Sustainability and accountancy: one year on from COP26

Among the big commitments made at COP26 in Glasgow in 2021 was the developed nations’ reaffirmation of their commitment to provide $100 billion a year of climate finance to developing nations. The participating countries also agreed to strengthen plans to become net zero by 2030 and submit them to the UN. And 65 countries committed to phasing out coal in advanced economies by 2030 and globally by 2040, meaning stopping new plants being built, scaling up clean power and retiring existing coal fleets.

But the war in Ukraine and the energy and cost-of-living crises have stunted these plans. While developed countries have updated their funding plans for climate finance, the money hasn’t yet made its way to developing nations as promised. Plus, the energy crisis and some UK Government policy announcements have meant a renewed focus on coal and other fossil fuels. And just 23 countries out of 197 submitted their net zero plans to the UN on time, only six of which are G20 countries. The effects of these overlapping crises may mean emissions get worse before they get better.

One country that did submit its plans, however, was the UK. It contains an ambitious target for 2030 emissions to be down 68% on 1990 levels. It’s encouraging that the government knows just how ambitious we have to be, as we can’t wait and hope that climate change solves itself. An updated green finance strategy and net zero review is also due at the end of 2022 - and should hopefully act as a positive indicator that the government wants to live up to its commitments.

The ICAEW engages with sustainability in lots of different ways. ICAEW was the first major professional body to become carbon neutral in 2020 and we have since introduced measures to reach net zero, offsetting all greenhouse gas emissions. Sustainability is one of the core themes of our 2020-2030 strategy, and we report on our contributions to the UN’s Sustainable Development Goals in our annual report.

Our Sustainability & Climate Change community, started in November 2020, has had a massive uptake since COP26 and is now ICAEW’s second largest community, with almost 17,000 members. The community is open to students, members and non-members and we regularly share events and articles of interest. Plus, the ICAEW Climate hub has all the relevant climate change information for chartered accountants, including guidance on non-financial reporting and ESG assurance. 

ICAEW CEO, Michael Izza, and Director of Sustainability, Richard Spencer, sit on the steering group and delivery group, respectively, of the UK government’s Transition Plan Taskforce. The group will publish a first draft of a sector-neutral framework for delivering a transition to net zero at the same time as COP27 in Sharm El-Sheik, Egypt, which takes place on 6-18 November 2022. We will aim to use that to support our own transition to net zero, also.

The ICAEW also works with organisations to not only leverage the voice of chartered accountants but other professions too. With the Accounting Bodies Network, we signed up to commit to reaching net zero as soon as possible. We are also part of the Professional Bodies Climate Action Charter – a group of different professions including chemists, engineers, and actuaries, sharing strategies on how to combat climate change.

Chartered accountants sit at the heart of all organisations, whether they are in the public, private or nonprofit sectors. It means they are well-placed across every part of the economy and every industry to advocate for change. In particular, chartered accountants have the tools and knowledge to communicate complex issues like business strategy planning and risk management; as well as explaining how sustainability and climate change issues feed into them. Sustainability should be seen as a core part of the accountant’s role, just like any other risk or economic impact.

At the ICAEW, we have got about 12,500 member firms which advise around three million clients. It means we have a massive opportunity to catalyse change in the UK and overseas. Most recently, in August 2022, we launched our sustainability certificate, aimed at those who have qualified in the last 5-10 years, which goes into detail on how sustainability is relevant to accountancy, such as reporting requirements and financial planning. We’re also looking into more role-specific CPD opportunities for qualified accountants, too.

The ACA qualification has covered sustainability since the early 2000s, but in recent years we have taken a more strategic approach to embed it across all of the relevant modules. Changing reporting requirements and climate risks mean issues around sustainability are more frequently falling into accountants’ laps, so it’s essential we share the broad implications of environmental, social and governance issues within the qualification. Accountants are seen as trusted advisors who are trained to look across the whole business environment, so you’ve got to have an understanding of sustainability if you want to help companies make big business decisions.

The ICAEW website and communities are great places to start if you want to get more involved in sustainability. We are also about to launch a climate champions initiative which will showcase people driving climate action within their organisations and the wider environment. That will be open to all ICAEW students, members and firms, so please do share your stories about acting on climate change. 

Plus, as part of the ICAEW Chartered Stars competition, we send two winners, who are either students or newly qualified members, to attend the One Young World Summit, an annual conference for young people to discuss sustainability and many other issues which are crucial for the future of the planet. The most recent attendees, Mariee Payne and James Skilton, shared some fascinating insights on sustainability from their visit in September.

Lastly, the ICAEW’s Climate Summit on 21-25 November is fully virtual and open to all. It’s a great opportunity to find out how you can get involved in sustainability. I hope to see you there.