Accountants need to act quickly to help clients combat climate change. Here's why.
When you think about the topic of climate change, what key players jump to mind? Climate activists? Politicians and lawmakers? Maybe even celebrities who have spoken out about environmental issues?
Of course, each of these groups contribute greatly to the conversation about sustainability. But the role accounting firms can play is underestimated.
Because you oversee your clients’ business finances, you have a tremendous degree of influence in building a greener world. By helping clients understand the social and financial benefits of working to mitigate climate change, you can help fight climate change.
Karbon teamed up with environmental consulting firm RyeStrategy to host a webinar on the unique role accountants can play in addressing climate change. Karbon Co-Founder and Chief Partnerships Officer, Ian Vacin, facilitated this conversation with RyeStrategy Founder and CEO, Cooper Wechkin, and Sustainability Manager, Hannah Moskowitz.
They shed light on why climate change is a timely topic for accounting firms and opportunities to help clients go green (while also putting more green in their pockets).
No time like the present: It’s the right climate for firms to act now
Present and future climate realities mean that businesses can’t afford to ignore their own environmental impact. And accounting firms play a pivotal role in the process of organizations starting to consider or are already working to reduce their emissions.
Supporting clients’ climate-related reporting processes is a timely matter. Here’s why:
1. Meeting demand
Regulatory changes for businesses around climate issues are imminent. The European Union is at the forefront of these changes, but the US government is also likely to pass climate legislation that will change organizational responsibilities regarding reporting and reducing emissions.
These factors mean that the demand for climate advisory services is increasing and will only increase further as more laws are passed.
In particular, organizations will need to comply with reporting requirements, and entering this new territory will lead them to seek external guidance. This is where you can step up to meet your clients’ needs by being available to support and partner with environmental advisors.
2. Leading the way
The evolving conversation around the environment presents a powerful opportunity for strong leadership. You have a decision to make: you can lead the way in reducing emissions or lag behind.
“You don’t get many of these moments. If the accounting industry doesn’t take an opportunity and own it...you’re going to see other players own it.”
The time to start these conversations and lead other industries is here. If you create a climate advisory niche alongside your existing services now, you can establish yourself as a valuable expert and industry leader when key changes come. “You can, ultimately, be the tip of the spear,” Cooper says.
3. Contributing to a better world
One of the most important (and most timely) aspects of participating in climate conversations with clients is the chance to make the world a better and greener place.
But it’s not just helping clients combat climate change—it’s also by reducing the emissions of your own firm.
These environmental contributions don’t just offset emissions or make a positive impact in the near term, either. Working to combat climate change as a business sets a precedent and offers an example for other organizations—including your current and future clients—to follow.
Of course, government regulations will also drive positive environmental changes. Taken together, individual and collective actions to reverse climate change “[are] how things are going to move forward. … This is how we’re going to tackle it,” Cooper says.
Accountants are primed to be climate partners and champions
Accounting firms offer a unique level of service and expertise to their clients that positions them to offer specialized guidance through new processes like tracking and reporting emissions.
When the RyeStrategy team steps in to offer their sustainability expertise to organizations, they connect with the project champion who is passionate about climate issues. These individuals help to steer the data collection process around emissions—and this process is where you can also offer your partnership.
From there, climate experts like RyeStrategy can assist with roadmaps and efforts to execute the more technical aspects of sustainable practices for clients.
Here are three ways accounting firms are well-positioned to guide the climate advisory process:
1. Accountants know the numbers
From the get-go, you know your clients’ data backward and forward. Cooper explains that throughout the climate advisory process, RyeStrategy is reviewing the very documents that accounting is most familiar with.
For major corporations whose carbon spend is quite high (such as Microsoft and Amazon), data like profit and loss statements, cash flow, and capital assets purchased are essential to determine emissions reporting. These elements help to shape the big picture of emissions, especially the ‘downstream’ emissions that result from the entire value chain of the business.
“The majority of emissions for most businesses … [are] coming from their supply chain,” says Cooper. In other words, the goods and services purchased for business operations are most responsible for a company’s carbon footprint.
And who would be familiar with the ins and outs of those purchases business-wide? The organization’s accounting firm.
2. Accountants speak the language
A business’ carbon footprint at every level—from the heaters used in the office to the emissions produced to create the goods purchased for the business—all ties back to the company’s costs.
And it’s you, the accountants, centrally located within the numbers and nuances of what it takes to keep the lights on (figuratively and literally), who know those costs best.
Accounting firms are familiar with how a company is run and the ripple effects of its purchase decisions. “That makes it pretty easy, with the right support, to jump into the actual emissions calculating or getting support with the emissions calculations,” says Cooper.
3. Accountants are trusted advisors
Not only do you know your clients’ companies inside and out, but you also have their trust and respect. Your clients look to you as valuable advisors in many areas, and climate issues are no exception.
In the future, more and more companies will play a role in tracking and reducing their carbon footprints—whether voluntarily or required by law. Accounting firms are poised to assist with collecting the needed data for these changes and, even beforehand, to connect businesses with the right resources to make their company more sustainable.
Warming up to the idea of decarbonization
As we’ve seen, the time is now for accountants to act in helping businesses adapt to growing expectations of reducing their emissions and carbon footprints.
Prominent businesses are stepping into the space, like Deloitte, which is investing $1 billion into its environmental, social and governance (ESG) services. Much of this investment will focus on carbon accounting and decarbonization.
The accounting industry is stepping up. Accounting for Sustainability, a charitable organization representing more than 2.5 million accountants worldwide, provides support to members committed to going carbon neutral. Organizations like this one are expanding awareness of carbon accounting and offering massive opportunities for the industry.
With the guidance of climate experts and essential support from accounting firms, companies around the world can step into a greener future with confidence, knowing they played their part to protect the planet.