SDG 13 Under the CA spotlight: Climate Action
ICAS Sustainability Panel member Meg Burns considers the role of CAs in tackling the issue of climate change.
In February we set our sights on SDG 8 and looked at the ways in which it could impact on the CA profession as well as how CAs could look to help support the achievement of it.
This month we put another United Nations Sustainable Development Goal (“SDG”) under the CA spotlight, taking a deeper look at SDG 13: ‘Climate Action - take urgent action to combat climate change and its impacts’ and what CAs could be doing in this area.
Manmade environmental issues have long been on the agenda of the global science community but seemed to largely remain outside of the general public’s consciousness. More recently, however, there seems to have been a shift in public perception as the negative impacts, we as humans are having on our planet and its biodiversity, become more widely recognised and understood.
Government response to the issue of climate change
Public passion really began heating up in late 2018 when the Intergovernmental Panel on Climate Change (“IPCC”) issued their special report ‘Global Warming of 1.5 °C’, grabbing front-page headlines and sparking debates worldwide. It gave some stark contrasts between what a 1.5oC vs 2oC increase in global temperatures could bring:
2019 has followed suit. One cannot ignore the political activism gaining speed across both the UK and abroad – April saw one of the most successful climate demonstrations by Extinction Rebellion culminating in the majority of MP’s backing a motion in Parliament to call on the Government to declare an environment and climate emergency. Whilst this didn’t legally compel the Government to act it coincided with the release of The Committee on Climate Change’s (“CCC”) eagerly awaited ‘Net Zero – The UK’s contribution to stopping global warming’ report published a day later, on 2nd May 2019. The report recommended:
- A new emissions target for the UK: net-zero greenhouse gases by 2050.
- In Scotland, a net-zero date of 2045, reflecting Scotland’s greater relative capacity to remove emissions than the UK as a whole.
- In Wales, a 95% reduction in greenhouse gases by 2050.
A domino effect has ensued. Within hours of the report being published The Scottish Government outlined a legally binding target of net-zero greenhouse gas emissions by 2045, swiftly followed by both Edinburgh and Glasgow pledging to become carbon neutral by 2030 and 2045, respectively. Pressure to write the new target into UK national law also began mounting and included a group of leading climate scientists calling on the Prime Minister to make this her lasting ‘legacy’ before resigning - ‘To do so would be an act of global importance for future generations, and a worthy legacy’. On 5th June 2019, the UK government amended to The Climate Change Act legislating a commitment to net zero emissions by 2050, making Britain the first major economy to do so.
The role of CAs
So as society begins to sit up and think carefully about its carbon footprint and overall environmental impact, demanding more from themselves and those around them, where do CAs come into the picture?
Well, as an individual there are numerous ways in which you can change your own behaviour to lead a more sustainable life, such as reducing your red meat consumption and flying less. However CCC analysis indicates that such behavioural shifts will only contribute up c9% of the change required.
But what else can CAs bring to the table? One of the biggest elements CAs can really make a difference in this area is trust. Trust, alongside Technology and Talent, are the three key themes of The CA Agenda which ICAS launched in March 2019 and seeks to usher in a new era for ICAS and its members. As a CA you are in a unique position to be trusted to drive change at the very heart of the organisation you work within. You can weave sustainability throughout your operations, from procurement decisions to investment plans. This will, in turn, help future proof your organisation from the changing landscape we’re seeing, both politically and socially, towards climate change. You can also protect your organisations from the physical risks associated with climate change, ranging from extreme flooding resulting in the disruption of your supply chain or increased staff absence to loss of market share as consumers seek more ‘environmentally conscious’ organisations to buy from.
The role of business
For forward-thinking organisations, there are also real economic opportunities to seize, too. Most obvious benefits include reduced costs due to less wastage and increased energy efficiency. One way to do this would be to conduct a supply audit and identify where ‘green’ interventions could reap efficiencies. An even greater benefit is the expected increase in brand value for organisations that can demonstrate they take their climate impact seriously; meaning communication with your customers of what you are doing is this area is key.
A shift to a UK ‘net-zero’ target will no doubt exponentially speed up the effort required to meet it– prompting the need for ‘greening’ across all sectors (with particular efforts in transport, housing and energy) and the continued expansion of low carbon and renewable energy economy (“LCRE”), which according to the ONS grew by 6.8% in 2017. One particular area of interest to CAs may be the hot topic of Green Finance, one of the UK’s existing strengths and an area of significant economic opportunity for the UK - according to the Global Sustainable Investment Alliance (“GSIA”), sustainable investment now accounts for $31trillion worldwide, up 34% from 2016 and shows no signs of stopping there.
Indeed, businesses are starting to take the impact of climate change and legislation surrounding it very seriously. According to the Carbon Trust, two-thirds (67%) of UK corporates will be disclosing climate-related risks and opportunities in their 2019 annual reporting. Fellow ICAS Sustainability Panel member, Carol Adams, wrote that climate change risks were increasingly being considered in corporate reporting and governance guidance in her article in January 2019.
Following the publication of the recommendations of the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, more companies are considering how to report on their climate-related risks and opportunities and may look to the accounting profession for guidance. Therefore, as CA’s we need to consider and develop the tools and resources that these companies will need to guide them through the evolving reporting environment.
In summary whilst the environmental impact of climate change is very real, the impact that CAs could have in ensuring their organisations remain ahead of the curve is also very real and it’s the skillset and business acumen, identified within The CA Agenda, that sets CAs apart. All whilst helping make a real difference in how society progresses towards any climate change-related targets the UK sets – if that’s not an example of CA ethics, I don’t know what is.