Does virtue bring its own reward for accountancy firms?

Accountancy firm Grant Thornton published a report called Women in Business: The Value of Diversity last week that sought to put a figure on the cost to big corporations of having men-only boards.

Authored by Francesca Lagerberg, the firm’s global leader of tax services, the report estimated that the aggregate cost to 1,050 of the largest stockmarket listed companies with male-only boards in Britain, India and the United States was £430bn of lost returns on investment.

Ms Lagerberg argued that companies with at least one woman on their boards were more likely to have a diverse range of insights about customer behaviour and risk-taking. She argues that boards of big corporations around the world would benefit from a change in their gender balance.

Grant Thornton is by no means the only accountancy firm that campaigns or offers analysis about social and political issues in ways that can, sometimes, be contrary to the interests of their big corporate clientele and the governments that place a lot of business with them.

Other recent examples of accountancy firms weighing in with reports and press releases about social and political issues include KPMG and PwC.

Earlier this year KPMG issued a press release quoting Mike Kelly, the firm’s head of ‘Living Wage’, voicing support for research published by left-wing social affairs think-tank the Joseph Rowntree Foundation (JRF).

JRF found that the number of British households with incomes below the minimum needed for an acceptable standard of living had risen by a third in recent years.

In KMPG’s associated press release, Mr Kelly said: “Business and government need to work together as we are in danger of creating a ‘lost generation’ of low paid youth workers in working poverty. It’s time to take responsibility to ensure that staff and suppliers receive a fair wage.”

Mr Kelly goes on to call upon firms to make an initial assessment about whether or not they should be paying the Living Wage, which, of course, amounts to Mr Kelly pitching his services.

Other examples of social issues addressed by KPMG include the North/South economic divide and affordable housing.

Martin Heath, PwCs senior partner in Liverpool.

PwC’s campaigns focus heavily on what they call female empowerment within the workplace and social mobility, issues it says it addresses in its own recruitment policies.

However, one seasoned observer of the accountancy profession believes that the firms’ motives for publishing reports about social issues are not entirely altruistic.

Leading accountancy academic Professor Prem Sikka of the University of Essex says that the firms are principally motivated by the publicity such reports attract.

Prof Sikka told the ECHO: “Press coverage is part of their business model. That is how they get business.

“They sell consultancy about everything and anything. You receive press releases and journalists will dutifully write something about it.”

Prof Sikka said that social issues tend to be more attractive to journalists than main-stream business issues, such as business rates, changes to VAT rules or capital allowances.

He added: “I don’t remember accountants anywhere receiving training about climate change or the gender pay gap.

“If they want to do society some good, how about giving up their tax avoidance business? How about highlighting corporate misdemeanours long before they hit newspaper headlines?

“I get this kind of information but I hit the delete button straight away.

“I’m not denying some of the people inside these firms really have good intentions, but they constantly manufacture these (tax avoidance) schemes. The big four accountancy firms are the global epicentre of these schemes.

“They have to move beyond conventional accounting technical stuff to project their organisations.

“Companies are very hard headed. Does it make sense from a business perspective? Companies have been going on about corporate social responsibility since the 60s and 70s and here we are still worried about low wages, bribery, corruption.

“It would be nice if they concentrated on the historical core businesses, such as auditing.”

Grant Thornton’s global research manager Dominic King acknowledged that the firm’s purposes aren’t wholly altruistic. He said: “We are not campaigning as a social issue but in terms of business growth. Our message is not around the moral aspect, but around the commercial aspect – diversity drives growth.”

As well as being good for sales and profits, firms are also keen to make themselves attractive to potential recruits, including high calibre women graduates. Martin Heath, PwC’s office senior partner in Liverpool, said: “It’s really important for us to be seen to be a progressive employer tackling issues like diversity, whether it’s gender, ethnicity, faith, sexuality, age or disability.

“It’s about doing the right thing. I know that sounds glib and trotting out corporate phrases but, particularly among the millennial generation, things like diversity and sustainability are important to them in deciding who they would like to work for.

“If we want to attract the brightest talent it’s important that we practise what we preach. Gender inequality is probably one of the deepest, multi-faceted issues we face. We are probably not going to solve it, and we are not holding ourselves out as paragons of virtue, but we are determined to get there.”

-ECHO