The word "sustainability" is ubiquitous at the moment. And obviously intrinsically linked to sustainability is climate change. Addressing climate change by becoming greener is now a key factor for many businesses as they develop their future strategies. In fact, companies are now using the label "greening companies". Greening companies are companies that are not lower carbon today but are serious about getting there. These are companies that have credible plans to transform and become greener.
CEO of BP Bernard Looney says "The world needs as many greening companies as possible chasing emissions down". It is clear that there needs to be a massive, unprecedented and sustained shift globally in energy demand and supply, away from fossil fuels and towards low carbon, to get to net zero.
Companies are considering how they can lower their emissions within their operations. In some instances, leaders have already begun to take action. Now, as climate change is recognised as a threat to the planet, the emphasis is shifting towards a need to set out on a journey to net zero. This is all well and good, but how do companies do this, and what does this mean from an accountant's perspective?
ACCA, The International Chamber of Commerce and Sage recently published a report entitled "Think Small First: Enabling effective climate action by small and medium-sized businesses". The report highlights how providing standardised small and medium-sized business-friendly reporting frameworks could unlock significant progress on the journey to net zero, given that the SMB sector represents over 90% of the global economy.
The report calls on policy makers, environmental disclosure bodies, accounting standard setters, and large corporate missions to bear four principles in mind:
Standardise: Large companies should work together within sectors and industries to ensure SMBs are being asked for information on a standardised basis.
Simplify: The majority of the guidance for climate and ESG disclosure is for large companies. This needs to be developed to provide simpler guidance that is relevant to SMBs.
Automate: Governments and businesses need to enable the development of automated tools to make the gathering of information, and of reporting, more accessible and straightforward.
Enable: Government policy needs to recognise the challenges faced by SMBs by providing a policy framework and incentives that are accessible and actionable for SMBs.
The report discusses how we have a huge role to play in facilitating carbon accounting and climate change. As accountants we gather and analyse a broad range of both financial and non-financial data for organisations. And although not all accountants have expertise in understanding how to measure carbon emissions, the task of finding data and organising it in meaningful ways is part of our skill set, and this is essential to both financial and carbon reporting.
As accountants, we are trusted advisors and our attention to detail, communication skills, analysis and ethical mindsets are skills that are key to achieving net zero.
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