Management accountants can be instrumental in collaborating across their organisations on a decarbonisation strategy, according to a statement of management (SMA) released by the Institute of Management Accountants recently.
The SMA titled “Management Accountants’ Role in Sustainable Business Strategy: A Guide to Reducing a Carbon Footprint,” details the steps businesses, led by their management accountants, can take in decarbonising operations amid ongoing investor and regulatory pressure to reduce greenhouse gas emissions, IMA noted.
The report shares how management accountants are crucial to supporting and implementing these goals and how their expertise will contribute to decision making and drive performance toward key milestones, the accountancy body added.
Apart from external drivers such as investor and regulatory action, companies are motivated by operational efficiency, risk management, and relationship-building opportunities that enhance performance and value over the short, medium, and long term, said Shari Littan, CPA, JD, director, corporate reporting research and thought leadership at IMA.
While many accounting and finance professionals in business remain reluctant to participate in emissions reductions plans as they view the area as novel or unrelated to driving performance, this SMA shows that they already have valuable competencies to help their organisations develop and implement emissions reductions in a way that brings valuable insights for building strategies in a changing market with new regulatory demands, she added.
Initiating a new organisational sustainability project to address a company’s carbon footprint requires a mandate and the designation of responsibility from senior executive leadership, a strong project lead that includes the finance function, and the enterprise-wide know-how of colleagues from a variety of business units, including operations, policy, risk management, and human resources, IMA pointed out.
More specifically, these professionals, working collaboratively, can consider the “how to” of reducing greenhouse gas (GHG) emissions by the initial development of an inventory that tracks sources of GHG emissions from the organisation’s activities along with the corresponding emissions factors, as demonstrated through the three case studies appended to this report, IMA noted .
When initiating a carbon assessment project, an important consideration is the tools that will be used to gather, sort, analyse, and report information in a way that supports decision making and serves as a foundation for internal controls, oversight, and external assurance, IMA observed.
In addition, one of the most important decisions an organisation can make in undertaking its carbon assessment is defining “scopes” and “boundaries”, said IMA, adding that these concepts are similar but not definitionally the same as used in mainstream financial accounting.