With COP26 looming ever closer, the commitment to reach net zero greenhouse gas emissions has never been higher on the agenda. Joe Pickard speaks to a number of professional accountancy bodies about their initiatives


 

Earlier this month, 13 professional bodies from around the world committed to reach net zero GHG emissions.

The bodies are part of The Prince of Wales’s Accounting for Sustainability Project (A4S) Accounting Bodies Network, which represents more than 2.5 million professional accountants and students who work with businesses and governments in 179 countries.

The bodies have committed to reach net zero emissions as soon as possible, and will publish plans to do so within the next 12 months and report annually to show progress.

Additionally, they have committed to provide members with training, support and resources to help them create their own net zero plans and reduce their emissions. The bodies have also pledged to provide advice to help governments create policies and infrastructure necessary for transitions to net zero economies.

The 13 professional bodies are:

  • AAT
  • ACCA
  • Chartered Accountants Australia and New Zealand
  • Chartered Accountants Ireland
  • Consiglio Nazionale dei Dottori commecialisti e degli Esperti Contabili
  • CPA Australia
  • CPA Canada
  • ICAEW
  • ICAS
  • Institut der Wirtschaftsprüfer in Deutschland e.V.
  • Regnskap Norge
  • The Association of International Certified Professional Accountants
  • JICPA

The Accountant: The commitment to reach net zero says plans will be published in the next 12 months. What action will be taken in the meantime? What plans have already been established?

Adam Williamson, head of responsible business and policy, AAT: AAT has been working on environmental sustainability plans over the last two years, achieving carbon neutrality in 2020. The net zero commitment is an extension of that activity.

Additionally, in 2022 AAT will be moving offices to a building rated ‘excellent’ by the Building Research Establishment’s Environmental Assessment Method (BREEAM). The building is also accredited with Leadership in Energy and Environmental Design (LEED), and uses a variety of ethical supply chains, renewable green electricity and a smart building management system to supply efficient heating, ventilation and air conditioning.

Once in the new offices, AAT will reassess the position in relation to GHGs and publish a plan accordingly.

ACCA: We announced our 11 commitments to nine of the UN Sustainable Development Goals (SDGs) in December 2020. This includes the aim to be net zero by 2030. We thought it was important to be involved in the A4S commitment too, and will be reporting on our commitments in the 2021-22 annual report which will be published in the second quarter of the strategic year 2022.

Andrew Harding, chief executive – management accounting, the Association of International Certified Professional Accountants, representing AICPA & CIMA (The Association): In today’s business environment, sharing meaningful data and information with all stakeholders is essential for success, particularly when it comes to measuring, disclosing and understanding the value that organisations create. This applies to the Association, representing AICPA & CIMA, as much as it does to our members, students and the organisations they serve.

The founding bodies of the Association, AICPA & CIMA, have been committed to bringing attention to ESG issues for some time. Since the Association was officially formed in 2017, we have expanded our commitment and accelerated our efforts. Since then, we have committed to the 17 UN SDGs. Our efforts notably include educating and providing members and students with relevant, high-quality resources, collaborating with IFAC on advancing global standards, and working on the formation of the Value Reporting Foundation and its predecessors the Sustainability Accounting Standards Board (SASB) and the IIRC.

We are now looking to grow our commitment even further. We are creating a new position in the organisation dedicated to supporting our efforts and aim to appoint someone in the coming months. We will be setting our roadmap and science-based targets for our net zero journey.

While going through this process, we will also be looking at near-term actions that we can take such as reshaping our approach to print publishing and embedding more sustainable event management and delivery into our activities.

Jane Rennie, general manager – external affairs, policy and advocacy, CPA Australia: CPA Australia is one of the only organisations in the world to prepare an independently assured Integrated Report in accordance with the Integrated Reporting <IR> Framework. As part of our ongoing materiality assessments, we are extending our disclosure considerations into aspects of natural capital.

Both in relation to these measures and in response to our net zero commitment, we have commissioned a carbon footprint exercise which will form the baseline of our emissions reduction trajectory and future net zero strategy

Davinder Valeri, director – strategy, risk and performance management, CPA Canada: Achieving net zero is aligned with our business objectives and, with support from our executive management team and board of directors, we have established a cross-functional team led by our finance department along with representation from all our major functional areas and subject-matter experts.

We are further building the internal team who will be responsible for calculating our baseline emissions, developing the strategies and tactics to reduce our emissions, tracking progress and communicating these plans externally. We see this project as a great opportunity to upskill our workforce.

