On 22 April, a billion people in 193 countries will commemorate Earth Day. It’s been observed for more than 50 years to highlight threats to the environment and demonstrate support for environmental protections.At first Earth Day focused on pollution, but in recent years this has shifted to climate change and biodiversity. The aim is to engage governments, institutions, businesses and people worldwide on taking action: “Everyone accounted for, everyone accountable”.

SMEs to watch

Small-to-medium size enterprises comprise 97% of all Kiwi businesses and 98% of all Australian businesses. While they may not be the biggest emitters individually, collectively the International Federation of Accountants (IFAC) estimates SMEs generate 60–70% of all industrial emissions. So, any climate action they take can have a huge impact.

Aly Garrett FCA, principal and founder of All In Advisory in Adelaide says: “Increasingly, clients are interested in reducing their carbon footprints. We suggest software that can measure and manage this, and can share their progress with customers and stakeholders.

“Many are choosing suppliers based on factors other than price, more aligned to their purpose and values, such as a net-zero future.”

“Many [businesses] are choosing suppliers based on factors other than price, more aligned to their purpose and values, such as a net-zero future.”

To demonstrate her point, Garrett cites festival producer Adelaide Fringe Inc, which has a strong commitment to the United Nations Sustainable Development Goals and works to minimise the environmental impact of large-scale events.

Garrett developed her own accounting practice as a 100% cloud and paperless office, and focuses on travel, energy and buying local to reduce waste and emissions. The office uses LED lighting and efficient heating and cooling, and a switch to renewable energy is in the works.

Another climate action trailblazer on the SME side is Chia Sisters – a New Zealand-based natural drinks company – which has gone further and faster than most businesses. Its factory is solar powered, it is B Corp certified (an independent assessment of a company’s social and environmental impacts and contributions), and it is not only carbon-zero but climate-positive certified as well, offsetting at least 120% of emissions.

Demonstrating that climate action doesn’t automatically mean sacrifices and costs for SMEs, the moves have been positive for the business’s revenue, reputation, accountability and growth.

Pictured: Chia Sisters founders, siblings Chloe (left) and Florence Van Dyke

Big changes for the big end of town

In addition to the changes they make internally, large enterprises can influence climate action down their supply chains.

Mike Atkinson FCA, director of Bellingham Wallace in Auckland, says a number of government agencies and larger corporations now want full transparency across their supply chains, requiring a level of reporting by smaller businesses that may not have the reporting capability.

However, “businesses that embrace the path to net zero, ESG (environmental, social and governance) or sustainability practices will most likely reap the rewards with regards to reputation, customer engagement and advocacy, staff engagement and ultimately better financial performance. Our advice is to develop a strategic plan with clear objectives, then use these practices as tools and enablers to deliver on the strategy,” he says.

Atkinson gives the example of Phoenix Metal Recyclers, a client working in a challenging industry, which the practice has supported in its sustainability journey. Phoenix is carbon zero certified by Toitū Envirocare, using approved offsets while its remaining net emissions are being reduced to zero. The company has shown that metals are 100% recyclable and that recycling metals emits 80% less CO2 than mining and producing metals from raw materials.

Another company leading the way that should resonate with larger clients is Port Nelson, a New Zealand marine cargo company with approximately 230 full-time equivalent employees. It was the first in the region to join the Climate Leaders’ Coalition, a group formed to accelerate business action on climate. The company has committed to reporting under the country’s new climate-related financial disclosure rules, although it’s not legally required to.

Chief financial officer Daryl Wehner CA explains: “Adopting the framework is part of a wider goal of building transparency and being a trusted community partner. We want to grow our transparency through what and how we report… as it becomes embedded, people will come to know how to read and interpret the disclosures, they’ll provide consistency and our auditors will evolve tools for this, providing an independent opinion for the reader.”

Pictured: Phoenix Metal Recyclers in New Zealand embrace sustainability because metal can be continually recycled. Image credit: Phoenix Metal Recyclers

Why CAs count

Chartered accountants have a key role to play in the climate and nature crises because people expect us to take a lead; because we already have many of the skills, the trust and connections that are required; and because there are huge risks and we’ll miss opportunities if we don’t.

