Q&A: How accountants and finance professionals can help in combating climate change

Michael Armstrong (FCA) ICAEW Regional Director for Middle East Africa and South Asia

The conversation around climate change and how to combat it has taken centre stage in global, regional and national circles. We are joined by Michael Armstrong, (FCA) ICAEW Regional Director for Middle East Africa and South Asia, to discuss what contribution those in the financial services sector can make in the fight against climate change.

How has the role of accountancy changed in light of the emergence of climate change as an issue facing global economies?

The role of the accountancy profession is increasingly moving beyond the traditional arenas of accounting, tax and financial services.

Accountants are in a prime position to help clients identify potential problem areas and recommend opportunities to improve profitability and reduce costs. In light of the relentless rise of energy prices around the world, the profession is playing an increasingly important role in drawing the subject of energy efficiency to their clients’ attention.

More than simply cutting costs, achieving sustainability is now a fundamental strategic goal for businesses given their duty to deliver long-term value and manage risks for the interests of customers, employees and shareholders.

How is the profession responding?

As a vital business partner, the accountancy profession has the skills, relationships and opportunity to help drive sustainable strategic and operational decisions, influence business decisions and advise on cost-reduction initiatives.

Some firms have already recognised the vital role they play in supporting, promoting and introducing energy efficiency endeavours and have built advisory services on the subject into their offering.

By encouraging businesses to put sustainability on the agenda, accountants are making a vital contribution to their clients’ operations from a financial, environmental and social perspective.

How can accountants help organisations understand the strategic and practical implications of sustainable business practices?

Senior management might not necessarily consider energy as a material cost to the business and consequently fail to recognise the need to focus on this area. Accountants can affect a change of attitude here by demonstrating a compelling business case that fully captures the return on investment.

By combining energy and business data and translating them into financial metrics that resonate with influential stakeholders in an organisation, many accountants are already acting as a bridge between those responsible for driving sustainability within the business and the management team.

What is the ICAEW doing to champion the fight against climate change?

We renewed our commitment to sustainability in September 2015 when the UN adopted its Sustainable Development Goals (SDGs). We have also worked hard on developing ways to measure and report on value creation beyond the financials. Additionally, we’ve been working on courses and advice for members, and we have also launched a joint initiative with Deloitte to educate businesses on addressing climate change. As part of the initiative a dedicated website and video learning programme have been launched for ICAEW members, finance professionals and non-executive directors. These aim to educate those in the profession and across financial services about climate change and to help finance professionals and businesses to do more about tackling it.

We also played a leading role in establishing the Natural Capital Coalition, the goal of which is to get all businesses to factor in their dependencies and impact they have on nature, into their mainstream decision-making. The coalition consists of around 350 organisations and 16 governments, including the European Union.

In a nutshell, what message would you give to the financial services community on the importance of fighting climate change?

Accountants are instrumental in helping their clients grasp the costs of any changes which can help the profession to play its part in the fight against climate change. Not surprisingly, the cost of these transformational changes will be enormous, but business must embrace it willingly. After all, there are no jobs on a dead planet. In acting now, we not only play our part in saving the planet, but figuring out how to do it will furnish us with a major new skill that we can share with others in years to come.