Sustainability – in particular, the existential threat of climate change – is arguably the greatest challenge facing the world today. The COP26 climate change conference, which took place in Glasgow in November 2021, highlighted the sheer scale of that challenge. 

Despite countries’ pledges to cut greenhouse gas emissions, the world is on track for global warming of 2.7°C by the end of this century, according to analysis published during the summit by the Climate Action Tracker. Should this temperature rise occur, it would fuel extreme weather events, such as heavy rain and heatwaves, and create unliveable conditions for millions of people.

To combat climate change and other social and environmental threats, the world must transition to more sustainable practices. Organisations can support this transition – but to do so effectively, they will need the support of finance professionals. 

In ACCA’s Sustainability web session, which took place as part of the Ignite Series in October 2021, chaired by Emmeline Skelton, Head of Sustainability at ACCA, over 400 attendees heard a panel of experts, discuss how finance professionals can play a proactive role in the fight against climate change. During the session, they also had the opportunity to share their own views and insights in break-out groups and participate in several online polls.

Urgency of the climate threat

Accountants recognise both the urgency of the climate threat and the responsibility of organisations to operate more sustainably going forward. More than half (55%) of those polled on the Sustainability web session said it was important for their organisation to operate in an environmentally friendly and sustainable way. 

‘Business as usual is not an option anymore,’ said John Lelliott, chair of the ACCA Global Forum for Sustainability. ‘Businesses are looking at their supply chains and value chains to see how they can improve their sustainability.’ He explained that as businesses increasingly make the link between climate change and business resilience, they are setting net zero targets and taking actions to limit their carbon emissions. 

The picture is similar in the public sector. ‘In the public sector, organisations are aware of the issue and there’s a desire to move to a carbon-neutral situation,’ advised Stephen Fitzgerald, Interim Finance Director for a local authority in the West Midlands. 

Organisations that fail to take environmental, social and governance (ESG) issues seriously expose themselves to significant operational, regulatory, and reputational risks. They could also limit their ability to attract and retain talent, argued Victoria Gillespie, who is responsible for sustainability and ESG services at JTC Group, a publicly listed global, professional service businesses supporting fund, corporate and private clients, ‘Potential staff and employees entering their career are looking at companies, and looking at the way they behave, and the way that they embrace climate change,’ she said.

Challenge for SMEs

Just like their larger peers, small businesses want to take action on climate change. The challenge for them is that they often lack specialist in-house sustainability expertise and they’re afraid of making errors. But ‘doing something is better than doing nothing’, Gillespie argued.

Yogesh Patel, Director of accountancy and tax firm Telic, said that small businesses could implement manageable measures, such as trying to reduce their electricity usage, encouraging staff members to work from home or walk to work, and challenging their suppliers on their own sustainability achievements and targets. He also suggested that SMEs could sign up to the Better Business Act campaign, which is aiming to change UK law to ensure that all companies align the interests of their shareholders with those of wider society and the environment.  

Role of the profession

ACCA members and other accountants can play a key role in terms of driving carbon accounting, measuring progress against the United Nations’ Sustainable Development Goals, and other initiatives that support organisations’ ESG commitments. Fitzgerald pointed out that accountants can be influencers who drive change – especially in an international context. 

On a technical level, accountants have the skills to monitor and measure carbon emissions. This is a crucial consideration, since requirements for organisations to produce sustainability reporting are set to increase over the coming years. Additionally, accountants can provide the sustainability data that businesses use as the basis for analysing their supply chains and making business decisions. Gillespie said the role of the accountant involves ‘giving comfort internally that you are working with all the stakeholders to pull together the best information you can to support the rationale and the analysis that you then use to measure your impact on climate change as an organisation’.

Lelliott commented that shareholders are pressurising companies to provide more sustainability information – information that accountants can help to deliver. 

Companies don’t need to be 100% confident that the quality of their data is accurate to do sustainability reporting. What is important, Lelliott argued, is that they are transparent about the quality of the data they have. He also emphasised the value of ‘integrated thinking’ – saying that sustainability must be embedded in an organisation’s strategy and activities. 

Accountants in the public sector can help to ensure that their organisations use their budgets to support sustainable practices, according to Fitzgerald. He said: ‘In terms of procurement, and in terms of our own services, we have incredible power to use that money in an environmentally conscious way.’ 

Patel noted that accountancy firms can be role models for other businesses that want to have a positive environmental impact. During the break-out discussions, it was suggested that accountants can educate their clients on sustainability and encourage them to embark on the journey towards net zero.

Leading change

Webinar participants in the break-out groups agreed that accountants can help to lead change. To do this, they must avoid the trap of ensuring that their organisation only complies with regulatory requirements in relation to sustainability. Instead, they need to play the part of the ‘critical friend’, thinking more broadly about which sustainability criteria their organisations should be measuring themselves against and challenging the status quo. 

On a practical level, participants thought that accountants should find ways to build sustainability into wider strategic and business thinking. They should also ensure that decision-makers properly consider climate risks and opportunities, and help sustainability teams to implement good practices around the disclosure of information. 

As ACCA head of policy, technical and strategic engagement Glenn Collins observed, we are in the midst of a transition to a greener, fairer and more ethical world. Accountants will be critical to making this transition a success. 

Sally Percy, journalist