The Accounting and Accountability Research Group (AARG) aims to promote accounting, accountability and financialization research relating to social justice, sustainability and good governance in public, private and third sectors. In particular, we broadly examine how accountancy and financial devices, discourses and practices shape and are shaped by markets, organisations and society.
Our research concerns analysis of corporate reports, the accounting profession, accounting regulations and their development, the construction of financial markets and the way actors use and mobilise accounting in their daily life.
To better understand the aforementioned topics, the Group gathers researchers from different disciplines and diverse epistemological traditions with a view to promoting inter-disciplinarity, from critical accounting to capital market related research, and as a result developing new understandings and new knowledge in these areas.
5th of June – 10am- 12:30pm: Round table discussion / in conversation with the civil society: The controversy of Thames Water: a discussion with the civil society about the sustainable management of water - followed by lunch.
https://www.eventbrite.co.uk/e/roundtable-with-the-civil-society-the-sustainable-management-of-water-tickets-883348879277?aff=oddtdtcreator
5th of June: 2- 6.30pm: Workshop: The landscape of climate change reporting. A discussion between academics and the profession. Followed by drinks reception.
2nd of July (all day) : SSAF (Social Studies of Accounting and Finance) Workshop: Academic round table : Imagining Accounting and Finance and the performativity of the Social Study of Accounting and Finance.
Title: From calculation to trading: the relevance of explication in an experiment to establish a marketplace for aviation greenhouse gases emissions offsetting credits (see NP_Emissions-trading_pdf [PDF 744KB])
Author: Nikiforos Panourgias
Abstract: The assembling of markets for greenhouse gas (GHG) emissions involves the bringing together of numerous social, legal, and scientific elements. This paper explores the experimental nature of carbon market design through a study of the development of a platform for the trading of aviation related GHG emissions offsets. Utilizing an action research approach, the study traces the progression of the initiative presented, from the development of software applications for real-time emissions measurement and the forecasting of future emissions of aircraft to the development of a prototype for the trading of emissions offsetting credits. This tracing highlights the importance of the metrological devices developed in terms of the visibility of the environmental, operational, and financial risks facing the aviation industry and how this visibility, in turn, surfaces the need for the trading of emissions offsets. The article argues that these metrological devices help establish a new calculative space that enables the estimating of future demand for emissions offset credits, the identification of surplus and deficit actors, and the revealing of new and uncodified financial assets and liabilities. The market design experiment also revealed deficiencies in the existing mechanisms that render emissions credits tradeable, prompting an exploration, by the participants in the initiative, of blockchain-based tokenization as a potential technological solution to these regulatory and policy deficiencies. Beyond the empirical account, the paper contributes to theoretical discussions by introducing the concept of explication in market design experimentation and clarifying its meaning and relevance to such experimental settings.
Water is essential for life, public health, and coping with climate change, as well as for a vast number of economic activities. It is a human right and critical for living, especially in urban settings. The unfolding crisis of Thames Water raises several key issues regarding the importance, management, and challenges of running a water industry, not only in the UK but more broadly.
The water industry is a nexus for many interests and interest groups (financiers, politicians, consumers, academics, workers, pressure groups and NGOs), but people often overlook the journey of water until problems arise. Yet, everyone needs clean, affordable water and the well-managed processing and disposal of sewage. All this requires significant capital investment and, in the UK, in the context of a privatised industry, a regulator (OFWAT) is charged with ensuring the supply of water to users as well as setting charges in such a way as to ensure predictable revenues and investment cycles on the side of the providers.
Since privatisation in 1989, the industry has not met its intended outcomes. Rather than promote wider share ownership and a shareholder democracy, as envisaged by the architects of privatisation in the Conservative government of the time, only three of the original companies remain listed. There are frequent raw sewage disposals into rivers and the sea, and financial engineering has led to high, and potentially unsustainable debt levels. Impending price reviews will likely increase consumer water bills to levels much higher than inflation.
