Accounting, finance & control

How to act on improved insights

By Bart Dierynck | November 16, 2022 | 2 min read
At its core, science is about improving our insights. This is how it goes. Based on new research, existing insights may be abandoned and new ones developed. Those new insights can have different implications in practice. A classic sustainability-related example is our exploration of the underlying reasons for climate change. Around 1990, there was already sufficient evidence that our climate was changing. We were still uncertain of the reasons, however. Improved insights have now made it clear that climate change is at least partly caused by human behavior. As a practical implication of these improved insights, we can adapt our behavior to help reduce the negative effects of climate change. 

Social progress

Social progress relies on improved insights. Improved insights, such wonderful things! Acting on improved insights isn’t always that simple, though. It can involve changing habits or reconsidering earlier agreements. To operate well, a finance department must also make use of improved insights. If new data and analyses reveal that the source of a problem lies elsewhere and is not addressed by current strategy, the finance department should communicate this information and propose an adapted approach. That is how to act on improved insights. 

Sustainability legislation

Sustainability legislation, too, must often adapt to improved insights. The Habitats Directive is a good example. This is a European law from 1992 that obliges countries and Member States to preserve and restore natural habitats and biodiversity. The countries and Member States must work to achieve this goal based on, you guessed it, improved insights. Perhaps the Habitats Directive doesn’t mean much to you. It’s the Directive that is currently threatening Averbode Abbey’s dairy cattle. The case is quite complicated. For example, there are suspicions that the original 2014 permit already infringed on the Habitats Directive. Very Flemish. Either way, new scientific research has now caused heathland to be reclassified as more vulnerable than previously. Again, improved insights. Basically, heathland habitats in proximity to intensive agriculture, such as the one near Averbode Abbey, are considered more vulnerable than in 2014. And yes, the abbey’s herd of 270 dairy cattle counts as intensive farming. In this case, acting on improved insights means reducing that intensity. 

Certain politicians have posited that the Habitats Directive is in conflict with any pretense of legal certainty. According to them, legal certainty apparently means, ‘once decided, binding forevermore.’ An introductory course in law is enough to show that legal certainty is not as absolute as these politicians would have it appear. Besides, this raises the question of what the alternatives are to acting on improved insights. If new research teaches us that specific habitats are more vulnerable than originally thought, is deliberate ignorance of this knowledge justifiable? Isn’t the haphazard application of European legislation, as is such common practice in Flanders, actually an active threat to legal certainty? Let me be clear that we also need to find a solution to help the affected farmers. In the end, these people are the victims of a failed policy decision. Here, again, improved insights have a role to play. After all, we keep learning more about possible ways for ecology and agriculture to coexist in harmony.

Practicing politics based on improved insights isn’t always clearcut. It could, however, result in more constructive politics, facilitating the production of real solutions to sustainability issues. Ultimately, isn’t that what politicians are supposed to be doing? If only politicians were more like well-run finance departments… 

This article originally appeared as a column by Prof.dr. Bart Dierynck in CFO Magazine Belgium.

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About Prof. Dr. Bart Dierynck

bart-dierynckBart Dierynck is professor of Management Accounting at TIAS School for Business and Society and Tilburg University. Bart Dierynck teaches management accounting, strategy implementation and corporate social responsibility in MSc programs, MBA and executive education programs and tailor-made in-company programs. Dierynck is best known for his multidisciplinary research at the interface between management accounting on the one hand and operations management, organizational behavior and corporate social responsibility on the other.

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