May 16, 2022

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IMA offers advice to accountants on reducing a business’s carbon footprint

The Institute of Management Accountants released a guide to the steps that businesses can take to cut carbon and other greenhouse gas emissions in their operations under the leadership of accountants.

The report discusses how management accountants can lend their expertise to decision-making and drive performance toward milestones in reducing a company’s carbon footprint.

As the pace of climate change accelerates, more businesses are trying to reduce carbon emissions and reach goals such as net zero over the coming decades, in line with some of the commitments reached at the United Nations’ COPY 26 climate change conference in Scotland last November. At that conference, a group of sustainability standard-setters agreed to come together and set up an International Sustainability Standards Board, overseen by the International Financial Reporting Standards Foundation, this year (see story).

On top of pressure from investors and regulators to reach a common set of standards for environmental, social and governance reporting (ESG) reporting, companies see other benefits in terms of operational efficiency, risk management and relationship-building opportunities and as ways to improve their performance and value over the short, medium and long term. The report, in the form of Statement of Management Accounting (SMA), discusses how management accountants can be instrumental in collaborating across their organizations on a decarbonization strategy.

“Many accounting and finance professionals in business have been reluctant to participate in emissions reductions plans, as they view the area as novel or unrelated to driving performance,” said Shari Littan, director of corporate reporting research and thought leadership at the IMA, in a statement Thursday. “This SMA shows that our professionals already have valuable competencies to help their organizations develop and implement emissions reductions in a way that brings valuable insights for building strategies in a changing market with new regulatory demands.”

The report describes how accountants can apply their skills in areas such as strategic planning, financial analysis, risk management, internal controls and reporting, technology, activity analysis, capital budgeting and investor relations to carbon reduction. The guide includes two parts. The first part explains the conditions impelling businesses to consider their carbon footprints. The second part offers a primer on the steps involved in developing and implementing an emission reduction plan that can also deliver new insights and innovations in an organization’s business strategy.

“We are excited to have produced this guide with IMA in this report that explains how a company can set a baseline and track progress on reducing GHG emissions,” said Arnaud Brohe, author of “The Handbook of Carbon Accounting” and one of the report’s main co-authors, in a statement. “In our work, we see every day how management accountants oversee the execution of these plans and how the analyses are used for internal decision-making and external reports. These professionals are a dream to work with, as they use their awareness of regulatory trends and reporting in a way that creates a sustainable advantage for their businesses.”