We have a duty to act in the public interest. Climate and biodiversity are not just environmental issues, they are crucial to health, food production, wellbeing and future generations.

Confirming this, a 2022 survey by Chartered Accountants Worldwide (CAW) of young finance professionals found that more than 90% thought the accounting profession had an important role to play in the fight against climate change. More than 63% said it was important for them to work in a profession that supports climate initiatives.

Opportunities will include the support we can provide in the transformation of the economy, including providing the information businesses will need to thrive in the new context. Assurance is an example. Chartered Accountants Australia and New Zealand chief executive officer Ainslie van Onselen said last year, “Today, there is a oncein- a-generation opportunity for audit firms to put down a marker and make sustainability assurance their domain.” If we don’t, others will.

The risks CAs face by not acting on climate change might include legal action for inadequate or misleading disclosure and the chance that we or our clients are unprepared for changing supply chain or investor requirements.

Best and brightest

An additional risk is that employees will not choose the accounting profession if we are not seen as proactive. Research by KPMG found 20% of UK office workers would turn down a job if ESG factors were considered lacking, with almost half of workers wanting their employers to demonstrate climate and social commitments.

The next wave of young accountants will be even more discerning.

Led by Bath University, a survey of 10,000 people aged between 16 and 25, across 10 countries, found that nearly 60% were “very worried or extremely worried” by climate change.

Last year, UN secretary-general António Guterres told new university graduates: “You will have plenty of opportunities to choose from. My message to you is simple: don’t work for climate wreckers. Use your talents to drive us towards a renewable future.”

CA ANZ support and action

Karen McWilliams FCA, business reform leader – Advocacy and Professional Standing team for CA ANZ says: “Chartered accountants have a key role to play in supporting the organisations they work with and for to become more sustainable, and we are providing them with training, resources and advocating for suitable regulation and reporting frameworks in this space.”

CA ANZ is a signatory to multiple global climate-change and nature crisis calls-to-action and is actively urging members to act on climate issues. CA ANZ’s Sustainability Action Plan commits the organisation to develop a pathway to net-zero emissions, to support the UN Sustainable Development Goals, and to share expertise and best practice.

The Sustainability for Accountants elective for the CA program was released in 2022, and CA ANZ will be launching sustainability micro-courses later this year.

While challenges are significant, there are many practical steps CAs can take to act on climate change:

• Learn about the issues, solutions and our roles in them.
• Think globally, act locally. Huge changes are needed worldwide, but they start in our own companies and communities.
• Measure, starting with the carbon footprint of our own businesses, to build knowledge and understand the challenges that others might have.
• Plan to halve greenhouse gas emissions by 2030 and to reach net zero by 2050. This applies in our own lives – in the businesses where we work. Target actions that will have the biggest, quickest impacts, such as reducing business and personal travel. Avoid any steps that will make it worse, including purchasing capital items that commit a business to ongoing emissions in future years.
• Don’t rely too much on carbon offsets (the use of emission reductions or carbon storage elsewhere, such as planting trees) to offset business emissions. Offsets may be useful as an interim measure, provided they are from a trusted source. But the best, most convincing way to cut emissions is to reduce the use of fossil fuels or other sources of greenhouse gases.
• Promote collaboration, with supply chains, industry or professional bodies and customers.
• Start now, even if you’re not quite ready. Refine the plan over time.
• Report on progress, as well as failures.

---

Earth Day 2023

Earth Day started in 1970, following a major oil spill off the coast of California and has been marked widely every year since.

This year’s theme is Invest in Our Planet and the organisers suggest a few ways individuals and businesses can show their support:

1. Plant trees

2. End fast fashion

3. End plastic pollution

4. Promote equitable education

5. Vote for Earth: ensure your political leaders are environmental champions.

To get involved, visit earthday.org or check your local media for events near you.

---

RESOURCES 

Sustainability playbooks CA ANZ’s sustainability playbooks can help you guide clients on sustainability strategy and options, and make changes in your own company or practice.