Practical Ways for Accountants to Help Address Climate Change

By Mahesh Krishnamurti and Ina Dwyer.

Across all industries, forward-thinking accounting and finance professionals keep environmental impact top of mind. Clients, investors, partners, shareholders, and existing and prospective employees are conveying their heightened focus on climate change and expectations related to each organization’s role in addressing our planet’s health. In fact, many professionals will not consider working for an employer, investing in an organization or purchasing from a company that does not have an active sustainability plan in place. Entities of all sizes risk losing opportunities to competition if progress on ESG (environmental, social and governance) initiatives is not maintained as a top priority.

As an accounting or finance professional for companies within the manufacturing, transportation, energy or real estate industry, extensive focus is allocated to analyzing data related to direct and indirect greenhouse gas emissions, and the investments to reduce such emissions. Process equipment, furnaces, vehicles, chemical productions, boilers and purchased electricity are all examples of emissions. However, all industries, without exception, impact the environment. With access to extensive data and as holders of purchasing power or influence, accountants are in a position to help companies remain competitive, align with stakeholder expectations and protect our planet.

Sustainability impact measurement and reporting frameworks are now being actively developed and harmonized by governments, rating agencies, consultancies, and auditing bodies to enable apples-to-apples comparisons across markets and geographies. Examples are the Sustainability Accounting Standards Board (SASB), Global Reporting Initiative (GRI), Dow Jones Sustainability Index, and the Carbon Disclosure Project (CDP), among others. Accountants can develop customized data collection and reporting frameworks by selecting and combining approaches from a variety of these frameworks so that they fit the needs of their organization.

Climate change questions companies need to consider

Whether small or large, actions that help organizations continue to reduce their environmental footprint and that can also be documented and quantified are powerful. They help businesses maintain a competitive edge. As we serve our own company or provide professional services to other entities, let’s consider the following questions in analyzing expenditures, future costs and the return on such investments:

What technology and security is necessary to promote and support virtual offices and future paradigms?
Are LEED-certified spaces included in the evaluation of properties prior to acquiring additional real estate?
Are LED light bulbs installed in all locations?
Are smart lighting systems, thermostats and temperature controllers utilized or considered for implementation in all locations? These controllers connect to a building management system that collects data from electronic sensors.
Is a recycling program fully utilized in all locations?
Is the need for paper forms removed or reduced via technology-enabled solutions (i.e., document management systems, digitization, scanners, large screens for readability, mobile-ready content for multi-device access)?
Are incentives in place for employees to purchase, rent or secure services from electric, hybrid, or E-85 fueled vehicles?
Are existing and new vendors evaluated for use of sustainable products and practices. For example, are the following asked of vendors (and of your own company, if applicable):
- Do you purchase “green” (recyclable, reusable, non-toxic, bio-degradable, and made from 100% post-consumer recycled materials) supplies, products and materials?
- Do you specify sustainable products and/or locally manufactured products?
- Do you specify products using Electronic Products Environmental Assessment Tool (EPEAT) standards?
- Do you partner with sustainable suppliers or utilize suppliers that share in the sustainability commitment?
- Do you use sustainable (e.g., recyclable, reusable, bio-degradable) packaging/shipping materials?
- Do you combine or consolidate deliveries?
- Do you specify products that can be purchased within a 500-mile radius of the delivery location?
- Have you been cited for non-compliance of an environmental or safety issue?
- Do you have a documented sustainability program?
Is renewable energy utilized by your onsite data centers or cloud service providers? Is the renewable energy utilized monitored?

Accounting and finance teams can set the pace for organizational impact

Accounting and finance professionals can help companies remain focused on initiatives to improve environmental performance, standards and/or compliance. These efforts can range from encouraging large-scale carbon foot printing exercises to simply providing an environmental lens when evaluating processes, vendors, practices, and standards. They can become strategic and influential business partners to business units, and play pivotal roles in important business decisions

An environmental focus has become a value driver, and with increased expectations, new reporting standards, and external investment decisions based on extent of carbon footprint, an organization’s efforts in addressing climate change will exponentially grow in importance. So will the roles of accounting and finance professionals. Companies of all sizes and across all industries need to focus on sustainability. In addition to asking environmentally focused questions, let’s work with our key stakeholders (employers, team members and clients) to help define a sustainability strategy, track metrics, and orchestrate results.

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Mahesh Krishnamurti is Senior Advisor–ESG & International Operations at Vaco. Ina Dwyer is Managing Director, Global Pursuit Enablement at Vaco.