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Chief Value Officer

October 19, 2017

This book review appeared in the August 2017 issue of The CPA Journal ( It is reprinted with permission and is subject to their copyright. I believe the book addresses an emerging topic and would like to make as many people as possible aware of it.

Chief Value Officer / Accountants Can Save the Planet
by Mervyn King with Jill Atkins
Reviewed by Edward Mendlowitz, CPA

This short book is direct in its focus and is a fitting way to discuss the importance and practicality of sustainability actions and responsibility in conserving natural resources. The book addresses the very important topic of how to save the planet and presents ways progress can be reported that can lead companies to act in ways that can also create value for themselves.

The book goes further. It brings up the concept of the importance of companies issuing financial reports not as financial statements but as a method of reporting their value measurement and creation using an integrated approach to include all six capitals, not just financial capital. Judge King also proffers that the most appropriate people to lead the charge are the accountants, specifically Chief Financial Officers who should be renamed and reconfigured as Chief Value Officers.

This is a quick read but it is on an extremely serious topic and as such needs careful consideration. The book begins by introducing as its foundation why conventional financial reporting should be transformed. Hard to defy logic is used to present the authors’ points using the history of the corporation and how the “ownerless company” emerged. The belief that shareholders are the primary “owners” of a corporation is overturned in favor of all of a company’s direct stakeholders collectively being the true “owners.” It is these stakeholders a company’s board needs to address.

Four major premises
The six capitals are categorized as financial, manufactured, social, human, intellectual and natural. The book sets forth how each is important in its own right. Whether one is more important than the others is not the issue – they are all important. It is similar to asking a person with six children which one they love best.

Integrated reporting (IR) is a way that companies can disclose information relating to the six capitals, sustainable development goals and other targets that can lead to value creation over the long term. IR is a relatively new concept that is taking hold in some countries and larger companies. As a new concept it needs to be introduced, thought about and considered, tried, refined and built upon. I believe there is much merit to IR as a concept and needs to be considered by everyone responsible for a company’s reporting and governance. I am not suggesting that it be adopted universally, as the book does, but I am imploring responsible officers to consider what the book suggests with an open and inquiring mind. Use this book as an introduction and a spring board to further study. Integrated reporting can and will lead to integrated thinking as a strategic business plan with concomitant results.

Stakeholders are any party who affects or is affected by a company and includes shareholders, employees, suppliers, lenders, creditors, service providers, the local community where it does business, the government and the natural environment that is impacted by the companies’ actions. Of the group the one most able to diversify its involvement are the shareholders that can spread their investments among multiple companies. The least able might be the employees who spend all their work time with the company. The one with the least advocates is likely the environment which cannot speak for itself.

Accountants’ are the primary measurers, auditors and designers of financial reports and they can be a vital influence to change the reporting vehicles. There is no doubt of the centrality of the accountant’s role. However, I think the book limits itself by using the accountant as the central or driving force. This book is too important of an introduction and thesis statement to be so limited. It should reach a much wider audience and with little changes in that regard (and in the title) it should be directed at all corporate directors, CEOs and CFOs of the major stakeholders and professionals engaged and consulted with by these organizations, and our legislators in all areas of government. As much as I appreciate accountants’ importance the subject is too big and too important to be limited to the accountants’ roles.

The six capitals and IR are tied into the “Sustainability” movement. However you feel about sustainability, clean air, toxic wastes and species extinction there should be no deniability that these are issues that must be responsibly considered. Six capitals are six separate issues and IR is another issue on how reporting should adapted to wider issues involving all the stakeholders. Each needs to be focused in separately and then on their totality. This is not a single do-good issue, but something much bigger and more important.

New concept
New concepts that address not only the way companies issue reports but account for waste, sustainable actions, human resource management, natural resource conservation and replenishment among others and how companies can establish a mindset and culture to assume responsibility toward this and how this needs to be established, organized and implemented are important and should be carefully looked at. Good citizenship requires awareness and actions promoting positive sustainability behavior. This book presents a way to start.

Mervyn King is the Godfather and founder of the IR movement and has garnered worldwide recognition of the importance of IR and the six capitals in corporate reporting and better value creation which sound reports lead to, so long as people pay attention to the reports, so anything he writes, as far as I am concerned, is a must read; and this book certainly is.

Given the issues the authors develop, this is a must read for all accountants as well as the heads of each stakeholder group. Get it and read it…and think about the consequences of ignoring what is suggested.

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