What does it mean to be a sustainable business? And why is it important? The marking of Earth Day every year raises questions about how we can build businesses that benefit wider society, rather than just their shareholders. Achieving that, however, means addressing a financial and commercial system that has been centuries in the making.
A new report from ACCA, Building future business, takes a radical approach to the topic by exploring why and how businesses have developed in the way they have, as a way of aiding understanding of what can be done to better balance the interests of business and the interests of society.
‘If we want to help build businesses that help, not hinder, the wider goals of society, we need to understand not only what decisions are made but why,’ it says.
Growing complexity
The report explores how corporate structure has evolved since the human race first realised that cooperation and collaboration deliver disproportionately beneficial returns. But our arrangements for pooling resources have become more and more complex with the development of currency, interrelated economic systems and technology. Legal structures have evolved that allow for the pooling of risk and the efficient allocation of capital, and to mitigate the boom-and-bust nature of markets.
Corporate law developed to ensure accountability of management to shareholders for the profits that corporations need to be productive. The result is companies that exist to generate a financial return on their shareholders’ investment. As the report says, ‘creating financial profits has precedence over other considerations.’
‘We need to understand not just what we measure but also why we measure it’
This means that good businesses can make decisions that are bad for society. The AI boom and its impact on jobs is the latest example; AI tools create efficiencies that improve profits, but the impact on society of lost jobs is not factored into the measurement.
Of course, financial results are important. Money is important, and so is financial rigour. But the report argues that if we are to build better businesses we need to look at value, and not just financial metrics – because there are many things in the world, such as having a safe place to live, reliable supplies of food and clean water, healthcare, education and infrastructure, that are more important than monetary wealth.
‘Getting the balance right in a global economy, where the connection between stakeholders and decision-makers can stretch across continents, may mean rethinking how decisions are taken,’ says the report. ‘If we might need to change the way we measure business, we need to understand not just what we measure but also why we measure it – and whether the practical reasons are driven by technology, politics or other factors.’
The report looks at the concept of multi-capital measurement, which looks beyond the single measure of financial capital to consider six interconnected capitals that drive long-term sustainable value. ‘By measuring and reporting on this wider range of factors,’ it says, ‘business decision makers form a broader picture of “success”, positioning financial results as part of an interconnected web of factors.’
But this requires a different approach to company reporting and, in order to truly embrace the UN’s definition of sustainability, the report argues, businesses will need to consider circular, or regenerative, economic models. The circular economy principles, it adds, ‘form a compelling model for sustainable business, and there is nothing to prevent businesses (and their advisers) adopting the appropriate practices and accounting models.’
Key considerations
The report’s author, Jason Piper, head of tax and business law at ACCA, describes it as ‘a tool to help business understand why they should be engaging in sustainable decision making, and how to do it’.
The report sets out a number of key considerations that should inform future developments, including thinking about what ‘value’ means to key stakeholders; what the expected flows of ‘value’ from economic activity to each group of stakeholders are, and how they align with the legal form and requirements of the entity; and thinking holistically about regulatory and non-regulatory guidance that is available and the gaps that need to be filled.
‘We need new business forms that embrace the potential of the digitalised economy’
The report acknowledges that existing business models are too entrenched to be simply discarded or replaced wholesale – and they are effective in holding management to account. But that does not mean that we should accept the status quo, especially at a time when business models are already changing.
‘As we look to build businesses fit for tomorrow, the conflict between the abstract financial imperative and the concrete impacts of business on society and the environment are too great to ignore,’ the report concludes.
‘For the relationship between business and society to be properly reset, we need to look again at the fundamental drivers of economic decision-making in private enterprise and explore new forms that can not only reflect the needs of stakeholders but also embrace the potential of the digitalised economy.’
More information
See more on this topic in the session ‘Getting set up for sustainable business’ at ACCA’s Sustainability half-day conference 2026 . Watch on demand.
