• Register
Return to: Home > Comments > Editor's letter: Climate challenge for the profession

Editor's letter: Climate challenge for the profession

Many governments around the globe have acknowledged the need to shift towards a low carbon economy. The international consensus is to keep the current global warming at no more than 2°C over the next 50 years in order to avoid the effects of climate change. If decarbonisation targets are ever to be achieved, carbon emissions should be halved by 2050. According to the majority of scientists that's the tipping-point in which the earth's climate, if no action is taken, would change with catastrophic consequences.

Since the start of the financial crisis, the debate on climate change seems to have run out of steam. However, policy makers in various jurisdictions have continued efforts to reduce their carbon emissions outputs. Since 2004 Canada has put in place a compulsory emissions reporting program. Similarly, Australian companies have disclosed their carbon footprint since the enforcement of the 2007 National Greenhouse and Energy Reporting Act. And the European Union (EU) has continued efforts to decarbonise the economies of member states and is aiming at reduction targets of 80% by 2050.

On top of that, carbon reporting duties overlap with emissions trade schemes for energy intensive sectors in different countries, such as the EU or the US. Emissions trading or the so called cap-and-trade schemes, represent another way to decarbonise economies. Typically, in an emission trade scheme the government caps the amount of emissions a company can emit. This way, emissions become carbon credits of a real market where companies who exceed its limit have to buy more allowances from other companies subject to the scheme.

This summer the UK government amended the Companies Act 2006 (see page 8-9), which will see quoted companies disclose, alongside financial statements, the quantity of emissions for which they are responsible. As a result, carbon emissions have been mainstreamed into their annual financial reports.

Climate change has traditionally been deeded more of an environmental cause than a material financial issue. However it's now clear that climate change is also a business risk and therefore it should be explained to investors in annual reports.

The opportunities arising from this are limitless for the profession. This is not smoke and mirrors: emissions have to be quantified, reported, explained, and assurance will have to be provided in the future. In order to do so the skills of the accountancy profession should be brought to the centre of these developments.

If accounting is the language of business and audit an indicator of business health, then carbon emissions need to be translated into this language. Accountants should take the lead in carbon reporting despite the challenges that might stand in the way. It could be a great opportunity for the profession to demonstrate that it can be forward looking and help businesses better face the future.<

Top Content

    Accountancy Europe: the winner takes it all

    Jonathan Minter spoke to Olivier Boutellis-Taft, chief executive officer at Accountancy Europe, about how technology could change the industry, and how training needs to keep up to enable the profession to develop

    read more

    Embracing global technology trends

    Accountancy Europe’s Digital Day 2018 found the European accounting profession looking to tackle the challenges presented by new technologies head on. Jonathan Minter reports from the day

    read more

    IMA Conference: automation of the audit

    At the annual conference of the Institute of Management Accountants (IMA) in Indianapolis, Deloitte partner Alex Smith gave a presentation on digital transformation in the profession. Joe Pickard spoke to Smith following the presentation to find out more about his views on the future of audit

    read more

    IMA Conference: technology and the human effect

    The annual conference of the Institute of Management Accountants (IMA) took place in Indianapolis this year. Members of the profession gathered to hear the latest from the institute and other market players, covering some of the challenges and opportunities the profession faces.

    read more

    The Caribbean: a digital paradise

    The ICAC hosted its 36th annual conference in June this year – very much looking to the future following a tough 2017 for the Caribbean. Jonathan Minter spoke with chief executive officer Misha Lobban Clarke

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.