Blog

22 February 2019

Radical change to fight our environmental crisis By Vita Ramanauskaité and Eleni Kanelli

This is the second blog of our sustainable finance series. Read our first blogpost Sustainable finance: what’s it got to do with accountants? to know how accountants’ daily work contributes to a sustainable economic growth.

 

Our environment is in crisis, and we have ignored it for too long. We are now pressed to radically change the way we live and do business.

Business has brought us here, as markets have ignored environmental or social costs to pursue profit. But business can also help get us out, by driving markets towards more sustainable practices.

Accountants are part of the solution. They can help companies make the right changes to reduce their environmental footprint – and costs. Together, we can harness corporate power to make the necessary shift to a sustainable economy.

How to bring about radical change?

Businesses must change their benchmarks for success if they want to be sustainable in the long run. Accountants can make a real difference by: measuring impacts, disclosing information, and add credibility to what is reported.

Measuring impact

Companies must measure more than financial performance; they must also properly measure the environmental and social impact of their economic activities. These measurements are aimed at supporting action and decisions, they shouldn’t be regarded as just a compliance exercise.

Measurements must be based on an appropriate methodology and professional judgement. Products and services must undergo science-based life cycle impact assessments, such as farm-to-fork , on what damage is being incurred where.

We also need to measure the same things in the same ways. This means moving towards global standards for sustainability, as has been successfully done for financial reporting with the IFRS.

Accountants are in the business of measuring and they already have a long standing experience of how these measurements can be done. Disclosing these measurement enhances their decision-making value. This is done by expanding corporate reporting to include non-financial aspects.

Disclosing information

Transparency is key here. Today, technology enables greater transparency than ever. Further, it is no longer possible for a company to control all of the information . Companies should understand that it is more cost-efficient to disclose information, even bad news, themselves rather than having it disclosed by others.

Reported information needs to encompass not only historic financial data, but also ESG and forward-looking information over the short, medium and long term. And the information needs to be integrated so that business decisions are taken on a holistic basis, with all aspects and impacts considered.

Here too, the accountancy profession has solid experience to report on sustainability data as well.

Adding credibility to what is reported

Trust is the foundation of markets and societies. But greenwashing undermines that trust. Financial and non-financial information such as environmental records of companies need to be reliable and trustworthy to enable investors and other stakeholders make the right decisions.

It is therefore important to have an independent expert opinion on the process used to collect and analyse the data; and to verify how accurate and exhaustive the data reported is.

In all human collective endeavours, delivery and progress have always depended on measurement, transparency and trust. This is why accountants have a key role to play in the challenge of reversing climate change.

In our next blog on sustainability, we will go into the steps that accountants can take to help companies to become more sustainable.

 

Related content

NewsAccountancy profession encourages renewed Sustainable Finance Strategy

9 April 2020

NewsCall to action in response to climate change

6 March 2020

NewsAccountancy profession is ready to advance the EU’s Green Deal

17 December 2019

Publication10 ideas to make corporate governance a driver of a sustainable economy

12 June 2019

Blog7 ways accountants can help companies get more sustainable

24 April 2019

BlogLooking back, moving forward: our sustainable future starts today

16 January 2019

BlogSustainable finance: what’s it got to do with accountants?

10 October 2018

SpeechQED Conference on Sustainable Finance

5 June 2018

EventEarly Warning Europe SME summit

30 September 2021

EventESEF in Practice

7 July 2021

EventSustainable financing 101 – State of play and next steps

24 June 2021

EventSustainable Corporate Governance – A fireside chat with MEP Heidi Hautala

21 June 2021

BlogSustainability risk management for SMEs: inaction is not an option

14 June 2021

NewsJoint statement on sustainable corporate governance

8 June 2021

Consultation responseFeedback statement: EU Taxonomy Article 8 Delegated act

3 June 2021

EventForce for Change: Mobilising the public sector for a sustainable economy

3 June 2021

UpdateSustainability

25 May 2021

PodcastThe shift to sustainability: A CFO’s journey

20 May 2021

Publication3-step sustainability assessment for SMEs

12 May 2021

Consultation responseIPSASB’s public consultation of Exposure Draft 75

12 May 2021

EventCorporate Sustainability Reporting Directive: Roadmap to implementation

12 May 2021

EventWorking Together for the planet: Audit & Assurance of sustainability Information

29 April 2021

NewsAccountancy Europe: Future-proofing tax to make it green, digital and fair

26 April 2021

UpdateSustainability

23 April 2021

NewsAccountancy Europe welcomes EU progress on sustainability reporting standards

21 April 2021

NewsNew directive takes EU corporate sustainability reporting to the next level

21 April 2021

EventFuture-proofing tax: make it green, digital, fair

15 April 2021

NewsIn-depth: what is at stake in EU plans for sustainable corporate governance?

9 April 2021

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?