Management accountants see negative impact from global warming
Global warming isn’t just a concern of environmentalists. Nearly two-thirds of management accountants think global warming is having an impact on the environment, according to a new survey, and a quarter of them are seeing a negative impact on the bottom line.
The survey, conducted by the Institute of Management Accountants, found that 65 percent of the respondents polled believe global warming is having a significant impact on the environment.
“The message that really came out loud and clear from the survey in my opinion was that addressing global warming is not some theoretical possibility that people are talking about, but a reality that is affecting companies and their profitability,” said IMA vice president of research and policy Raef Lawson. “Two-thirds of the companies or more are moving to address it now. It’s something that I think will become increasingly urgent and be on companies’ radar screen going forward.”
The accounting profession has made progress in recent years on sustainability reporting and integrated reporting, introducing new guidelines from the Sustainability Accounting Standards Board and the International Integrated Reporting Council. While the IMA didn’t ask the management accountants it polled specifically about integrated reporting, it did ask them about whether they’re implementing metrics to measure their environmental performance.
“About a quarter of them have done that, and 18 percent of them are measuring their carbon footprint, so there is movement in that direction,” said Lawson. “If we dig a little deeper into the data, we see that measuring the carbon footprint, for example, varies around the world. Europe has been way ahead of the United States, for example, in terms of integrated reporting and measuring the environmental impact. We saw that indicated in our survey. Two-thirds of the European companies are measuring their carbon footprint. We see evidence that integrated reporting and sustainability reporting are becoming more of an issue for U.S companies, with an average of 17 percent of U.S. companies measuring their carbon footprint. I expect to see that grow in the coming years.”
He believes there needs to be more of a sense of urgency in implementing sustainability-related initiatives to address global warming, despite the changes in Washington that threaten to roll back environmental regulations. Environmental issues are nevertheless becoming more of a concern for finance professionals and their companies.
“I do expect it to continue,” said Lawson. “That was one of the motivations for this survey. It was to see whether this idea of global warming was just some liberal fantasy or whether it was a reality, and 72 percent of the survey respondents said global warming is affecting their company. They’re implementing various initiatives to address global warming. It wasn’t motivated by regulation. It was motivated by the impact that global warming is having on the bottom line. A quarter of the companies indicated that global warming has already had a negative impact on their profitability. Another fifth, 19 percent, weren’t sure. It’s clear this is an issue that will affect company profitability that they need to have on their radar screen and need to think about how they’re going to address it.”
He believes the trend will continue, even if there are changes at the Environmental Protection Agency that remove protections against greenhouse gases and install officials who deny that global warming is even happening.
“We’re in the age of alt reality, but that doesn’t change the reality,” said Lawson. “That’s another interesting part about the survey. We’re asking these hard-nosed financial accounting professionals what their perspective is, and they’re the ones who are seeing the dollar monetary impact of this issue on their organizations’ profitability. They’re in the best position. That’s the great thing about the IMA Pulse surveys. It’s a survey of finance folks who can see the impact of these various issues on their organizations and the profitability.”
Another finding from the survey is that only 20 percent of the companies indicated they are encouraging modes of green commuting, such as bicycle transportation, although that varied globally by region.
“In Europe a third of the companies are encouraging that, whereas in the U.S. only 17 percent were,” said Lawson. “I think again Europe’s ahead of the U.S., but also the U.S. is so much more dispersed geographically. It’s tough, especially in rural areas, to do green commuting. I’m actually encouraged by the 20 percent. That’s much more feasible in urban areas. Even to have 20 percent of the companies encouraging that I thought was encouraging.”