People and Planet in the Accounts: how to be a net-zero accountancy practice

Scott Johnson set up his practice, Kung Fu Accounting, to have a wider social and environmental purpose.

Kung Fu Accounting (KFA) is the world’s only B Corp chartered accountancy practice, and it may well be the world’s only net-zero carbon one too. Many accountants advertise that they’re not like other accountants, but in this case, it’s true.
Any decision KFA makes or advice that it gives takes people and the planet into consideration. The company has an ethical buying policy, prioritising local and second-hand purchases. They created a community fund to help local charities, community initiatives and non-profits during the pandemic. It has a giving commitment of 3% of turnover. It’s also a B1G1 organisation through its unique ethical payslips service.

“We ask our clients to sign up to this service,” founder Scott Johnson explains. “They pay us a pound, we match that pound, and then it gets donated through B1G1. We launched that in September, and we’ve had a whole series of impacts around the world; just through having the gumption to say: this is something that we could do, so why not do it?”

Kung Fu Accounting is Johnson’s passion project. The concept arose from deeply personal circumstances in 2014, when a potentially life-threatening illness in a close family member made him reassess his life (thankfully, the family member recovered). “It caused me to look very carefully at what I was doing. I was working in a place where the nine-to-five was actually seven-to-seven. When a life event such as that comes along, it makes you re-evaluate what is truly important. So, I spent a year, building up the courage to leave my job.”

Johnson loved working as an accountant but wanted it to be more human. He also wanted to make sure that his business had a positive impact on the world around it. This stems from Johnson’s other passion; ‘Kung Fu’ isn’t just a quirky name, it’s a part of Johnson’s life.

My kung fu teacher has given me a huge amount of non-physical training, a lot of guidance and leadership. It’s about just being better today than I was yesterday, for me, and being a positive force for good. It completely chimes with people; it completely chimes with B1G1. All of the decisions that I make as a business owner are not necessarily what I would have made when I was an accountant. In my previous role advising clients, I wouldn’t have even considered these sorts of things, necessarily. But for me, it’s the right way to do business.

Ethical and environmental decisions are threaded into the way the practice operates, but top of the priority list is looking after people. “It’s really important that the people in my team feel valued and feel appreciated, so their welfare comes first.”

Business decisions are made holistically, with any wellbeing impacts on staff considered first and foremost, then wider environmental impacts, alongside possible business benefits. This attention to doing the right thing also extends to the service; the team aims to reduce financial stress as much as possible, with a KPI to get draft accounts to clients two months after year-end. “We can give them forward-thinking advice that way: you’ve got seven months before your company tax bill is due. What are you going to do in that time? Let’s make a plan.”

The company has adopted cloud technology to minimise paper use and to build a foundation to allow them to give real-time advice, “rather than looking in the rearview mirror.”

Ethical advice is also a part of this; KFA tends to attract like-minded businesses. For example, the company will outline ethical pension options. Johnson recalls a conversation with a budding entrepreneur who wanted to set up a business with purpose and had come to KFA for advice.

That’s a bigger conversation than you would have with a normal account,” says Johnson. “There are all sorts of implications of that. Can you afford to pay £15 an hour? Can you afford to invest the time and energy in building a great sustainability programme, or a charitable giving programme? How do you go about making it happen? I know, because I’ve done it in my business.

Perhaps, as the push for a greener economy continues, KFA will start getting requests about setting up net-zero businesses as well. A member of the KFA team has completed a degree in environmental management – she assessed the business against all criteria for scope one and scope two emissions. The net-zero status of the business hasn’t been externally verified yet – that has been delayed by the pandemic, but Johnson says the numbers speak for themselves. “The B Corp framework means we need to be able to show our policies and track performance, so going through that process has been really helpful on so many levels.”

All of this work takes time and energy to do; it needs to be a major priority, threaded through the culture of the business, Johnson explains. Focus on the causes you care the most deeply about if you want to put more purpose into your company or team.

From day one because I knew I wanted to run an ethical business, and B Corp was the rubber stamp that I needed. So, for me as a startup, the requirement was very different to me going through an assessment, three years down the line. It requires you to really think about the way that your business operates, and the principles that you use to make a business decision.

He tells a story that he read in a Buddhist text, years ago: a little boy on a beach covered in dying starfish, methodically throwing them back into the ocean, one by one. An old man asks him what he’s doing: “There are thousands of starfish here, you can’t possibly make a difference.” The boy throws another into the ocean and says: “I just made a difference to that one.”

That’s it for me; make one thing better every day. That’s the difference that I can make in the world. And that’s what I will do.

This article was first published by ICAEW. You can visit the original page here.