When Blake Phillips began his doctorate in finance at the University of Alberta in 2009, he was asked to declare a focus. With previous degrees in biology and forestry, and an interest in conservation, the B.C. native zeroed in on sustainable finance.
His supervisor balked, steering Phillips away from what was then considered a niche segment. Warned that there would be no jobs in that sector, Phillips was advised to commit to one or the other: sustainability or finance.
Today, Phillips is the director of a new program at the University of Waterloo that aims to cultivate precisely the kind of finance professional that Phillips always wanted to be: comfortable in the languages of both finance and sustainability.
Waterloo’s business school has made a name for itself offering hybrid programs that marry the study of business with various majors. The Sustainability and Financial Management program is the latest of these, a partnership between its School of Accounting and Finance and Faculty of Environment. In the fall of 2022, the first cohort – some 50 students – embarked on its bachelor’s program.
The injection of non-financial factors into the study of finance comes at a critical time. In the last decade, corporate culture has been transformed; sustainability and ESG (environmental, social and governance) factors have gone from being nice-to-haves, matters of lip service and savvy branding, to integral parts of the corporate balance sheet.
Companies must now not only understand these concepts, but also be able to measure their performance. New financial reporting standards are in the pipeline. The International Sustainability Standards Board, the Frankfurt-based body that provides a global baseline for sustainability-related financial disclosure, has now issued a suite of new standards. As Canadian regulators adopt them, companies will have to report to them – initially on a voluntary basis.
“There’s a huge scrabble for talent,” says Jessica Fries, the CEO of Accounting for Sustainability, the British charity that has been a driving force in the transformation of the accounting profession. “Companies used to have a need for sustainability specialists, but now it’s part of day-to-day operations.” In a 2022 report co-authored by Deloitte, 68% of Canadian finance-sector professionals surveyed claimed that they faced a shortage in sustainable finance skills in their workforce, and 85% estimated that this deficiency was significantly affecting their operations.
The Waterloo program was conceived to address this talent gap. It may also breathe new life into a profession that has been falling out of favour with today’s “impact” generation, which Phillips contrasts with his own “ambition-driven” cohort. Keenly aware of climate change and global and social inequality, students today are drawn to work that aligns with their values, and many have bought into the cliché of business schools as propagators of cold, hard capitalism.
The school’s Bachelor of Sustainability and Financial Management offers three pathways: one in in corporate sustainability, which could feed into a CPA designation; one in government policy and financial markets, which is more geared to financial analysts; and a third in Indigenous entrepreneurship, which Phillip hopes will attract Indigenous students, historically underrepresented in the world of finance. As a co-op program, it will offer students work placements – with consultancies, banks, insurance companies or government – in alternating terms throughout the degree.
Sustainable finance is, by definition, a complex discipline, that brings together diverse areas of expertise and competing motives. Phillips says the thinking required is full of ambiguity and trade-offs. It’s widely believed that this additional nuance will be the salvation of the accounting profession that many of the Waterloo program’s students are destined to enter.
“Book-keeping may be dying,” Phillips says, referring to the traditional tallying of ledgers that will inevitably be offloaded sooner or later to artificial iIntelligence. “But not accounting.” To the contrary, he considers this to be the most exciting chapter in the profession’s history since the introduction of formalized reporting standards in the early 1900s.
Sustainability and ESG remain empty concepts in the corporate world if they aren’t being accurately measured and reported. The Waterloo program aims to produce the expertise to do that vital work. “This is the accounting degree of the future,” says Phillips.