Bringing Out the Best in Business Through Sustainable Accounting

Feature Bringing Out the Best in Business Through Sustainable Accounting

Leanne Keddie believes in the good of all people. She believes that most everyone wants to do the right thing, make good decisions, be compassionate, give back to the greater good. This belief is not only at the heart of Keddie’s research, but it is at the heart of everything she does in life.

Perhaps surprising, Keddie is an accountant; a numbers person who loves to analyze business plans. And, she is using her proclivity for logic to be an agent of change in the business world. At Sprott since early 2019 as Assistant Professor, Keddie’s research program focuses on sustainability—helping large corporations rethink how to incentivize executives to effectively and genuinely incorporate corporate social and environmental issues into their business models.

It was Keddie’s experience working in the banking industry that sparked her love of how numbers tell a story about a company, and why she went on to earn her MBA/CMA degree from McMaster University in Hamilton. While working as an accountant in business valuation, Keddie was able to see the art in figuring out what a company was worth. But while teaching accounting as a sessional lecturer and concurrently working for CPA Canada, Keddie came across an article. A scant article at best, yet it was the first time Keddie read anything about social and environmental accounting. At that time (circa 2010), for Keddie, the concepts “accounting” and “environment” were not fundamentally congruent.

Keddie was drawn to this idea of learning more about issues in corporate social responsibility (CSR), so she left industry and took a leap of faith. She dove into academia to earn her PhD in Accountancy from Concordia University in Montreal. And she did it all while building a family of four kids and taking on the task of becoming carbon neutral through ongoing major modifications to her family’s lifestyle. None of these are small feats, proving that Keddie is truly dedicated to her mission.

With Keddie’s arsenal of expertise from industry, her brilliant way of analyzing business, and her passion to bring out the best in people, Keddie’s mission is to drive real change in corporate governance’s systematic approach to executive compensation linked to CSR. Remarkably, 40 per cent of companies on the S&P 500 are indeed integrating incentives linked to societal metrics, such as diversity or workplace safety, or an environmental metric, like water usage or greenhouse gas emission reduction, within their executives’ compensation plans. Yet, there is so little understanding of how CSR incentives work, the effects and outcomes, what strategies are most effective, how to create metrics that effectively measure and provide useful outcomes to the company, or even provide a clear definition of executive performance success. Moreover, there is a huge lack of information around who influences this compensation process. Keddie is tackling all these questions and is keen to tease out the players who have a vested interest in promoting genuine and effective CSR compensation and those who may push against this strategy.

Leanna Keddie “How do we tell the difference between companies who have a genuine interest in CSR from those who are simply pretending to care? I’m looking to identify the ‘wolves in sheep’s clothing.’ There are no industry standards, protocols, or measures that allow us to do that yet.”

Executive compensation has historically been linked to financial measures that tell the story of a company’s direction and success. Keddie sees, however, that there is much more to this story.

Compensation linked to CSR is a relatively new way of thinking and Keddie’s goal is to bring out the best in those high-level executives and board of directors by providing effective strategies and tools. And, this will be a game-changer.

Keddie’s research has revealed that corporate governance is about thinking critically and the necessity for organizations to gain a full perspective around CSR executive compensation. Preliminary work suggests that having board directors with CSR experience is key, along with understanding who has the power and the influence over the incentive plan. Moreover, previous CSR research indicates that it is a win-win for companies who do it right. When companies have a genuine approach to CSR, they are also very profitable.

Keddie understands that it is essential, now more than ever, that corporations remain accountable for social and environmental issues in society; that the environment and the future of our planet depends on this commitment. Keddie knows that when you provide the knowledge and tools, executives—and all people—want to do the right thing. Keddie truly believes in the good of all people. And it is thinking like this that keeps the world going around!

“Sustainable accounting—it’s a revolutionary concept. The big goal is to differentiate companies that want to do better and provide them with the tools and guidance to help them achieve this.”