As 2024 progresses, many businesses will find themselves woefully unprepared for reporting requirements that they have not previously faced. This year promises to be a milestone year for emissions reporting as large organisations cascade carbon data requests throughout their supply chain. SMEs make up 44% of non-household emissions in the UK but for many this will be their first encounter with carbon reporting. They desperately need guidance to navigate this new area and to ensure that they stay compliant. With access to key data, accountants are incredibly well placed to provide carbon accounting services, yet most have either not yet taken up the opportunity or have failed to signal these capabilities to their client base.
The timing on this is critical. Businesses that have not yet received a request for emissions data are likely to do so in the coming months as the focus on supply chain emissions filters to all levels. The most prominent example of this is the new NHS supplier requirements coming into effect in April. While Net Zero and social value have had a weighting in NHS procurements for some time now, as of April this year the NHS is extending the requirement for a carbon reduction plan to ALL new procurements. SMEs that work with the NHS are likely to need support in measuring and reporting their carbon data. The NHS is far from alone with these requirements, with large companies such as Atlassian increasingly looking to control their supply chain emissions through similar measures. Carbon reporting is quickly becoming a licence to operate: to win contracts, to access capital, to retain clients, to acquire new ones.
As trusted business partners and with access to the spend data used as the foundation of carbon footprint measurement, accountants are uniquely placed to help measure carbon emissions. The core accounting skills of rigour, data capture, analysis and reporting are directly applicable to the process and make it an easy addition to the service list. Firms that have already embraced carbon accounting are seeing benefits beyond standing out as a leader in the space. By keeping their clients up to date on new requirements and reducing related business risk, accountants can increase their strategic standing and open up further opportunities beyond traditional accounting services. In this way carbon accounting can act as both an additional revenue stream and as a driver for further growth in business advice services. There are talent considerations too, particularly among young accounting professionals who expect their firms to be aligned with their own values and want to empower the journey to Net Zero.
At Trace, we believe that the future of accounting will include non-financial reporting, emissions measurement and climate-related disclosure. For 3.5 years we have been building the technology that accountants and business advisors can utilise to provide this service today, and we now work with over 100 accounting firms to power their carbon accounting capabilities. Crucially, we also help accounting firms to understand their own footprint and reduction opportunities. Our platform uses business expenses and other business data to power credible carbon reports and climate action and features seamless integration with Xero. Contact our team if you would like to find out more about Trace or our fellowship programme, which is designed to help accountants get up to speed on the world of carbon accounting.
*The views expressed are the author's and not ICAEW's.