Tatsuya Arai, executive board member at JICPA: We have formed a cross-sectoral team to promote our commitment. Considering a shift to renewable energy as a viable option, the team is working to formulate a plan to achieve the net zero goal. We are also looking into a scheme to provide our members with support for their net zero initiatives.

TA: The commitment states that professional bodies will ‘reach net zero GHG emissions as soon as operationally possible’. When do you realistically see this happening for your organisation? Is it important to set a firm date to achieve this?

AAT: Until AAT has moved and is in a position to assess the relevant carbon footprint of the new working arrangements, it is not possible to put a definitive plan and date in place. However, AAT is committed to doing this as soon as realistically possible.

ACCA: We have set a firm date in line with our UN SDGs commitment: 2030. If we can do this sooner, then we will.

The Association: Like all businesses, we need to have a credible approach to our net zero commitment and take into account a range of considerations, such as how to provide the necessary financing, how to adapt our business and operating model to our targets and how to ensure accountability, before doing so.

This change will touch every part of the organisation and we must find the right balance to ensure that we can deliver ambitious and credible targets in an achievable time frame. Over the next 12 months, we are committed to come up with a plan to do just that and outline how we will achieve our net zero target ambitions.

CPA Australia: CPA Australia has adopted what we consider is a sensible and measured approach to reaching net zero emissions. Both our targets and our progress towards them will reported in our Integrated Report. As such, they will be subject to audit assessment and regarded as ‘assertions of the company’. We take our net zero commitment and setting firm targets very seriously and welcome scrutiny of our progress.

CPA Canada: We agree it is important to set a target for achieving net zero GHG emissions. CPA Canada, like other organisations deeply concerned with the environment, will be interested in achieving this objective sooner rather than later, and sustaining this objective prospectively. To get there, several important decisions need to be addressed.

Some of the key decisions include which GHG emissions, geographic operations, sources and activities will be covered by the target. Another key question is to decide upon the year to use when establishing our baseline recognising that Covid-19 has had a significant impact on our organisational carbon footprint. We will also need to evaluate the impact of our anticipated future workplace needs into our net-zero plan.

Within the next 12 months, by 30 September 2022, we expect to have a net zero emissions pathway that will include clear and transparent disclosure of targets, actions and key performance indicators. The plan will also include details on the underlying assumptions and risk factors that could affect progress in meeting targets. We will communicate our plan to members, other stakeholders and the public at large. We are excited by the opportunity to share our journey publicly and set an example for other organisations to possibly emulate, regardless of the size or scope of their own businesses.

JICPA: We also understand the importance of setting a clear timeline for achieving the goal. Of course, it is essential to reach the ultimate goal of net zero GHG emissions within a certain time frame, but we also consider it important to work on more feasible plans first, with a sense of urgency, so as to achieve the reduction of emissions as early as possible.

 

TA: The commitment states that the professional bodies will provide training to members. What will this consist of? Will part of it be training on how to use non-financial reporting standards such GRI or SASB?

ACCA: Our aim is to ensure our current and future members are both climate literate and financially literate. Sustainably and climate are included in the ACCA Qualification and in our Continuing Professional Development (CPD) for members. Our Professional Insights also covers these issues to inform and engage readers on ‘green’ issues.

Our qualification prepares future members for the issues and matters they will experience in the workplace, for instance sustainability, technology and data. ACCA does this by developing and assessing the capabilities broadly and where applicable at the required depth. As ACCA is a global professional body and at a time where there are numerous standards and frameworks, without coalescence, we have taken a broad, global approach.

Currently, ACCA considers sustainability reporting standards and frameworks at a high level, because it is not practical to do more, especially as the landscape is evolving and we head towards much needed harmonisation. We focus on developing a sustainability and wider reporting mindset, which is evidenced in our recently launched Career Navigator and also articulated in the sustainability in the qualification article.

The Association: We have been actively supporting the work of accounting and finance professionals in helping organisations understand the value of ESG information to their businesses, and reporting on and communicating their commitment to the priorities, values and concerns of their growing and increasingly diversified stakeholders.

Moving towards integrated reporting is the best thing organisations can do to ensure long-term viability and success, create a better dialogue with stakeholders, and support sustainable economic growth in the post-pandemic world. We already have training and learning available on sustainability attestation engagements and implementing integrated reporting to support our members to develop their skills and competencies in these areas. In addition, earlier this year we published a series of five educational briefs on sustainability standards and frameworks – such as the SASB, Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), IR Framework and Climate Disclosure Standards Board (CDSB) – which is designed to help organisations better consider sustainability issues, embed them into their business strategies and integrate them into their reporting.

