Accountants should tackle climate change to serve the public interest

Leading sustainability experts examined the impact that successful climate talks in Paris will have on UK business and how finance professionals should respond. ICAEW, Carbon Credentials and HRH the Prince of Wales’ Corporate Leaders Group (CLG) hosted a summit on Thursday, 1 October, in preparation for the Conference of the Parties to the UN Framework Convention on Climate Change (COP 21) to be held in Paris in December.

The summit addressed the implications of transitioning to a low-carbon economy and how business leaders should prepare to address these issues. Key strategies mentioned focus on mitigating risks, realising opportunities, securing investment and innovation. Guest speakers highlighted the role that finance professionals should play to ensure this is achieved. They also stressed that this challenge should be viewed in terms of a positive opportunity to improve the world for future generations and the commercial benefits of green strategies.

Michael Izza, Chief Executive of ICAEW said: “You might wonder why accountants should be concerned with climate change. Firstly, because their role is to serve the public interest. Unless we act we will destroy our planet, with the impact borne most by those least able to bear it. Secondly, because sustainability and acting on climate change is good business. We have an opportunity to change our behaviour and build sustainable, thriving economies. We don’t think that governments can make it on their own.

There is a huge role for businesses to play in driving this change. To be viable in the long-term the resources they depend on must be maintained and not depleted. There is a need for the private sector to help fill the gap between national targets and actions. We need to innovate with our business models and adapt in the finance world to support a low carbon future through innovation, infrastructure investment and conscious use of our resources.

“The business case is important but it comes second; firstly and most importantly this is quite simply the right thing to do. Climate change is no longer a concern of environmental activities only; it has an impact on all of us. It is time for finance professionals to seize the opportunity, take the lead and help build a sustainable world. “

Richard Spencer, Head of Sustainability of ICAEW, said: “We anticipate that a legally-binding deal will be reached in Paris. Although this will not be one that achieves a reduction in emission sufficient to meet the 2 degree threshold, it will be a good start. We expect to see increased regulation as well as a growing number of more effective cap-and-trade schemes and carbon taxes.

“Scientists agree that global warming above two degrees Celsius will lead to catastrophic and irreversible climate change. Yet, according to the International Energy Agency, we are heading for an increase of over three degrees by 2040. This will result in more extreme and frequent weather events, including droughts, hurricanes, rising sea levels causing flooding, damage to infrastructure, and wholesale destruction of people’s homes and businesses. I believe it will be this reality combined with an agreement in Paris that will result in market pressures for businesses to change, complementing the regulatory response.

“Energy prices will climb dramatically and become a board room issue. Investors will be increasingly concerned about loss of value through stranded assets, physical damage and regulatory intervention. We will also see the public looking to business to act responsibly. However, well-managed transition to a low-carbon economy will mean huge opportunity and growth in jobs.

“We can process all the numbers we like and construct ever more elaborate business cases but in the end it is primarily about doing the right thing. It is our collective responsibility to stop this destructive process and help build a sustainable future; and there should be more action rather than just talking. ICAEW is one of the founder members of Natural Capital Coalition that is developing a framework (the Protocol) that helps businesses build into mainstream decision-making their impacts and dependencies on nature.

“We continually draw the attention of our members to the importance of sustainability and encourage them to take innovative steps to show how finance leaders can positively contribute to the future. Only a collective approach, involving both the governments and businesses, will bring the desired benefit.”

About the authors

ICAEW is a world leading professional membership organisation that promotes, develops and supports over 146,000 chartered accountants worldwide.

Carbon Credentials works with over 150 clients in their UK and international estates. Major clients include Royal Mail Group, The Crown Estate, Hermes Investment Management, and Intercontinental Hotel Group enabling sustainable business in a global low-carbon economy

The University of Cambridge Institute for Sustainability Leadership (CISL) empowers business and policy leaders to make the necessary adjustments to their organisations, industries and economic systems in light of this challenge.