The impact of climate change has accelerated and now is a global emergency going beyond national borders. From a carbon footprint to carbon tax, climate change can hurt the economy. This is a real issue and requires real coordinated solutions at an international level. Now is the right time for businesses to start planning how to combat climate change. This can be done with the help of their accountants and senior management team. Here we discuss how accountants can help combat climate change.
Accountants Can Help Combat Climate Change – Overview
The current global GDP is roughly $87.55 trillion. A study from August 2015 found that an increase of 4.5°C in global temperatures could shrink the global domestic product to $72 trillion. The Paris Agreement has played a role and aim to create a global framework by limiting global temperature increase to below 2 degrees. 189 countries have signed the agreement.
Accountants are realizing that to mitigate climate change they will have to step in by creating awareness on climate-smart policies and embracing renewable energy within their organizations.
Economists and business leaders emphasize switching to less carbon-intensive production and consumption methods. Additionally, a carbon tax has been put in place that sets a price on carbon emissions. It also defines a tax rate on the carbon content of fossil fuels.
Sustainable business practices can help the problem. This starts by ensuring all processes address current climate change adequately but while still addressing profit growth.
To improve resource efficiency, it is important to offer products and services which are less carbon dependent. An internal analysis can help in exploring untapped opportunities to evaluate the alternatives and achieve targets by reducing all greenhouse gas emissions to net-zero by 2050.
The plan depends on your organization.
There is no “one-size-fits-all” approach to fight climate change. If you are an outsourcing firm, back office operations will generate carbon emissions more than other lines of business. Make policies and encourage your team to follow them.
Try to think about adopting ‘greener’ infrastructure, reduce and recycle waste, and raise awareness through internal initiatives. Some include in-house contests, hackathons, or a small event to calculate the carbon footprint of individuals and the organization.
Ways to measure the effective ness of green initiatives is very important and must be considered before implementing your plans to mitigate climate change. Accountants can help by providing a scalable plan on economic, social, and business risks. This will help the company to set a benchmark. The planning phase is where accountants will really come into play. This is an imperative step and an example of how accountants can help combat climate change.
Three Level Approach
Companies can take a three-level approach to helping mitigate the risks of climate change.
Your accounting team can play a role in identifying the risks and opportunities a business can capture in their action plan. Raise critical questions by identifying how business is impacting the climate and how climate change is impacting the business.
Plan and Implement
In this stage, evaluate where your organization currently stands. Brainstorm possible solutions by finding alternative approaches. Cost estimation will help in designing a rough plan to follow.
A step-by-step approach can be a great way to implement action. For example: a lot of paper is being consumed in back-end operations, digitalization could help. Using technology such as QR codes can help users read material anytime, anywhere. It will help reduce paper use and is just one of the ways accountants can help combat climate change.
After implementation, it is important to assess the performance of the initiatives. Several metrics can be developed to track this. Metrics and KPIs can help businesses set targets and evaluate results. To get a complete picture, internal and external audits should be done by your accountant and management in regards to performance data and financial reporting.
Carbon footprint is another metric which a company can use to reduce their carbon consumption. A higher carbon footprint means higher costs on the supply chain. Carbon footprint can be an initial and final metric for any organization to follow. Accountants can take a collaborative approach to understand the carbon measurements with management and provide emission reduction plans with cost estimates.
How Accountants Can Help Combat Climate Change – Summary
It may not seem like it, but accountants can help combat climate change. It all starts with analyzing the current way your firm operates, and identifying opportunities to reduce waste. A great way to do this is by implementing new technology solutions that can automate legacy processes.
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