We will continue to watch the sustainability space and play a central role in its development.

CPA Australia: In October, CPA Australia will launch an ESG micro-credential for members, focused on developing practical skills for accounting professionals.

We conduct regular member forums on global developments impacting the Australian corporate reporting and regulatory environment. In 2022, we will develop new resources for members, on topics including business capacity building, supply chain due diligence and applying the recommendations of the TCFD.

CPA Canada: We have a long history of developing guidance on sustainability and climate change. We have a number of resources and education offerings related to the strategy, risk, performance, governance, reporting and assurance implications of climate change and the transition to a low-carbon economy. We will continue to develop implementation guidance and be a go-to resource for our membership.

We also strongly support the IFRS Foundation’s proposal to create a single set of international sustainability reporting standards via a newly created International Sustainability Standards Board (ISSB). Better reporting will enhance the ability to assess organisational performance in achieving net zero.

JICPA: We are currently working to prepare a training curriculum for our member CPAs to develop sustainability literacy.

We consider issues related to the disclosure of sustainable information, especially on standards to be developed by the ISSB of the IFRS Foundation and the application of existing standards, as another important topic of education for our members. The training curriculum is planned to include topics related to ISSB and TCFD, among other things.

 

TA: What resources do you provide to members on sustainability issues? How have these been received?

AAT: As part of the new AAT 2022 syllabus change, sustainability has been introduced as one of the four key themes underpinning the curriculum. This reflects the need to retain the robust technical grounding while engaging with the changing business environment.

For qualified members, AAT regularly provides talks, conference sessions, articles and signposting to resources on a wide range of subjects including sustainability. We are currently embedding the topic of sustainability into our member CPD programme which will include the flagship annual members conference and branch events across the UK.

New CPD pathways are also in the pipeline, including an online CPD pathway due to be released next year which will be designed to give all AAT members a thorough grounding on some of the core themes, including:

  • Climate-related disclosures;
  • SDGs;
  • Embedding climate change into financial management reporting;
  • Financial risks and opportunities related to climate change;
  • The role of finance professionals in achieving sustainability;
  • Technology and sustainability reporting.

 

Sustainability will also feature in the syllabus for our prescribed CPD programme for all new members from May 2022.

ACCA: Our Rethinking Sustainable Business Hub is where all our resources for members sit. This is a one-stop shop for events, CPD, articles, policy positions and details about our partners in sustainability.

The Association: We are committed to providing educational resources and practical tools for finance and accounting professionals working on behalf of corporations and robust authoritative guidance for those who play an independent role providing auditing and assurance services.

Some of the tools we have helped develop include: the guide, ESG reporting and attestation: a roadmap for audit practitioners; the Sustainability Toolkit; a series of introductory guides and briefs exploring sustainability, business, and the role of finance professionals; a series and research tools from the CGMA Sustainability and Business Research Programme.

Our members regularly highlight the value these resources bring them and their organisations. Their feedback is critical to ensure that we create the resources that they need to evolve their skills and knowledge, progress their careers and drive their organisations forward.

CPA Australia: CPA Australia has a long-standing interest in sustainability and ESG subject matter. We provide practical resources on factoring climate change risk and opportunities into financial accounting assumptions and disclosure choices for our members.

Over more than a decade, we have undertaken and sponsored significant business and practitioner-oriented research projects, in areas such as the SDGs, GRI and the cost of capital benefits of sustainability practices and disclosure.

CPA Canada: A priority for us is equipping Canadian business leaders and organisations with the knowledge and skills they need to better manage, account for and report on sustainability issues.

As mentioned, we provide guidance on a variety of sustainability issues and they have been very well received. For example, our management accounting guidelines cover topics such as GHG emissions strategy and management. We also recently developed a guide for cities on how to apply the recommendations of the TCFD, which has been adopted by major cities across Canada. Our climate change training course for auditors addresses the financial statement and audit implications of climate change. We also have a climate change training for business executives to help them recognise and anticipate the emerging financial impacts of climate change and develop value-creating strategies for the longer term.

CPA Canada is also actively engaged with the various organizations in the sustainability space, including establishing a Canadian chapter of the A4S CFO Leadership Network. We recently published the A4S Essential Guide to Valuations and Climate Change, which has been positively received by our members and broader accounting and valuations community. As part of our ongoing partnership with A4S, we plan to continue to develop resources to help our members integrate sustainability into their organisations.

