Ahead of our first ICAEW Climate Summit this month, we have been intensifying our interactions with members to understand how they are professionally engaging with climate change. As part of our own ‘road to COP26’ activities, we have also specifically reached out to our international members to hear their perspectives on how the organisations they work for are acting to mitigate the risks and maximise the opportunities of climate change across different parts of the world.

The outreach to our international members was conducted via an online survey in late September. Members from over 50 countries shared their insights on how their organisations are addressing climate change. Over six in ten work in organisations with cross-border operations. The survey also builds on a similar exercise conducted over the summer which was focused on UK members working in business.

The journey to net zero

While most of our members are broadly familiar with the international climate change framework, centred around the 2015 Paris Agreement, it is evident that different countries are at different stages of addressing climate change, including when it comes to setting net zero carbon emissions targets. Overall, however, the direction of travel appears to be positive, with a third of our members reporting that public authorities in their jurisdictions have adopted binding or voluntary targets – and another third suggesting that public authorities are discussing such targets.

Even more positively, feedback from members suggests that organisations are also responding to the challenge with over half now taking action to move towards net zero.

The minority of organisations that are not yet taking any action are often reflecting limited pressure for change, especially where there are no requirements set by public authorities. The absence of external demand, whether from consumers or clients, is another critical constraining factor. Businesses alone are not going to solve all the issues associated with climate change, particularly where there is no immediate imperative to change. This points again to the key role that public authorities across the world will need to play to lead the transition to net zero, coupled with changing behavioural patterns by consumers. As we have noted elsewhere (see: 'Accountancy’s role in fighting the climate crisis'), we need to see well thought out action by public authorities, enabling intelligent partnerships with business and civil society.

Other often cited reasons for inaction include the absence of a business case for change, the lack of leadership commitment as well as non-existent demand from consumers and/or clients. Some organisations remain focused on dealing with the impact of the COVID-19 pandemic.

"We will be taking action, but our plans are in early development stage" (Italy)

"Our not-for-profit industry is facing other existential threats – inadequate funding, excessive administrative burdens, lack of support workers – so our strategic priorities relate to addressing these threats. Some of our planned actions will result in fewer emissions, but emissions targets are not on our radar right now" (Australia)

"The business is focused on its own profit and performance targets; it is not a big contributor to global carbon emissions" (Spain)

"There is a lack of talent, hindering action" (Hong Kong SAR)

Many of our international members also point out that there are potential business opportunities associated with moving towards net zero. Indeed, for just under a third of organisations, these opportunities are seen as being significant.

Supporting organisations’ climate activities

Our international members also provide us with further insight into how their organisations are dealing with climate change in practice. There is a strong focus within organisations to both reduce carbon emissions and to take steps to adapt to the impact of climate change on the business, as affirmed by around two thirds of respondents.

Significant minorities of two in five, further note that their organisation has now allocated responsibility to senior management to deal with climate change and that climate change is now embedded in their organisation’s strategic planning process. A similar number report that their organisations also have targets for climate-related opportunities. A third of organisations have already integrated climate change into their risk management.

Addressing the risks and embracing the opportunities associated with climate change is a work in progress, with organisations at different points in the journey. This is reflected in the need that many organisations have for best practice and guidance to support their activities. According to our international members there is a similar split between those organisations which have sufficient information and those that do not. Those seeking more guidance include organisations that are already acting on climate change as well as those that are not yet.

What organisations need also differs, ranging from technical guidance and ‘how to’ guides (often with an industry or sector focus) to broader best practice or benchmarks. Some members consider that their organisations would benefit from more accessible scientific and market data, while others want more regulatory advice.

"I live in a developing country that will be threatened by climate change due to rising sea levels, degradation of rainforest. There is general awareness of impacts of climate change, but there is no real information about what each and every organisation can do to mitigate impacts" (Papua New Guinea)

"Best cases for a strategic plan and practical implementation in mid-size organisations" (Luxembourg)

"Better regional projections on adverse severe weather risks in the next nine-year period will be necessary if risk management is to be embedded effectively in corporate action. Data must be more readily available across the entire business chain and not simply to the most prominent and best resourced companies, this is particularly important for economies where SMEs have a dominant share of the economy and are likely to be the slowest adopters" (Hong Kong SAR)

