Accountants: The unlikely environmentalists?

Accountants are in an ideal position to guide companies through the green economy. Image sourced from www.shutterstock.com

With an increasingly complex assortment of green tape and initiatives such as emissions trading schemes, environmental issues are no longer solely associated simply with a corporate conscience; they are synonymous with business strategy and economic survival.

With their financial acumen, accountants are arguably best positioned to redress the deficit of data for corporate greening. However, within most tertiary accounting programs, environmental issues are not in the core curriculum, even though recent research shows managers of accounting firms would like such knowledge to be mainstreamed.

The clear danger is that we risk flooding the financial services market with graduates ill-equipped to cope with the challenges presented by the contemporary business world and armed only with the skills for external reporting.

Latest research in the Centre for Accounting, Governance and Sustainability (CAGS) suggests graduate accountants should be trained in Environmental Management Accounting (EMA).

This provides an “environmental toolbox” for accountants working in the corporate world or public practice. The purpose of EMA is to bring together physical environmental information (such as carbon emissions) with the monetary data that drives decision-making at all levels of corporate management (for example, the price of carbon offsets). The purpose is to help identify the “business case” for environmentally sustainable actions: reduced environmental impacts plus increased profitability.

The researchers undertook a survey of Certified Practising Accountants (CPAs) in business to establish their perceptions of current and anticipated future use of EMA tools. The research revealed that only one quarter of the accountants surveyed were employed by organisations that used EMA tools. In addition EMA use was predominantly found in large organisations and those operating in environmentally-sensitive sectors. This is concerning given the need for strategic environmental awareness affects all forms of business.

And while two-thirds of accountants reported their organisation was expected to use EMA tools to a greater extent in the next three years, the immediacy of the problem and the relevance of EMA to practice is still not fully recognised.

Environmental costs (such as waste, contingent liabilities and fines) place a significant, material burden on contemporary organisations and it is safe to assume these expenses will continue to rise well into the foreseeable future.

EMA offers a way to isolate costs of sustainability as well as monetary gains associated with environmentally proactive activities, as well as placating regulators, and building the trust of employees, managers and stakeholders. Who would say no?

Environmental accounting is a vibrant and exciting area. However, certain questions remain. Accountants might not be around to see the growth in environmental accounting. In order to maintain the accountant’s position as an important and valued member of the corporate management team, it is vital accountants engage in this area. If accountants fail to answer this challenge, there are other professions such as engineering that will be more than willing to take advantage of their inaction.

Accountants have a limited window of opportunity to adapt to change, as well as making a positive contribution to identifying and solving the contemporary challenges faced by real world organisations - or they can be relegated to mere bean-counters.