Green business: doing the environmental sums

What role should, or do, accountants play in meeting the challenges of CSR?

Richard Spencer, corporate responsibility manager at ICAEW

It’s a very big question, and I think there’s possibly a gap between ‘should’
and ‘do’. From our perspective at the institute, I think accountants have a huge
role to play, and I think it’s partly in the nature of what accountants do to
structure things, to define things, to be precise about things, to give things a

If you look at risk management, the profession embraced it, made it its own,
gave it a language, owned the process. That’s not to say that the finance
function are the risk directors – the risk register, if you like – is populated
by the operational side, but what the accountant and what the finance function
do is own the process.

There’s a similar argument to be made around CSR or sustainability, that the
accountants take the idea and say: what does it look like? What’s the cost?
What’s the shape? What processes underpin this? How are we going to measure it?
When are we going to say that this is a successful outcome?

So there’s a huge role there, and if we ask why do businesses do things, they
do them because stakeholders pull certain policy levers. Then all that relies on
a flow of clear, verifiable, useful, trusted information.

If you like, a role for accountants is perhaps starting to produce the
evidence base, and feeding into the confidence. It’s certainly true that
benefits do reach the bottom line.

What are the factors in making the environment important for SMEs?

Mike Kelly, director of corporate social responsibility at KPMG

Employees in our business care about how we use resources, so you engage
hearts and minds as we’ve done. And the most visible thing people think about in
the auditing profession is paper.

We’ve decoupled paper consumption and business growth, so there is a
straightforward quantifiable measure. We can say, business went up by 40%, paper
consumption went down by 50%. Those are very tangible bottom line evidence based
quantitative numbers.

On the qualitative side, the war for talent already produces pretty robust
measures.If you have 25% of your workforce randomly being asked what they think
about your business, and you’re being publicly reported upon, then you’ve got
the concentration of the leadership of the business. Because that’s going to be
on the front page of every single publication that clients read, whether it’s
the smallest business in the land, or the largest.

So there is, I would suggest, already qualitative data there that gives the
evidence that employees care about this.

It is accessible, even to the smallest of SMEs. A few years ago the World
Wildlife Fund put out guides for simple steps SMEs could take. They demonstrated
that there are environmental savings to be had, and economic savings at minimum

Is an SME’s main concern cashflow, rather than carbon emissions?

Ian McMillan, partner in IBM Consulting

One of the challenges is that while the conceptual logic applies to all
businesses, the economic imperative will apply more to the larger businesses.

If you consider the carbon disclosure projects the investing community is
initiating – which are about understanding more about businesses’ carbon
footprints – and how that plays out in market valuation, it’s going to become
increasingly apparent as a component of share valuation.

That gives a more tangible connection, and it will probably will drive CFOs
and CEOs to make carbon-conscious decisions.

In an SME environment, those pressures may not always exist to the same
degree, and that’s where the role of legislation will come in.

The other part of the economy that will be very interesting to follow is how
the public sector responds to the green agenda – because there is a sector that
will generate and consume a huge amount of resources.

The economic imperative doesn’t exist there either, so again legislation will
come into play.

So depending on where people sit in their organisations, and where their
organisations actually focus, I think the way in which this will play out may

A quick tip to the finance community is to start to understand big decisions
that need to be made in the business, and the green impact of them. Put that
onto the agenda for the next planning cycle.

Chaired by Gavin Hinks

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