Accounting for Climate Change: Why Chartered Accountants can be an influential voice on tackling the climate crisis

Accounting for climate change

The question ‘what did you do during the climate crisis?’ has taken on fresh urgency after a devastating UN report framed the issue in the starkest terms possible. More than 230 climate scientists contributed to the UN Intergovernmental Panel on Climate Change (IPCC) report, which warned that major climate disruption is inevitable.

But just as human activity contributed to climate change, the report also found that human activity can help to limit global warming’s effects.

That’s where Chartered Accountants can take a leading role as the world works towards achieving sustainability goals and looks to address the crisis.

From our exclusive survey of Member Institutes, a strong consensus emerged that Chartered Accountants occupy influential positions in organisations, in management, on boards and steering committees. This gives them a voice to advocate for change.

“These members drive the organisations and their voice on this matter will effect change as they are the ones at the heart of most key organisations,” The Institute of Chartered Accountants of Zimbabwe (ICAZ) noted.

The Institute of Chartered Accountants India (ICAI) feels the same, telling us: “Chartered Accountants not only influence businesses in calling for climate change mitigation and adaptation but also encourage and enable meaningful action on climate change as influential advisors in governments and organizations by providing relevant insights and analysis.”

As another example of the influential voice that Chartered Accountants possess, the Zambia Institute of Chartered Accountants (ZICA), cited the many ways it engages with the Zambian government. For example, it provides advice on tax policy and national budgets, having first collected members’ inputs through workshops. It also provides commentary on economic policy and development plans.

Progress by numbers

A second theme to emerge from our engagement with members was the importance of being able to gather the right information, interpret it for insights, and track progress against goals. As the world looks for solutions to the climate crisis, that skill is more critical than ever, and it puts Chartered Accountants at the heart of sustainability efforts because the profession by its nature seeks out data and numbers to measure and analyse.

Climate risk reporting is expected to play a more prominent role in business, as moves continue to make this mandatory in company financial reports. As the South African Institute of Chartered Accountants (SAICA) pointed out, improved reporting and disclosure on climate change will lead to a speedier adoption of measures and more effective actions. This will play a key role in achieving SDG13, it said.

ICAI in India holds annual awards to recognise, reward and encourage excellence of businesses in integrated sustainability reporting.

The Institute of Singapore Chartered Accountants (ISCA) and Chartered Accountants Australia and New Zealand (CA ANZ) both referred to the increased global activity in setting standards around sustainability and sustainability reporting, such as the establishment of an International Sustainability Standards Board (ISSB) under the IFRS Foundation.

Setting standards

“These activities reaffirm that in addition to the paramount importance given to sustainability and combating climate change by global stakeholders, accountants are expected to be a key influence in driving positive change,” ISCA said. Meanwhile CA ANZ noted that Chartered Accountants have “a clear role in the reporting and assurance of climate-related data as jurisdictions move to mandate this information and the ISSB progress the development of globally consistent standards.”

The Institute of Chartered Accountants Scotland (ICAS) told us Chartered Accountants are already playing a key role in achieving the UK’s climate change ambition across the economy. “By continuing to engage with governments, standards setters and regulators on this issue, we can help to ensure that credible targets and reporting mechanisms are established to meet these ambitions. The ultimate objective for 2030 would be a global net zero commitment across the profession.”

Going far, going together

In this series of articles, we’ve covered the activities of nine of our Member Institutes as they raise awareness of climate change and engage with stakeholders to push the climate agenda further.

Such a pressing global issue as climate change needs everyone to step up in their own efforts. Chartered Accountants Ireland, for example, made a commitment to become the first carbon-neutral professional accountancy organisation in Ireland. It aims to balance its carbon dioxide emissions with offsets or remove them altogether. Others such as the Institute of Chartered Accountants in England and Wales (ICAEW) have been measuring their carbon footprint for years and taking steps to identify areas for improvement. In 2020, ICAEW’s board endorsed a roadmap strategy and the organisation became carbon neutral last Autumn. The operational area of the business had already overseen projects which had achieved a 20% reduction in emissions over the previous five years and are now working towards further reduction targets.

One theme that resonated strongly was the importance of awareness raising. Over the past number of years, our Member Institutes have contributed to bringing this issue to public attention through programmes such as incorporating climate messaging into their own upskilling and continuous professional development. Webinars proved a very popular venue for our Member Institutes to keep the issue at the forefront of their membership’s thinking. Others took an advocacy position by publishing thought leadership and commentary.

When it comes to making lasting change with the environment, no single entity can do it alone. Collaboration is critical, and this was another theme that resonated strongly with our members. A joint initiative between Chartered Accountants Ireland, the ICAEW and ICAS celebrate 1,000 Chartered Accountants who are acting on the climate crisis either by signing up to one of the Race to Zero initiatives, helping their clients to reduce their emissions, or being an active voice in decarbonising the economy.

Engaging with governments is another key plank in our Member Institutes’ strategies, through a series of forums including working with regulators, supporting government-backed green finance initiatives and consulting with other national bodies.

Post COP26, the race to address the climate crisis will intensify. Chartered Accountants Worldwide Member Institutes aim to ensure they are not only leading the field, but bringing others with them.