"Information and guidance based on our location - Pakistan - and based on the limited resources available. The government has not communicated net zero requirements or climate change risks for organisations. So, there is a need to work at an organisation-driven level" (Pakistan)

"The organisation needs better and more granular information on the causes of climate change, as well as on areas which have been successful in reducing emissions to date" (Canada)

"Information on how professional service firms can embrace climate change" (UAE)

Climate change reporting

With more and more jurisdictions moving towards, or considering, requiring greater disclosures on climate change risks as well as broader sustainability issues, we also took the opportunity to ask our international members for their views, including in relation to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Overall, awareness of the TCFD framework is limited to a third of those responding, likely reflecting the focus of the recommendations on large financial institutions and listed companies. Indeed, only a small handful are in organisations that are already reporting in line with TCFD recommendations at the current time. One in ten apply other sustainability reporting frameworks, such as GRI and SASB as well as industry and/or country-specific ones.

Our experience in the UK and the EU suggests that awareness will continue to increase over time across the broader economy, including the SME sector, as more and more companies start to face direct and/or indirect reporting requirements, including via information demands arising in their supply chain, from financial institutions or from their customers.

Confidence around data being collected in organisations for climate-related and sustainability disclosures also varies. While some members consider that their organisations are fairly confident in the data, others are more reticent. In some cases, the more diffident feedback comes from members who are very or fairly involved in their organisation’s external reporting. Similarly, of those members aware of the TCFD recommendations, only two in five consider that their organisation would not be ready to report in line with the framework, should it be mandated in their jurisdiction.

Echoing findings in the UK, the feedback from our international members again underlines that climate-change and sustainability disclosures can be extremely challenging. Moreover, it is not necessarily a linear journey: the more organisations do, the more they may realise that additional information and reporting is required.

What role for ICAEW?

We wanted to hear more from our international members to build our knowledge base and to inform our future activities in this space. Reflecting our broad and diverse membership, we heard varied views on our sustainability and climate change initiatives. More than a third of members welcome more ICAEW action, a handful of others feel that we are behind the curve while a small, sceptical minority see no role for professional bodies – or indeed business – when it comes to climate change.

"Companies need to ensure that the burden of compliance with reporting requirements does not divert scarce resources from actually doing something about climate change to filing more and increasingly complex and diverse reports and disclosures" (Hong Kong SAR)

"Rules and regulations are leading to an information overload. We need ideas, thoughts, demonstrated realistic changes that we can follow. Help us to help ourselves" (Australia)

"This issue will not be solved by businesses where there is no immediate imperative to drive change. The pressure to change has to come from consumers/general population and their political representatives. This must inevitably drive regulation that delivers a change in the business community" (Hong Kong SAR)

"In Vietnam, over 40m live in the Mekong delta area which will sink below sea level. As professionals we need to be clear with our clients. We need help on how to advise key decision makers and on how to show them the cost benefit of action, not just in financial terms but also in relation to environmental and societal impact" (Vietnam)

For a number of members, professional bodies can play an important role in providing practical information to help organisations and individuals act. This could include straightforward guidance on ‘how to start’ or more bespoke best practice focused on particular sectors, perhaps accompanied with training solutions. The specific needs of SMEs are referenced, as well as the need for a single point of access to all relevant information. Others call for ongoing awareness-raising initiatives, whether targeted at younger members or those in more senior positions with organisations.

"Promote real world changes and ideas. There is an absolute willingness to ‘get onboard’ just not enough time and clarity" (Australia)

"Provide tips and tricks, playbooks by industry citing best practices. Help the development of peer metrics and key benchmarking reports" (Belgium)

"Work with standard setters to ensure professionals giving financial audit opinions or making statements in relation to non-financial disclosures by their clients are clear on the expectation placed on them as a ICAEW member. The climate reporting ‘sector’ is a key reputational risk or opportunity for ACAs as it reopens the auditor expectation gap that has been so effectively managed in respect of true and fair" (Switzerland)

"Look at the SME sector who do not have the resources to address the issue" (The Netherlands)

"Provide more roles and visibility for key young members to lead the way in climate change discussions, boards and topics" (Singapore)

This feedback from our international members provides valuable input to our thinking as we consider how to further develop our activities to raise awareness, develop more guidance and provide more resources to help drive change.