Once upon a time a ‘sustainability initiative’ was a nice-to-have undertaking that corporates did on the side of their ‘real’ business. From an accountant’s point of view, it was often seen as a cost to the bottom line, albeit one off set by an intangible feel-good factor for stakeholders and a continued social licence to operate. What it lacked in rigour, it made up for in good intentions.

Not any more.

Considering sustainability is now a core part of any serious business. Organisations everywhere are searching for ways to make a meaningful and measurable difference to the environment, their customers, communities, employees and all other stakeholders.

Accountants have a key role to play in making sure the bold initiatives needed to create positive change add up financially – that they’re feasible and actionable.

Companies are being required to audit their organisations for environmental, social and governance (ESG) performance and risks, and share the results with the outside world. This means business leaders across the board are checking that their sustainability metrics will enable and support a resilient and future-ready business.

Much of this momentum is being driven by investors, governments and regulators who want greater transparency around climate risk. For example, the International Sustainability Standards Board will set out a comprehensive global baseline of sustainability-related disclosure standards and the Securities and Exchange Commission and the European Union are both proposing to mandate them.

In New Zealand, a climate disclosures regime was announced in 2020. It will require around 200 of New Zealand’s largest businesses to report to the new External Reporting Board (XRB) standard, to be issued in December this year. Their reports will outline their approach to climate risk, how it’s governed and how it’s implemented.

The trickle-down effect to other New Zealand businesses will be felt very soon, as smaller operators get asked by big business partners about their production inputs and outputs.

This is where you – accountants – come in. You can create better, stronger businesses by equipping everyone with data that is robust, transparent and compliant with regulatory requirements. I know this first hand, as I am lucky enough to have a chartered accountant in my team who brings invaluable insights and rigour to our work.

At Westpac

Climate risk is financial risk, especially for a business like ours, where customer relationships include lending that spans decades. That’s why we’ve made it our business to understand what that risk looks like.

In 2020 we became the fi rst New Zealand bank to release a report that details our exposure to climate-related financial risks. It identified that between 2% and 3% of our residential, commercial and agricultural mortgage portfolios are potentially subject to heightened risk from coastal erosion and flooding as a result of sea level rise.

Because information like this is only useful if it aligns to a common approach, we made sure the report met the Task Force for Climate-Related Financial Disclosure standards. We know future reports will be even more valuable, as the data feeding into them becomes richer.

Business change is underpinned by strong financial and non-financial performance, and the line between those two things is starting to blur. Looking to the future, we need accountants that can think holistically and integrate financial and non-financial data, and translate their insights into issues and opportunities.

Sustainability professionals need accountants to be connectors of people and information, bringing your valuable insights and skills to a wide range of stakeholders across your business and industry.

Find out more:

To find out more about Westpac’s sustainability strategy, visit www.westpac.co.nz/about-us/sustainability-community/our-sustainability-strategy/