We continue to see a growing interest in sustainability among our members.

JICPA: JICPA has conducted research on sustainability for almost 20 years and published the findings to support practices. Most recently, we published two research reports: one for introducing basic issues of climate change and the other one relating to green bonds.

JICPA also started publishing a series of articles under the title of Global Sustainability Insights in June 2021 to inform our members about the recent major global developments in sustainability reporting. We believe that we can continue to provide sufficient resources to our members in cooperation with external organisations including IFAC and the Value Reporting Foundation (VRF).

Moreover, in addition to hosting symposiums and forums on sustainability and SDGs, we have published articles around the themes of climate change and other sustainability issues in JICPA’s organ. Each symposium or forum attracts many participants, reflecting a heightened interest in such initiatives among our members.

 

TA: What work are you currently undertaking with governments to achieve net zero economies?

AAT: AAT regularly engages with governments on sustainability issues including, recently, aviation tax reform, tax policy, enhancing climate related disclosures, and plastic waste, among others.

ACCA: In our report Climate action and the accountancy profession: building a sustainable future, we call on governments to action the following:

  • Set intermittent targets for the end of each decade leading up to 2050;
  • Help with practical guidance and support, particularly for SMEs, including via local and regional authorities;
  • Create knowledge hubs for sharing best practice;
  • Work together across borders to tackle a global issue.

 

ACCA has been engaging with governments around the globe on sustainability matters for many years now. In countries such as Vietnam and Pakistan we have acted as a specialist advisor on matters relating to sustainability and net zero where we have highlighted and achieved recognition for the hugely important role that the accountancy profession has to play in helping business and government meet the targets which they are aiming for.

Our global research into climate change, net zero and role of the profession provides us with evidenced based calls to action for governments around the globe. From our recent report, Accounting for Climate Change, we issued three core calls to action for governments. This has prompted discussions with the UK government, the European Commission and policy makers in the ASEAN region. Our aim is to work with governments to help them realise the potential which the global accountancy profession holds to help them pave and measure the way to net-zero.

The Association: We are actively working on a number of levels to help achieve net-zero economies. For example, we actively engage with governments, regulators and policymakers around the world by providing policy recommendations and input to drive economic growth. Here in the UK, we put forward recommendations on the adoption of integrated thinking and reporting and the need to invest in green infrastructure to support net zero targets as part of our Budgeting for recovery and a long-term economic future for the UK plan.

We also work with global accounting bodies such as IFAC and the VRF on reporting standards to build confidence and trust in data and numbers when it comes to sustainability and ESG.

CPA Australia: For many years we have sought to influence governments to adopt ambitious and equitable emission reduction pathways, and to encourage businesses to do the same. For example, we have provided detailed submissions to the Climate Change Authority’s consultations on a ‘low-emissions toolkit’ for Australia.

We also work closely with Australian securities and prudential regulators in their efforts to embed climate-related market transparency and economic transformation.

CPA Canada: We continually engage the Canadian federal government, at both the political level and the public service, to discuss how our organisation and the Canadian accounting profession can support the just transition to a net zero economy. We closely monitor and weigh in on sustainable finance policy and regulatory initiatives in Canada and internationally and, most recently, engaged with Canada’s Expert Panel on Sustainable Finance and Sustainable Finance Action Council. We also convened leaders from the business and investing community to develop a series of recommendations on the Canadian energy sector’s transition to net zero.

A great example of our work in action is our recent initiative to facilitate the creation of the Canadian Champions for Global Sustainability Standards, a national collaboration with a shared objective to see the IFRS Foundation’s proposed new ISSB be located in Canada. This Canadian bid was put together in partnership with the federal government and support from major private and public sector organisations from across the country.

JICPA: We are supporting the government’s efforts to reach net zero emissions from the perspective of accounting and financial professionals by participating as a member in the Central Environment Council of the Ministry of the Environment (MoE.

In order to achieve carbon neutralilty by 2050, our urgent task is to put in place an environment for promoting sustainable finance. We have participated as an observer in meeting bodies to develop guidelines for green and social bonds, a type of sustainable finance instrument, while providing opinions to the bodies as accounting and financial professionals.

The Green Bond Guidelines were published by the MoE and most recently revised in 2020. Meanwhile, the development of the Social Bond Guidelines has been discussed by a working group set up by the Financial Services Agency, and the guidelines are scheduled to be published shortly.