The enthusiasm for resilience now implies a shift in accounting paradigms.
The idea of "resilience" did not originate in 2020. The term originally comes from physics and engineering and referred to an object's ability to withstand a disturbance and absorb a shock before returning to its original shape.
Quentin Arnaud, University of Montpellier; Amel Ben Rhouma, University of Paris; Clément Carn, IAE Poitiers and Souâd Taïbi, Audencia
Recently, the concept has been applied in various disciplines, including psychology, geography, physics, and ecology. The COVID-19 health crisis has even brought it to the forefront of media attention.
According to the dictionary, resilience refers to a person's ability to bounce back. But beyond this individualistic view, it can also be considered on a systemic level, as proposed by the Stockholm Resilience Center:
Resilience is the ability of a system, whether it be an individual, a forest, a city, or an economy, to cope with change and continue to develop.
Against the backdrop of economic crisis, the concept of "organizational resilience" has emerged, used to describe a company's ability to adapt to a constantly changing environment. This now corresponds to an ISO standard.
The enthusiasm for this concept permeates society as a whole. However, its measurement in accounting systems deserves to be questioned.
One-way accounting?
The definition given for organizational resilience seems to focus attention on the economic and financial aspects of performance. The company is considered within its traditional boundaries, and environmental and social resources are thus taken into account in a one-way manner.
This is evident, for example, when shareholders of major oil companies demand that executives take climate change more seriously. Above all, it is a question of questioning the financial resilience of these organizations in the face of the Anthropocene, i.e., the era characterized by the predominant role of humans in changing their environment.
It was with this in mind that the G7 set up a working group, the Task Force on Climate-related Financial Disclosures (TCFD). The report published by this working group in June 2017 recommends that organizations report on the effects that global warming would have on their activities and the strategies adopted to limit its negative impact.
However, this outside-in approach has its limitations. Since flexibility and adaptability in a dynamic and uncertain environment are key qualities for achieving resilience, companies have integrated their dependence on a multidimensional ecosystem but have also modified their control tools to account for the consequences of their activities on their ecosystem.
This is particularly true of IR and capital coalition approaches. They work towards the emergence of multi-capital accounting, the purpose of which is to steer the evolution of the value of the capital on which it depends. In this way, a connection can be created between the concepts of resilience and corporate social responsibility.
Change course
However, researchers have shown that there can be a disconnect between a company's actions and its CSR communications. Whether intentionally or unintentionally, companies focus on factors they consider fundamental, neglecting certain aspects that are essential to other communities or ignoring the interconnected and global nature of social and environmental systems, which the current crisis has brought to light.
In addition to the outside-in perspective, organizations must also adopt a reverse perspective: inside-out. It seems desirable for accounting to incorporate indicators of organizations' contribution to the resilience of a system experiencing multiple crises.
The exercise is no longer limited to pursuing the resilience of the organization, but rather that of its system. This change of course is necessary so that companies can face the increasingly significant challenges and issues of the Anthropocene.
This is accompanied by a paradigm shift: by integrating the constraints of the system in which it operates, the organization moves from accounting for its own resilience to accounting for the resilience of the socio-environmental system.
This article was written by a group of researchers as part of a collaborative "speed blogging" event organized alongside the CSEAR France/EMAN Europe 2021 online academic conference. The speed blogging event involved writing an article on the conference theme of "sustainable development accounting in the Anthropocene" in a limited amount of time, working collaboratively. At the end of the event, three articles were co-written by senior researchers, junior researchers, and doctoral students..
Quentin Arnaud, PhD student in Accounting, University of Montpellier; Amel Ben Rhouma, Associate Professor in Management Sciences, University of Paris; Clément Carn, Assistant Professor in Management Sciences, IAE Poitiers and Souâd Taïbi, Lecturer-Researcher in Sustainable Development Accounting, Audencia
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