As highlighted in the Sustainability and business — the call to action; build back better report, AICPA® and CIMA® started a programme of thought leadership to explore accountancy and sustainability. This is part of a series of briefs exploring the topic of sustainability, business, and the finance professional’s key role. These briefs will help organisations consider the sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
Although this report focuses on accounting for carbon, we recognise that a three-fold crisis of, a climate emergency, dramatic nature loss and rising social inequality affects our planet. Addressing this requires systems thinking across the three crises as companies reallocate resources, reorientate production and reimagine their business models. Climate change disproportionally affects and impacts the poorest in the world. Our goal must be to make it possible for low-income people to climb a ladder without making climate change worse.
This report is designed to help finance professionals build their climate emergency literacy so we can lead and support the journeys of our organisations, firms and clients to adapt business models and reduce their carbon footprints in the global race to net zero.
This is a health warning and it’s going to be messy. Accounting for carbon is not a quick tick-box exercise in a world goal to reduce global warming. The American political economist and Nobel Prize winner in Economics, Elinor Ostrom reminds us the complexity (quote above).
Given the complexity and changing nature of the problems involved in coping with climate change, there are no 'optimal' solutions that can be used to make substantial reduction in the level of greenhouse gases emitted into the atmosphere. A major reduction in emissions is, however, needed. The advantage of a polycentric approach is that it encourages experimental efforts at multiple levels, as well as the development of methods for assessing the benefits and costs of particular strategies adopted in one type of ecosystem and comparing these with results obtained in other ecosystems.1
Given the complexity of the task ahead for society, governments, organisations, and individuals, quick-fix solutions that fail to acknowledge the interconnectedness across the three crises could make things worse. Climate change exhibits the characteristics of what the authors Rittel and Webber called ‘wicked problems’.2
The characteristics of ‘wicked problems’ include:
Difficult to formulate.
It is never clear when a solution has been reached.
They don’t have true or false solutions, only good or bad according to the perspective taken.
A solution will have long drawn out consequences that need to be taken into account in evaluating it.
An attempted solution will change a wicked problem so it is difficult to learn from trial and error.
There will always be untried solutions that might have been better.
All wicked problems are essentially unique; there are no classes of wicked problems to which similar solutions can be applied.
They have multiple, interdependent causes.
There are lots of explanations for any wicked problems depending on point of view.
Solutions have consequences for which the decision-makers have responsibility.3
What is clear, thanks to the Paris agreement on climate change, is that the world has a goal to keep global warming to less than 1.5 degrees. It is a goal that must be at the heart of, and, driving an organisation’s carbon accounting.
