Accountants are problem-solvers so let’s solve the climate crisis
22 January 2020: accountants could be the climate heroes we all need, according to the World Economic Forum (WEF). What does that mean?
When the WEF suggests accountants could be climate heroes, how does it make the leap from accountants as the guardians of business to being the saviours of the oceans, forests and skies?
The answer is simple. Accountants are deep in the numbers and the climate emergency has thrown up endless numbers: the need to limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels; volumes of carbon emissions; how long we have to solve the various climate disasters that make up the bigger awful picture. If anyone is placed to tackle the numbers that demonstrate the crisis, and apply the metrics that will be the building blocks of solving it, it should surely be accountants.
The case about climate change has been made; we don’t need to rehearse it. Business leaders have been clear about that. But turning ambition into action will make accountants true climate heroes and, let’s not forget, much has already been done.
The Task Force on Climate-related Financial Disclosures (TCFD) is shining a spotlight on financial and non-financial disclosures around companies' environmental footprints. The
Climate Disclosure Standards Board (CDSB) has issued a report, "Unchartered Waters", which explores how existing international accounting standards (IAS) can be leveraged to report on the financial impacts of climate-related risks.
The WEF says in its climate heroes article: “TCFD and CDSB’s recommendations around IAS, while principally a step in the right direction, fail to internalise the climate externality. A new accounting standard to account for climate costs might be the right approach – and there are multiple reasons why this could nudge emitters in the right direction.”
The WEF concedes that a new accounting standard is no panacea, but it could “set a precedent for fundamentally altering the existing economic model”.
“If there was ever a challenge that called for an innovative solution, it is the climate crisis we face today. The inter-generational injustice has to stop with us. We need to relay this message unequivocally to the emitters; it’s too late for disclosures. They must account for the carbon they produce – as well as its impacts.”