The finance function has been key in helping their organisations understand how sustainability issues affect value creation and financial performance.
Sustainability issues are having an increasingly larger influence on traditional business models. The linear approach on which the business models are based ignores the interconnected nature of economies, society, and the biosphere. For organisations to be successful, they’ll need to pivot and anchor their business models so that performance connects with purpose, according to the report, Reframing Business Models for a Sustainable World.
‘If you’ve got a business model and you haven’t looked at it for a while, you haven’t taken sustainability issues into account in any kind of detail,’ said Dr. Martin Farrar, Associate Technical Director — Management Accounting, at CIMA .
The report suggests a new approach where organisational leaders take responsibility for how their business models affect and depend on the health of entire systems.
Thanks to sustainability’s outsized effect on business models, there’s an opportunity for management accountants to shift their organisations into a system-centric approach that goes beyond the balance sheet.
‘We need to be aware of what the impact is we’re having on the planet and the impact that a degrading planet is having on us,’ said Farrar. ‘And that needs new ways of thinking.’
Understanding polycrisis and why business models must change
The report explores how multiple, simultaneous global risks — referred to as a polycrisis — interact and amplify each other and erode traditional business model foundations. Polycrisis risks make siloed sustainability planning a liability. Instead, updated business models need to incorporate strengthening society while remaining economically viable.
‘Everyone is looking at climate on its own, but not in relation to biodiversity, food, or populations,’ explained Farrar. Organisational leaders may be updating their business models looking at only one crisis at a time, but ‘not seeing what the implications are of a polycrisis of seven factors that have tipping points and feedback loops that feed on each other, which are more likely to impact your business model more severely than if you just look at one’.
The seven physical aspects of a polycrisis — climate, energy, population, food, biodiversity, pollution, and disease — could be interacting with one another at any given time. It’s a holistic approach that encompasses, said Farrar, that shift organisations away from focusing solely on profit and instead towards proactively problem-solving.
To reframe business models, a new macro-stewardship lens will be key.
‘We create business models looking from with inside the business and we don’t really think a lot about outside the business,’ explained Farrar. ‘The business model frameworks stay the same … It’s understanding where our business model is within the wider ecosystem, and we need to think about that first.’
Traditional stewardship — micro-stewardship — focuses on influencing individual companies, while the macro-stewardship approach fosters proactive engagement with governments, regulators, and other systemic influencers to ultimately create long-term sustainability.
With a macro-stewardship lens, organisational leaders and finance teams:
Pay closer attention to the bigger picture and factor what’s happening in the economy, society, and the environment into their decisions
Plan beyond the next few years to ensure today’s choices don’t limit future generations
Collaborate across industries, sectors, and communities, and coordinate with policymakers and stakeholders to jointly tackle challenges
Put ethics and the public good first with decisions that favour long-term trust and shared benefit
As your organisation works to reframe their business models, two concepts as detailed in the report should be at the centre: thinking of the needs of future generations and a do-no-harm approach that understands where an organisation fits in the wider ecosystem.
Anti-fragile thinking: Designing for disruption
Resiliency may no longer be enough for an organisation. In the context of business, resiliency refers to the ability to withstand challenges, resist damage, and recover quickly. But resiliency prepares you for the last disaster, not the next.
Anti-fragile organisations, however, get better in the face of adversity.
‘We’ve got to understand what’s our impact on those seven factors [of a polycrisis] and what impacts do the seven factors have on our business models?’ questioned Farrar. ‘Once we understand that, we can build adaption plans and transition plans and help relieve the polycrisis and make sure our business models are anti-fragile in this new environment.’
An anti-fragile organisation continually reworks their business models to ensure they grow stronger when exposed to challenges. Risks are shared across value chains and among stakeholders. Key characteristics of an anti-fragile approach include having multiple revenue streams, flexible supply chains with redundancies to help absorb shocks, and sharing risks across an entire value chain.
The skills that enable change — and where to apply them
As a management accountant, your understanding of how your business model interacts with the wider environment gives you a head start in this journey. To deliver the necessary changes, you’ll need systems thinking, strong storytelling skills, ethical judgement, and moral ambition.
But you’ll also need an awareness of how data feels to stakeholders, and not just what it shows.
Equipped with these skills, management accountants are uniquely positioned to move from insight to action, starting with governance‑level conversations that frame polycrisis risks and set the tone for what happens next across the organisation.
‘It’s good to get in at the governance level first because you have audit and risk committees that should be discussing these things first. They set risk appetites,’ said Farrar. ‘If you can have that kind of high-level discussions first, on stress testing against polycrisis factors, they can then move that down into the business for finance functions and CFOs to provide more detailed data and support’.
Read the full report, Reframing Business Models for a Sustainable World, for more in-depth insights and recommendations.