Accountants are not known for their revolutionary or idealistic zeal, but, Gleeson-White argues:
Because accounting is the primary language of corporations, the accounting revolution also acts as a psychological intervention: by requesting the corporation to speak differently – to consider more than its own self-aggrandisement, more than its own short-term profits – it is attempting to alter the corporation’s behaviour.
In a book written for a global audience, Jane Gleeson-White reports on a movement among accountants, investors, company directors and lawyers to change the fundamental underpinnings of capitalism so that the corporate sector will contribute to a sustainable future for our world. We are mired in a never-ending global argument about environmental issues that results in much angst and little action. Gleeson-White highlights the observation of the economist Pavan Sukhdev that ‘economics has become the currency of policy’. In order to make some progress on environmental questions, people like Sukhdev and environmentalist Tony Juniper are discussing these issues using the language of economics and the corporate world:
This grey and explosive ground – where morals meet markets in a political vacuum – is where many environmental scientists and activists, economists, international organisations and others dare to tread today … We must now deal with the might and reach of the corporation in the twenty-first century.
An important driver of corporate behaviour is the information provided by accountants. As Gleeson-White explains, it is well recognised that accountants’ reports do not reveal the total costs and benefits of corporate activity. It is the lack of reporting of a company’s impact on environmental and social well-being that has led to too many companies getting away with damaging behaviour. The six capitals referred to in the book’s title describe a more holistic conception of the actions of a company. As well as reporting on the financial and management capital of the business, company directors, lawyers, economists, accountants and non-government organisations around the world are exploring the reporting of other resources businesses use, such as intellectual capital, human capital, natural, social and relationship capital.
Yet Gleeson-White looks beyond the need to measure and provide holistic information about corporate activity. She looks at the underlying philosophical and ethical problems on which capitalism is based and not surprisingly finds fundamental issues that need to be addressed. Accounting is the interface between law and economics. It expresses economic activity in terms of the legal entities that generate it and the laws that govern it. While the focus in this movement of corporate reform has been on corporate reporting, Gleeson-White turns to the problem of the basic tenets of the western legal system.
Companies have a status equal to that of ‘a natural person’ under the western legal system. This is so well established that we think it is normal. Gleeson-White highlights a far-reaching development in Bolivia where, in 2012, the country gave equal status to the natural environment in their law. This was as radical a development as the granting of equal legal status to companies in the 19th century. Bolivia’s law will lead to its legal system seriously acknowledging and protecting the legal rights of the environment just as it does for people and companies. It rights a profound imbalance that has left the environment as an afterthought in our economic activity. In 2014 a New Zealand court adopted a similar approach by recognising the status of a river in the North Island as a legal person. Both the Bolivian and New Zealand developments effectively recognise the importance of the indigenous perspective that acknowledges our lives are entwined with the land, vegetation and animals around us and that we have profound responsibilities as custodians of that environment.
Gleeson-White begins Six Capitals by looking at the crisis of capitalism from an historical perspective, tracing the development of modern-day capitalism from its origins in ancient times to today. The second chapter is a review of recent developments in the measuring of GDP and the problems in properly reflecting the economic contribution of the banking and information technology sectors as well as the environment. This is followed by an overview of a plethora of different approaches that have been devised to address the various ills of the economic life of our planet. Then the book takes off in an extraordinary account of individuals and organisations around the world who are acting as prototype engines of corporate reform.
This is not a facile pop-management book. Gleeson-White necessarily introduces acronyms and discusses issues surrounding the calculation of economic measures and a glossary would have been useful for those not familiar with business language. The referencing is also light, which at times can be frustrating for the reader who, for example, wants to find out more about the ancient Indian guilds of merchants who sold shares in their businesses and were bound by regulations.
Some readers may find the second chapter slow but it is worth persisting. It is only by having the current state of economics and accounting described that we can truly appreciate the revolutionary nature of the changes that are being proposed and are in the early stages of being adopted.
The language of accounting, numbers and graphs, is notably absent. ‘It seems the accountants of the future will be as much storytellers as bean counters,’ Gleeson-White observes. Overall the narrative presentation of this book will appeal to the general reader.
This book should also appeal to accountants and anyone else working in corporate management. As someone who started her working life in chartered accounting in the latter half of the 1980s, I read this book with great interest, then excitement. I had experienced a profession governed by the constant need to get more business and extract higher profits. I left, despairing that the profession had anything to offer the world other than legalistic compliance with the law, minimising taxes, maximising profits and a loud silence about the serious issues that were present (and are still present) in corporate life. From my position on the sidelines of the accounting world I have been astonished in the last couple of years to see accountants now discussing topics that were previously ignored or taboo.
I cannot recall the words ‘morals’ and ‘values’ ever being spoken when I was working as an accountant. These words are scattered through Six Capitals because ultimately the means to right the world rests with the economic behaviour of each one of us:
… in the twenty-first century all larger, shared moral frames have broken down – and it is into this breach that the market has stepped. In a globalised world with little common moral ground it is difficult to agree on just which values are worth caring about and why, and so it seems easier to outsource such complicated deliberations to the apparently cool hand of money and the market … To change our system we need to do more than changing the mindset or paradigm (profit maximisation) that generates it … we need to change our values.
Most people are investors in companies through superannuation and, for many of us, through our small shareholdings. We all have to put hard questions to ourselves about our values and our desire to maximise our profits. As Gleeson-White asks: ‘… are we prepared to accept a lower return on our money for the sake of the health of our societies and the planet?’
Six Capitals has captured the extraordinary nature of the soul-searching now taking place in some parts of the corporate world. The depth and global scope of this book gives much to fuel discussion and debate, and it should be read by anyone who wants to understand and support the transformation of the way the world does business.
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