A recent report suggested that climate change promises by many countries at the Global Climate Change Summit of 2021 have been put on the backburner in the face of other national and international crises. Moreover, many climate change initiatives are often confined to well meaning groups but lack financial muscle or strategic plans. The accounting profession in South Africa, led by institutions such as the South African Institute of Chartered Accountants (SAICA) and the Independent Regulatory Board for Auditors (IRBA) can take the lead in demonstrating how a strategic, sustainable climate change project can be initiated and executed.
The accountancy profession in South Africa has an opportunity to become a global leader to address climate change by initiating long-term corporate climate change projects.
In July, Kurt Sartorius, professor in the School of Accountancy at the University of the Witwatersrand, will initiate a long-term climate change project that incorporates two interlocking components.
First, Sartorius and his son, Benn, will paddle 1 100km down the Rio Madeira, a southern tributary of the great Amazon River, to highlight the changes that have occurred in this region in the 50 years since he first paddled down this river in July 1972.
Second, and more importantly, the expedition provides a unique opportunity for the accountancy profession in South Africa to initiate a global climate change initiative of its own. This component will be used to demonstrate that corporate South Africa fully understands that climate change has no geographic borders. This is underlined by the fact that the Amazon Rainforest is the world’s lungs. If it is destroyed, the rest of the planet cannot breathe.
In response to this global threat, the expedition in conjunction with the accountancy profession, will pioneer a new genre of climate reporting in corporate South Africa’s published integrated reports. It will also try to get commitment to funding a reforestation project in the Brazilian Amazon.
Accountancy SA is a world leader in the development of accounting standards and corporate South Africa must comply with these standards when they develop their annual reports. These integrated reports are designed to include a focus on the corporate social responsibility they bear as the captains of industry. This responsibility extends to the environment and its natural resources and how they manage these in a responsible manner.
Accountancy SA has a unique opportunity to persuade its members to expand this reporting to cover their role to address climate change beyond just their use of natural resources. In other words “what are you doing that adversely affects climate change and what are you doing about it, especially in a global context?”.
Corporate social responsibility
The Code of Responsible Investment in South Africa and the United Nations’ Principles of Responsible Investment call on the corporate world — and, by inference, the accounting profession — to start doing something about climate change. There are also clear indications that the investment community recognises climate change as an important element in financial risk — see, for example, Larry Fink and Blackrock — and it is important for the accountancy profession to take the lead.
King-IV is the gold standard for corporate governance and it applies to all companies, including professional service firms. All accounting firms should be leading the way when it comes to responsible and ethical business at the core of good governance. Stated simply, “ethical” and “responsible” cannot be separated from environmental activism and this project can highlight that the accounting profession has embraced the need for all professional services to play a more proactive role to address climate change.
The accounting firms have been expanding their assurance services to include different aspects of financial and non-financial reporting including environmental metrics and the effort to raise awareness about deforestation of the Amazon aligns very nicely with this new business model.
The accountancy profession can take a global lead by not only demonstrating their commitment to the environment but encouraging their clients to do so. The accountancy profession must push the integration of climate change and corporate risk in integrated reporting, as well as ensure that corporate social responsibility indexes include climate change as part of the weighting to determine company rankings.
The accounting profession, led by institutions such as the SAICA and IRBA can emphasise integrated thinking and life-long learning and demonstrate how the corporate world can use this in their reporting to demonstrate their understanding and support of climate change issues.
Although this project may not evoke the same emotion as an ardent naturalist addressing a crowd with the annual Norwegian seal hunt taking place in the background, it is likely to be far more successful. Over time the enormous cumulative effect of corporate focus in their reporting on climate change will translate into visible progress.
In short, this project is practical, it can work and it is sustainable because the burden on any specific company is small. This initiative can trigger a global change in climate change thinking that has the corporate world and the accountancy profession at its centre.