By Jessica Sier

A global pandemic, climate change activism, protests against injustice, and a radical rethink of how we work are at the heart of a profound shift in business thinking.

Where once good business meant delivering growing profits and healthy returns to shareholders, a macro shift in corporate sentiment has reset the framework. The pursuit of profit hasn’t disappeared, but businesses are being measured by additional criteria. Is the business fair and accountable? Does it have sound governance?

In response, employees are insisting on values-based business models that push organisations to live up to these new lofty expectations.

When trust in governments and institutions is low, people use their workplaces as vehicles to enact change and express their personal values, explains Donna O’Neill, director of corporate citizenship at KPMG Australia.

“Good business now means so much more than profit growth,” says O’Neill. “This seismic shift means companies need to be more strategic and sophisticated in how they measure and report their impact on our world.”

“Good business now means so much more than profit growth.”

The main trends reshaping business include issues about ethical investing, staff and community health, transparency and accountability, and stewardship of the environment. CAs have been leading the way in this change. We spoke to some about what these macro shifts mean for their business.

Employee health

From heavy-drinking miners and isolated truck drivers to mentally stressed lawyers and sedentary accountants, Andrew Baillie CA and Connor Baillie CA spend their days determining just how healthy, or unhealthy, a company’s workforce is.

The Brisbane couple are tapping into the global corporate shift to better support the physical and mental needs of staff by building plans to help them perform and excel in their working lives.

“We see many companies are adopting a more purpose-driven approach to business rather than just hitting growth targets every quarter,” confirms Andrew.

“They now know they need that high-performance environment, but also realise the people under their wings need to be supported in a way that keeps them happy, healthy, productive and resilient.”

The couple’s company, Boncentric, is built around a preventative health screening tool that measures, understands and interprets the health status of thousands of staff. Rather than suggesting gym memberships and ergonomic desks to improve employee health, Boncentric leverages the Baillies’ auditing and analysis experience – shaped at PwC and refined over six years in Paris working for global firms – to interrogate raw data and build programs that expand and cement healthy, motivated workforces.

Boncentric screens employees for 14 health components like a GP would in a clinic (blood pressure, body composition, expired air) and overlays that with lifestyle (nutrition, exercise, fitness, alcohol, smoking). They also do a psychological assessment (motivation, willingness to change health, attitudes).

The Baillies then provide companies and individuals with a metabolic snapshot: hard medical data from which organisations can make company-wide health decisions. Executives can see exactly how healthy their workforce is and what they might need to change.

“Understanding what is happening in your employee population is a powerful business metric and facilitates a more targeted and data-driven approach to managing people,” says Connor.

Picture: Andrew Baillie CA and Connor Baillie CA. 

“Understanding what is happening in your employee population is a powerful business metric.”

“For example, when we see that 20% of a workforce have clinical symptoms of depression, it becomes a strategic problem we can work towards, not just a feeling that anecdotally we have some mental health issues.”

The Baillies say COVID-19 has accelerated the understanding that good business decisions are no longer purely about profit.

“Historically, workplace health and safety was viewed as things like bricks falling on your head, but there’s now recognition from employers towards the importance of supporting a worker’s overall health and wellbeing,” says Andrew. “There’s a lot of research showing that the physical, mental and social health of workers has a huge impact on individual and collective performance.

“Add that to the younger generation of workers who are looking for more than just a transactional relationship with their employer, and you’ve got a trend that’s here to stay.”

Climate change

One of the first jobs Andrew Smith CA set himself as CFO of CH4 Global was to learn about carbon accounting.

The start-up was founded in 2019 by US, Australian and New Zealand scientists and entrepreneurs to facilitate zero-emissions agriculture. It’s now working to make available commercial quantities of quality Asparagopsis seaweed, which can be turned into a licensed animal feed supplement that reduces methane emissions from cows and other farm livestock by up to 99%. (FutureFeed, a company established by Australia’s CSIRO, manages licences for the supplement around the world.)

Agriculture produces about a quarter of the world’s methane emissions. Methane makes up about 20% of the world’s carbon emissions, but the greenhouse gas is more than 28 times as potent as carbon dioxide at trapping heat in the atmosphere, according to the Global Carbon Project.

Smith, whose career has spanned stints in software engineering businesses, government, and television and film production with Weta Group, first became aware of CH4 when he was approached by an acquaintance to invest in the start-up.

“I started doing a whole lot of research and realised pretty quickly that this greenhouse gas problem was a really big problem,” he says.

Within weeks, he had joined the company as CFO and was mapping out how the organisation could leverage carbon credits and voluntary carbon markets as well as measure emissions. Smith was also interested in how carbon itself was priced.

