The resilience craze now implies a shift in accounting paradigms

The idea of "resilience" doesn't date back to 2020. Originally, the term originated in physical science and engineering, and referred to an object's ability to withstand a disturbance and absorb a shock before returning to its original form.

Quentin Arnaud, University of MontpellierAmel Ben Rhouma, University of Paris; Clément Carn, IAE Poitiers and Souâd Taïbi, Audencia

Recently, the concept has been mobilized in a variety of disciplinary fields: psychology, geography, physics and ecology. The Covid-19 health crisis has even given the concept a high profile in the media.

If we go back to the dictionary, resilience refers to a person's ability to withstand adversity. But beyond this individualistic vision, it can be thought of on a systemic scale, as proposed by the Stockholm Resilience Center:

"Resilience is the ability of a system, whether an individual, a forest, a city or an economy, to cope with change and continue to develop."

Against a backdrop of economic crisis, the notion of "organizational resilience" has emerged , used to designate a company's ability to adapt to a constantly changing environment. This is now an ISO standard.

The enthusiasm for this concept permeates the whole of society. However, its measurement in accounting systems needs to be questioned.

One-way accounting?

The definition given to organizational resilience seems to focus attention on the economic and financial aspects of performance. The company is considered within its traditional limits, and environmental and social resources are thus taken into account in a one-way fashion.

This can be seen, for example, when shareholders in the oil majors demand that management take climate change into account. Above all, it's a question of questioning the financial resilience of these organizations in the face of the Anthropocene, i.e. the era characterized by man's predominant role in modifying his environment.

To this end, the G7 has set up the Task Force on Climate-Related Financial Disclosures (TCFD). The task force's report, issued in June 2017, calls on organizations to report on the effects that global warming would have on their activities and the strategies adopted to limit its negative influence.

However, this outside-in view has its limits. Since flexibility and adaptability, in a dynamic and uncertain environment, are key qualities for achieving resilience, some companies have integrated their dependence on a multi-dimensional ecosystem, but have also modified their control tools to account for the consequences of their activities on their ecosystem.

This is particularly true of the IR and capital coalition approaches. They are working towards the emergence of multi-capital accounting, the aim 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.

Changing course

Researchers have nevertheless shown that there can be a disconnect between a company's actions and its CSR communications. Whether voluntarily or involuntarily, companies focus on factors that seem fundamental to them, neglecting certain aspects that are essential to other communities, or ignoring the connected, global nature of social and environmental systems that the current crisis has brought back into the spotlight.

In addition to the outside-in view, organizations must also adopt the opposite view: inside-out. It would seem desirable for accounting to include indicators of the contribution made by organizations to the resilience of a system affected by multiple crises.

The exercise is no longer limited to the pursuit of organizational resilience, but rather that of system resilience. This change of course is necessary if companies are to face up to the ever-increasing challenges and stakes 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 in conjunction with the CSEAR France/EMAN Europe 2021 online academic conference. Speed blogging consisted in collaboratively writing an article on the conference theme of "accounting for sustainable development in the Anthropocene" within a limited timeframe. At the end of the event, 3 articles were co-written by established researchers, juniors and doctoral students.

Quentin Arnaud, Doctoral student in Accounting, University of MontpellierAmel Ben Rhouma, Lecturer in Management Sciences, University of ParisClément Carn, ATER in Management Sciences, IAE de Poitiers and Souâd Taïbi, Lecturer in sustainable development accounting, Audencia

This article is republished from The Conversation under a Creative Commons license. Read theoriginal article.