: Putting Ethics and Morality First,” The CPA Journal, June 2012). By embracing sustainability initiatives, we uphold our obligation to the public, remaining relevant, vibrant, and engaged.

Based on presentations I have delivered to college students, no other subject resonates as strongly with the next generation of accounting professionals as this one. In 2014, the Association of Chartered Certified Accountants (ACCA), in partnership with Accounting for Sustainability, undertook a study of student views on sustainability (Sustainability and Business: The Next 10 Yearshttp://bit.ly/1VH9dvV). Eighty-seven percent of students from 126 countries believed that accounting professionals will need to provide businesses with more decision making insights on sustainability; 79% agreed that sustainability issues will become more important in the next 10 years; 74% agreed that environmental impact on organizations will be a bigger focus for accounting professionals; 54% wanted to be involved in integrating sustainability issues into businesses; and 34% said that the world will be a better place to live in.

The United States will need to catch up quickly in this fast-moving, emerging practice area. Though it will be difficult, there is no question in my mind that accountants really can save the planet.

The opinions expressed here are my own and do not reflect those of the NYSSCPA, its management, or its staff.

Richard H. Kravitz, MBA, CPA. Editor-in-Chief.