Climate action should be on every organisation’s agenda. Linda McWeeney and Mary Jane Webberley outline four key areas that should be considered in 2022.

Apart from the pandemic, there has been one topic on everyone’s agenda: sustainability. Climate action needs to be at the top of all business agendas, particularly for boards that have a fiduciary responsibility. It is a massive risk (financial and reputational) and must be given the attention it requires from all sectors. Here are four key areas organisations should look at in the New Year.

Cost of sustainability

Individuals and companies need to take every step necessary to remove carbon from their operations. There are a few ways companies can go about this, such as sourcing renewable energy and ensuring that it is certified to a fully traceable source and retrofitting commercial buildings.

The long-term costs of climate change are substantial. Transition and physical costs may be high, but there are plenty of opportunities that can outweigh these costs. Be proactive and seek out the opportunities. Retrofitting loans are available, as well as green lending to help companies reach their goals.

Start reporting

Accountants have a responsibility to ensure that climate change is at the heart of business activity. Sustainability Accounting Standards, produced by the ISSB, will be industry-focused, market-led, and will respond to stakeholder concerns, producing highly comparable information.

The standards will not be mandatory for companies straight away. This, however, does not mean that companies or boards should wait for them. Regulation will take time, and pressure will come from investors, employees, and governments sooner rather than later. Companies cannot wait for regulations and policy change to take place. Start reporting and make changes now to ensure the continued attraction of talent and investors.

Minimise greenwashing

Ensure that climate risk is part of the risk management strategy, boards put forward relevant information, and sustainability is at the core of all decisions. Accountants can help embed it into the business plan. Also, lead with data analysis, reliable data, and seek out opportunities for value creation. Companies must provide all stakeholders with information showing their commitments and action in this area.

Think about the organisation’s reputation

There are many risks associated with doing nothing, including reputational risk. While there may be a difference between what is mandatory right now and what we would like to see happening, it is important to remember the ethical considerations.

Robust discussions must be had to ensure that company reporting is reliable and relevant, even though accounting standards may not yet require it. It will by no means be easy to quantify risk and convert it into numbers. Nevertheless, reliable information is an expectation of all stakeholders and accountants have an important role in this regard.

The connection between financial and non-financial data is more important than ever. Therefore, accountants and boards need to work with experts in these fields and educate themselves.

Linda McWeeney and Mary Jane Webberley are Lecturers in Accounting and Finance at TU Dublin.