“Accountants are ideally placed to be part of this equation to better the planet,” he says. “Because at the end of the day, somebody needs to pay for making emissions, and everything an organisation does needs to be quantified and reflected in the accounts.”

Picture: Andrew Smith CA.

“Accountants are ideally placed to be part of this equation to better the planet.”

CH4 is forging agreements in Australia and New Zealand, including with Māori iwi and the Narungga Nation Aboriginal Corporation on South Australia’s Yorke Peninsula, to grow the native Asparagopsis armata variety.

It’s also involved with beef and dairy farmers; operations Smith found were working on very thin margins.

Adamant that it was wrong to take money from the hands of poor farmers, he built a financial model using his new-found carbon accounting knowledge to illustrate how CH4’s product could help reduce the emissions released by the farmer, acquire carbon credits en masse (while getting a better price for the farmer) and attract a premium for methane-free meat or milk.

“Consumers are driving much of the business change in our industry. Companies are changing their practices because consumers are demanding change. I see it happening from the bottom up, not really the top down,” Smith says.

Investment: Renewables

In 2007, when Jomo Owusu CA was advising on renewable energy financing in London for Ernst & Young (EY), he saw first-hand how shareholders and voters had the power to move companies and governments towards sustainability.

“Voters were telling the UK government they wanted renewable power, so the government put in place regulations to guide industry towards renewable projects, and private investors responded,” says Owusu, now a director of the Infrastructure Advisory team at EY Australia in Sydney.

“Money was moving towards carbon neutral projects because shareholders were demanding it as an additional return on their equity.”

Since then, Owusu has seen that shareholder and voter demand for sustainable business take hold in Australia, whose government has been notoriously backward on climate change policy.

“Global investors see that communities are onside with the move towards carbon neutrality. It’s a definite direction,” he says.

When it comes to investing, the argument that investors will only go where there’s more money to be made remains as true as ever.

But large-scale investment that runs parallel to and, in many cases, towards climate change goals is common, and Owusu says this is a direct function of the understanding that businesses are rewarded when they are good for society and good for the planet.

“It took a while to catch on, but the unit economics is in place for capital to play its role in designing new infrastructure and new business.”

Owusu’s team at EY were most recently involved in the Woolworths deal to purchase 195,000 megawatt hours of green electricity from the new Bango Wind Farm outside Yass in southern New South Wales.

The 10-year deal will supply energy for the equivalent of 108 supermarkets, or 30% of the company’s power needs in NSW, and avoid 158,000 tonnes of carbon emissions each year.

“Private organisations are underwriting so much of renewable energy investment, not just because it makes economic sense, but because it fits with where the community is heading,” Owusu says.

Picture: Jomo Owusu CA.

“Private organisations are underwriting so much of renewable energy investment ... because it fits with where the community is heading.”

Aged care

Margaret Howie, a registered nurse, began providing in-home care for 16 elderly customers in 1992. Her organisation, KinCare, expanded fast, and in 2000 her son, Jason Howie CA, came on board to manage its growth.

“As we got larger, we needed to corporatise to keep control and manage things, but we also needed to keep that underlying value set around community care,” says KinCare’s now CEO.

Howie started his career at the global American firm Arthur Andersen, which gave him unparalleled insight into the different ways companies can arrive at the same results.

“I learned how robust businesses are as institutions,” he says. “Often it doesn’t matter how well they’re run, or how badly, somehow they just keep keeping on, which means they have a big effect on a community.”

One of the challenges for Howie is maintaining the wellness of KinCare’s staff, who can be vulnerable to mental pressures – especially given emotions around clients’ inevitable death through old age. “They see the best and worst of humanity, from abusive family members to completely selfless acts.”

In addition to employee assistance programs and understanding the pressures that frontline workers from lower socioeconomic backgrounds may deal with, Howie says keeping communication lines open is vital.

“By their very nature our staff are caring people, so we work hard to keep communication lines across the organisation open so they can support each other,” he says.

During KinCare’s lifetime, Australia’s acknowledgment of aged care needs has improved. After the most recent Royal Commission into aged care, the federal government announced a five-year, A$17.7 billion aged care package in the May 2020 Budget. But while the money is much needed, it’s good values that need to be maintained in the sector.

“When businesses have a narrow set of views it ultimately destroys value,” emphasises Howie. “In Australia, I can see attitudes are changing around what’s important and the role of business in the community – people are taking it to businesses that refuse to take responsibility for that role.”

Picture: Jason Howie CA.

“When businesses have a narrow set of views it ultimately destroys value.”

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