The old Finance adage – “what doesn’t get measured doesn’t get done”, and the converse of that applies particularly to climate change.
Large corporates have been reporting on their actions to address climate change for many years and the picture presented is, of course as you would expect, that everything is under control and that all of these companies are making giant steps towards a carbon-neutral position by a date safely on the distant horizon which given the scale of the challenge doesn’t seem unreasonable.
So, given all this apparent progress, why have climate change issues worsened significantly in the last 10 years? Well, glossy corporate Annual Reports are designed to present the best picture of the company’s activities, both financial and non-financial and this includes how a company addresses environmental concerns. However, with financial reporting, there are clear, determined long-established reporting requirements that are prescribed in a standard format and audited based on these standards rigorously by external auditors. Reporting on climate change falls within this overall reporting framework but the measurement of activities designed to address climate change and related reporting standards are evolving over recent years at the same time as public consciousness of climate change issues has escalated.
There is, therefore, a huge opportunity to impose the same disciplines and standardization around climate change reporting as already exists for financial reporting on a company’s assets and liabilities and profit or loss during the year.
In this sphere, the accountant sitting on public bodies such as the ICAEW or IFRS committees can play a key role in driving the standardisation of reporting and disclosure on activities around climate change.
To finish as I started – what doesn’t get measured doesn’t get done. So accountants should seize the opportunity to provide reliable benchmarked climate change reporting that is subject to audit based on agreed standards. This, together with government actions, should mean not only that climate change issues are properly understood but also where we are on the path towards properly addressing climate change issues and saving the planet.
The next blog explores what the accounting world has already done with respect to reporting on climate change and what the plans are going forward. Please do read on when I publish the next instalment….