Advising your clients on carbon emissions

Advising your clients on carbon emissions

AAT has released advice on how its members can guide their clients on reducing their carbon emissions and become greener.

Advising your clients on carbon emissions

The Association of Accounting Technicians (AAT) has called on its members to be proactive with helping clients and employers understand how they can achieve zero carbon emissions. 

The association has said that accountancy has a big part to play in the UK achieving its target of bringing all greenhouse gas emissions to net zero by 2050, a goal that makes it the first major economy in the world to pass such a law to end its contribution to global warming. 

Following this, the water industry committed to net zero by 2030, the farming industry by 2040 and a growing number of individual business, such as British Airways and British Gas have also made similar commitments. 

Adam Williamson, Head of Professional Standards at AAT, said: “The drive towards zero carbon emissions has been led by the UK, the first major economy to state an aim to achieve net zero emissions by 2050, and accountants will have their own part to play – for their own businesses and those of their clients.

“Ultimately the approach you take as a business will help you encourage clients as to their own steps.”

AAT has said it is reasonable to consider what the accountancy sector is doing. Currently, there is no industry-wide agreement, but individual organisations are also busy determining their approach to reaching net zero. 

A survey undertaken by the association found that 100% of its Assembly and Council members think reaching net zero is important, as do 88% of its licensed accountants. The AAT commented that few issues achieve this level of consensus. 

However, AAT’s research also found that understanding of the issue among their licenced accountants was limited, and therefore they had not advised their clients on how to reduce carbon emissions. The vast majority commented that they would like to do so in the future. 

Accountants are increasingly finding themselves in an advisory role, and therefore are well placed to help their clients once they gain a better understanding of what can be done. 

Getting started 

The issue of climate change is at the forefront of many people’s minds globally, but the problem can seem so vast it’s hard to know where to begin.  

For an accountant, the first step is to establish what a client’s current carbon footprint is, and what key areas need to be addressed in order to reduce carbon emissions. 

There are free tools and guides available that can help businesses do this. One example that AAT gives is the government-backed Carbon Trust that offers a free Carbon Calculator for SMEs. 

In addition, the trust has published a Climate Leadership Framework, which helps senior management to:  

  • Understand how their company is currently performing on climate change 
  • Identify the opportunities for measurable improvements via a low carbon roadmap 
  • Guide their strategic planning.

Guiding clients to these tools is a good first step to understand what a company’s carbon emissions are, and which areas need to be addressed. 

“The Carbon Trust offers a carbon calculator for SMEs, along with a Climate Leadership Framework to help senior managers understand how their company is currently performing on climate change, so it’s a good place to start,” said Williamson.

“It’s also a good idea for businesses to regularly compare, report on, and respond to your latest emission figures so employees can buy in to the journey towards becoming more sustainable.”

Reduction strategy 

The next step is to establish a strategy to reduce carbon emissions and introducing specific targets throughout the business. As with any strategy, this often requires a shift in company-wide mindset to ensure that everyone involved is on board with carbon reduction. 

There is also plenty of help and advice in this area available from independent organisations, such as the Energy Saving Trust or Business Link. AAT’s also has a platform for start-ups and small businesses that offers advice. 

Depending on the type of business, it will often be obvious which areas need addressing in the strategy. For example, does the business require employees to drive often? Can public transport or electric vehicles be used more? Does the business operate internationally? Is this always necessary, or can more be done to communicate remotely rather than flying as frequently?  

Perhaps the business has lots of waste, or spend a lot of money on paper when moving to the cloud could be greener? For accountancy practices themselves, this is something that could be considered.  

Specific targets addressing these issues should be established. Ongoing measurements and reporting should be introduced. For example, monthly, quarterly or annual reports should compare emissions to previous time periods.  

Regular internal reporting is a good way to encourage staff involvement and ownership and will show tangible results based on the effort they have taken to follow the strategy. The same can be said for communicating achievements and milestones to clients and stakeholders.  

Results 

The path towards net zero can be a steep one and daunting to businesses who already have so much to be concerned with. However, it can lead to numerous opportunities. It can result in the development of new services, new business models, it can save money and dramatically enhance a business’ image and reputation.  

Bank of England Mark Carney bluntly, but correctly, said: “Firms that align their business models to the transition to a net zero world will be rewarded handsomely. Those that fail to adapt will cease to exist. The longer that meaningful adjustment is delayed, the greater the disruption will be.” 

An accountant can help demonstrate this with to clients. Perhaps one client has a success story and can be used as a case study to demonstrate the benefit to another. The accountant has access to a network of businesses, and can act as the knowledge base on how to achieve net-zero, thus adding value to their services offered to clients who want to cut their emissions.

Williamson concluded: “Aside from the clear positive environmental impact, heading towards carbon neutrality and improving global sustainability could also allow businesses to develop new services, save money, and improve their own image.

“AAT is a member of Accounting for Sustainability (A4S), and as such understands that accountants really are uniquely positioned to help drive business change for good, and there will be much more to come in this area from AAT, A4S and other organisations throughout the year.”

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