It is impossible to look at the unfolding crisis at Thames Water, the largest water supplier in the UK in terms of customers served and the geographical area covered (around 15 million across London and the Thames Valley), and not conclude that the financial engineering involved in the inception of its corporate structure has not played an important part in its current troubles. This is not just a Thames Water problem. Among UK water companies, many are owned offshore, and most have complex (if not opaque) corporate and financial structures. Despite being cash-generative, they have preferred to use debt over equity for funding, leading to significant levels of debt and financial vulnerability, especially with rising interest rates. This ultimately impacts water bills as well as imperilling the financial health of the operators. Furthermore, as Thames Water shows, the linking of this borrowing to the complex corporate structure of the company has imperilled, not only the interests of the users, but even the interests of the eventual shareholders of the company in the form of pensions funds such as USS.
It is worth remembering that the massive indebtedness of Thames Water came about, not out of a need to fund investment in its operations, but as part of the company’s delisting from the London Stock Exchange through a leveraged buyout by a consortium led by the Australian investment bank Macquarie from Thames Water’s previous owner, the German utility company RWE.
OFWAT, the UK regulator, sets investment levels and targets every five years, but the regulator’s effectiveness has come into question regarding its inability (or unwillingness) to intervene in the financial engineering engaged in by the water companies and resulting in concerns about potential failures of suppliers. This is fuelling broader structural concerns about the UK regulatory regime and the ability of the OFWAT to fulfil its mandated role. It also raises questions about whether the current regulatory and organizational structures have failed and whether new industry models are needed that better serve societal interests.
The crisis of Thames Water has helped make explicit many of the problems of water privatization and raised questions about the future viability of a privatized model for water provision. This, in turn, raises further questions about what actions can be taken to put water provision on a sounder social, environmental, and even financial footing.In the immediate future there are questions about whether there will be a need for supplier bailouts or re-nationalisations, what shape might these emergency actions take, and whether OFWAT must become more activist regarding the dividend policies of operators and improving their financial transparency as well as increasing environmental targets. In the longer term, it is interesting to examine whether public or social ownership could improve outcomes, how the pricing regime can be modernised and/or democratised, and what the role of consumers could/should be in funding investments. Might there be socially equitable ownership and/or charging models that provide a new blueprint for the provision of such a vital service?
All those interested in piecing together the origins of the current water industry crisis in the UK and discussing what this can tell us about the future organization of the water industry and how it can inform alternative models and structures that overcome the limitations and flaws of past models, should sign-up for this event being organized by the Accounting and Accountability Research Group of the School of Business and Management of QMUL to discuss these issues with a panel of invited speakers that give voice to the many groups that have a stake in the future of the water industry in the UK.
Dr Alessandro Merendino (Queen Mary University of London)
Creative Accounting refers to how arts-based interventions can disrupt traditional business and accounting mindsets, build future work capacity for uncertain and complex environments, and promote more integrated approaches to business (www.creativeaccounting.com). Creative Accounting innovates by bringing together two disparate disciplines, art and accounting, in order to provoke, unsettle and transform accounting thought and practice[1].
Creative Accounting is innovative as it adopts unique and playful methodologies that combine arts-based intervention with technical accounting practice to transform business processes. This project recently won the prestigious PQ Magazine Award in the Editor’s Choice category and was marked as an innovative approach in the Accounting profession.
The accounting profession, in particular, and businesses, in general, face multiple challenges, such as concerns around climate change and sustainability, the emergence of new technologies and attractivity to the profession. Businesses and accountants feel stuck or do not know how to solve such complex challenges. There is, therefore, the need to make a change, shift the mindset, and allow businesses and accountants to find innovative, novel and creative solutions.
How to do so?
