Every Accountancy and Finance Student Should Know How to Account for Climate Change – Prof. Ian Thomson

 

By Dela Ahiawor

 

As environmental, social and corporate governance (ESG) funds gain traction among investors, the accounting profession is rapidly embracing sustainability to avert climate catastrophe and transition to net -zero carbon emissions by 2050.

For that reason, the University of Birmingham, UK has become the first higher educational institution to introduce climate change into its BSc Accountancy and Finance degree course; in response to the call for a greener global financial system.

Academics from Birmingham Business School at the University of Birmingham believe the introduction of climate change into the BSC Accountancy and Finance course is a world first.

In a media note from University of Birmingham to (delreport.com) on February 24, Professor Ian Thomson, Director of the Lloyds Banking Group Centre for Responsible Business from Birmingham Business School said: “Greta Thunberg was correct in what she said in Glasgow. It is an undisputable fact that business cannot carry on as normal if we are to effectively fight climate change and reach the government’s target of net zero carbon emissions by 2050. This means that every student studying accountancy and finance should know how to account for climate change.”

For their part, Dr Mayya Konovalova and Dr Madlen Sobkowiak who were responsible for creating the new syllabus for the course added that : “Students embarking on their journey to becoming accountants can help future proof their own careers and the organisations they go on to work for thanks to the changes we have brought into the accountancy course. Mainstreaming climate change into the syllabus just makes sense. Climate change is a real threat to business resilience, as well as the world at large, and nothing will change if we don’t give our students the tools they need.”

University of Birmingham aims to share its accounting and climate practice with other universities across the globe. Already they have presented their work to universities in Canada, Brazil, Saudi Arabia, Australia and Italy through international webinars. Moreover, University of Birmingham has called on other universities to mainstream climate change into the study of accountancy in the bid to equip the next generation of accountants with the requisite sustainability/ climate smarts before starting their careers.

Sustainability Reporting a Powerful Tool for the Next Generation of Accountants

Current ethical concepts in business emphasize the significance of environmental, social and corporate governance ( ESG) reporting, also known as sustainability reporting. It’s therefore necessary for the next generation of accountants to understand the concept of sustainability reporting: how it’s evolving and how it helps to strengthen governance in business.

Sustainability reporting is a latter-day corporate reporting trend rooted in environmental reporting which started in the late 1980s. It’s an evolution of ‘corporate reporting’ which encompasses: sustainability reporting, financial reporting, corporate governance, executive remuneration, corporate responsibility and narrative reporting.

In days of yore, the interest of companies was only oriented towards profit making without any concern for their negative impact on the economy, environment and society or the triple bottom line. The only form of corporate reporting for companies in the past was book-keeping. This involved keeping a record of a company’s accounts accurately. Book-keeping evolved into financial reporting. Followed by Financial Accounting, which uses internationally accepted standards to help compare one company to the other. Later, financial accounting evolved into the rather newfangled non-financial reporting concept known as ‘corporate sustainability reporting’ or simply ‘sustainability reporting.’ It encourage companies to inculcate sustainability measures in their operations, but that is not the case for book-keeping, financial reporting and financial accounting.

The sustainability report highlights a company’s economic, environmental and social performance in addition to their financial performance.

The Global Reporting Initiative (GRI) defines a sustainability report as a report published by a company/ organization about the economic, environmental and social impacts caused by its everyday activities. It presents a company’s values and governance model and demonstrates the link between a company’s strategy and its commitment to a sustainable global economy. Obviously, the sustainability report becomes a powerful tool in strategic decision making which helps to communicate an organization’s corporate policy and strategy.

If well implemented over time, a company’s sustainability report is capable of increasing productivity, efficiency and transparency which leads to better economic returns, cost saving, improvement in environmental and social performance and increased  long term value. Again it improves investor confidence, management quality, builds trust, motivates staff, ensures better access to capital and ultimately impacts organizational reputation positively. Resultantly, business entities (private and public) are keen on sustainability reporting for varied reasons, this includes the efficient use of scarce resources.

And the main essence of reporting is the role it plays in improving transparency and accountability, which are key determinants of good corporate governance in the body corporate.

 

—–Dela Ahiawor focuses on sustainability/ climate related journalism and events across the globe—-

 Contacts: Email: deljason3000@yahoo.com  Twitter: @DAhiawor

www.delreport.com

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