Accountants have a big role in enabling climate action

IN 2020, the sheer magnitude of the Covid-19 pandemic drove businesses into survival mode, pulling business continuity and recovery plans to the front of agendas, while placing initiatives such as sustainability on the backburner. But while sustainability issues may have taken a backseat last year, 2021 should be a year of climate action, as companies move from responding to adapting and emerging stronger in the new volatile landscape.

A recent survey commissioned by Boston Consulting Group found that the pandemic is heightening environmental awareness, with 70 per cent of survey respondents stating that they are now more aware than before Covid-19 that human activity threatens the climate and that the degradation of the environment, in turn, threatens humans.

In Singapore, the government has repeatedly emphasised that working to become more sustainable will be key to enabling organisations to remain competitive, and the increasing realisation of the interconnectedness of the health of economies and the environment is pushing business leaders to introduce more green measures into their operations.

As trusted advisers to governments and businesses, chartered accountants should be in the driver's seat to help organisations make sustainable and long-term contributions to the fight against climate change. Through education, consultation, and measurement of businesses' sustainability agendas, accountants can create a new generation of climate leaders that automatically infuse sustainability in their work and have a drive to think and do "green".

Many business leaders still view sustainability as a "nice to have" rather than integral to the way they do business. But sustainability can affect elements such as supply chains and natural resources, which when disrupted, could deeply impact the continuity of businesses. Sharing the business risks posed by climate change, such as its impact on supply chains, is an important first step accountants can take to convince businesses to embark on a sustainability journey.

It is only through properly managing finite natural resources that businesses can build resilience and future-proof their business models. This is why Singapore's government has launched its first Green Finance Centre, that will drive Asia-focused research and training dedicated to green finance and talent development.

Accountants can help business leaders recognise how to pivot their business models to be more sustainable, and why this is important for the future to ensure resilient supply chains and connect with more eco-conscious consumers.

Beyond increasing awareness, taking action to adopt green policies and regulations can be challenging as there is no one-size-fits-all solution for every business. While an organisation might see the merits of going green, it may not know how to do so.

This is where accountants can step in to assess the opportunities and challenges of going green for businesses they work with and provide recommendations for how climate risk measures can best be integrated into organisational strategies, finance, and operations.

CONVINCING STAKEHOLDERS

As data analysts, accountants can help examine data sets and translate them into insights which can support the overall business strategy and objectives. Business leaders can use these insights to drive their visions for sustainability and create clear strategies and overviews of potential opportunities and challenges. This could include navigating legal requirements and the demands of key interest groups and leveraging competitive strategies to manage bottom lines and convince stakeholders why becoming sustainable is key.

Measuring success the right way is important in any sustainability journey. Accountants should help businesses benchmark their progress against appropriate environmental, social and governance (ESG) reporting metrics and identify areas where they can improve.

Support of measurement can come in the form of accountants communicating the latest reporting guidelines, such as advising how businesses should report material uncertainties related to going concerns and making sure that transparency and good corporate governance is enforced. With a clear benchmark on what success looks like, business leaders can begin to exercise integrated thinking.

Lastly, accountants' reporting on businesses that have and have not adopted sustainability initiatives can shape public perception. Business leaders may be more likely to step up their sustainability efforts if they see their competitors announcing their green goals to the public.

By encouraging business leaders to place the United Nation's Sustainable Development Goals at the heart of what they do, accountants can pave the way for future leaders who naturally infuse sustainability into their work and are committed to turning sustainability rhetoric into action. As trusted advisers and partners for business, accountants should educate, provide direction and help measure success to support businesses and cultivate a virtuous cycle of sustainable change.

• The writer is managing director international at ICAEW.