Artistic perspectives and arts-based approaches stimulate innovative thinking and offer new ways of conceptualising solutions to global challenges, fostering integrative mindsets as the basis for future value creation. The goal of Creative Accounting is to induce new frames of reference and fresh thinking, providing innovative solutions to complex business challenges such as sustainability, the adoption of digital technologies and the profession attractiveness. This arts-based approach to investigating wicked problems in accounting can elicit innovative thinking and generate novel responses to grand challenges such as climate change or the opportunities and threats posed by new digital technologies and recruitment and retention of professionals.
In recent months, we have run two innovative arts-based events for accountants, finance professionals and business directors.
First, Creative Accounting’s “Sent to Coventry!” industry event saw a unique collaboration with England’s leading accounting professional bodies – ICAEW (Institute of Chartered Accountants in England and Scotland), ACCA (Association of Chartered Certified Accountants), AICPA & CIMA (Chartered Institute of Management Accountants) – to quite literally send the accounting profession to Coventry! Leading professional accountants, CFOs, Heads of Finance and senior managers in accounting areas packed their bags and were sent to Coventry (literally!). The event took place at the Drapers’ Hall in Coventry through formal business dinner but with a twist! Artistic intervention was a night of performative provocation, narrative storytelling and mycelium-induced metaphorical discussion.
This event was collaboratively created by international artists (Talking Birds and Camille Aubry), business and art scholars, and accounting professionals from the industry.
The event sought to challenge and expand the perspectives of accounting leaders by utilising metaphor, narrative and performative techniques. The dinner centred on the pressing issues of sustainability and digital innovation within the accounting field. Artists led the evening, fostering critical reflection and in-depth and robust conversations to gain more nuanced understandings and actions (Creative Accounting Report, 2024).
Second, a follow-up event took place in the heart of global finance at London’s Toynbee Hall, where accountants, business directors, policy-makers and academics experienced first-hand how an arts-based approach could open new ways of thinking, offering new perspectives towards solution generation. Upon arrival, guests were greeted by tables adorned with mushrooms and tablecloths with quotes from Creative Accounting participants. The event featured an immersive audio experience akin to a "Silent Disco," which set the stage for subsequent panel discussions with speakers from academia, business, artistic practitioners and accounting organisations. The International Federation of Accountants (IFAC) were able to join from New York, positioning creativity as the number one capacity required by accountants for a rapidly changing, uncertain future. Before leaving, participants wrote postcards to their future selves, outlining actions they intend to take informed by the Creative Accounting initiative. These postcards are stamped and ready to be mailed out to them in early June as an approach to in-depth reflection and summative summer action.
An international team of cross-disciplinary academics from Queen Mary University London, Coventry University and Monash University (Australia) has worked on this innovative, novel and unique approach over the past year. It has attracted significant traction from accounting students, practitioners, businesses and professional bodies. Leading global accounting body ACCA, in their report - Integrative thinking: the guide to Becoming a value-adding CFO - described “Creative Accounting” as a novel approach towards integrated thinking. The global connecting body, IFAC, responsible for 180 professional accountancy organisations spanning over 135 jurisdictions, endorsed Creative Accounting as a uniquely innovative project with the potential to transform accounting mindsets. Furthermore, Melanie Proffitt, the Vice President of ACCA and CFO, spoke of how our approach has changed her approach to sustainability and the actions she has taken because of Creative Accounting. You may want to listen to her podcast on our website, www.creativeaccounting.com
Some Sources:
Our website www.creativeaccounting.com
Our report: Creative Accounting Report, 2024
Video of the first event “Sent to Coventry!”: https://www.youtube.com/watch?v=MnV_WqTYSJM
Podcast with Melanie Proffitt, CFO and ACCA Vice-President: here
[This is part of an ongoing project whose team comprises Professor Nick Mcguigan, Monash University-Australia, Professor Maureen Meadows and Professor Nick Henry, Coventry University, UK]
[1] If you are a logophile or lexophile, Creative Accounting is a Janus word, i.e. a word with two opposite meanings.