By Duncan Kinney – Illustration by Colin Spence
I know I’m being completely unfair. When I think of accountants, I have this image of Bob Cratchit in his dismal little cell. I know this isn’t right, but it’s stuck there. This negative association may also have to do with the visceral hatred of mathematics I developed while in junior high and high school.
So what do accountants do? Well, you know those financial statements that government and industry are obligated to create for stakeholders. Yeah, they synthesize, understand and decipher those.
And as the world turns to various market related solutions like cap and trade and carbon taxes to combat climate change the accountant ascends in importance. These carbon costs have a good chance of being reported in financial statements but even if they’re not forward looking companies are already positioning themselves ahead of government legislation. Regardless of mandate or legislation, it’s the accountant who has the know how to understand these data sets.
Julie Desjardins is a chartered accountant and has been the climate change advisor to the Canadian Institute of Chartered Accountants for the past ten years. She’s quite frank about the importance that accountants are going to have going forwards.
“We, as a planet, have to start redefining success,” says Desjardins.
“I think every profession has a role to play and chartered accountants as a profession has to play its role also. I think that some of the skill sets that CAs bring are very important. Number one we’re business leaders. Number two we’re a profession that’s trained in auditing and assurance services.”
When you’re verifying the numbers on an odorless, colorless, omnipresent gas, assurance, which is making sure the numbers are what they state they are, becomes ever more important.
Calgary is going to be home to the Carbon Finance Conference in October of 2010. While Calgary might not be the first place you’d think of to hold such an event carbon finance is a hot topic in Alberta because of the furor over oilsands emissions.
According to one of the conference organizers, Rob Kaczanowski, certain classes of investors are starting to put more thought into climate change risk or climate change disclosure
“You’re seeing shareholder groups saying that they are interested in this and they’re using proxy voting at the board level to push agendas.”
Back in April BP defeated a motion brought forward by FairPensions, a good governance lobby group that is concerned about climate change. The resolution brought forward wasn’t an outlandish “Stop the Tarsands” message, they were seeking more financial and carbon related disclosure for BP’s oilsands business.
Kaczanowski also makes the point that accounting is more than just number crunching.
“There’s a whole qualitative side to accounting where you’re getting into risk disclosure as opposed to risk quantification.”
Federal governments in North America have been extremely reluctant to implement carbon taxes or cap and trade but when the CEO of Suncor starts speaking in support of a carbon tax, you know they can’t be too far off. And while governments dither what else is going to cause companies in the global supply chains to start keeping their track of their emissions? The surprising answer is Walmart.
“Walmart, throughout it’s supply chain now, is asking for their suppliers to report their greenhouse gas emissions and to show that they’re taking actions to reduce them. If you want to have a chance at that market you have to have that information,” says Desjardins.
Given the importance of Walmart in the global economy, I’d say that’s another big clue that carbon accounting is going to become more and more important.
An interesting thing I learned talking to the sources for this story was that what they were talking about didn’t sound like accounting to me. It sounded like a new job, one beyond the financial statement. It seems that as you progress through your career you become more like a storyteller and less like an accountant.
“I think it’s generally recognized that financial statements alone cannot deliver all the information that’s required for a company. You need a contextual, a narrative setting and quite frankly financial statements are very complex these days. Even if you’re a chartered accountant sometimes you need help to understand these things,” says Desjardins.
Context? Narrative? These are words you’d be hard pressed to connect with accounting yet here is one of the industry’s leading lights making these connections. Maybe I’m not as far from accounting as I’d like to think in my journalist perch.
Given the historical and transactional nature of financial statements there is a lot of information that investors need that will be found in reports outside of financial statements. So is the focus of accounting changing?
“I think we will always be the experts there but I think there is a general and growing recognition within the leadership of the profession that financial statements should be complemented by additional performance reporting, non-financial performance reporting. Especially on environmental and social issues. This is integral to a company’s intangibles and it’s reputation.”
And while we as humans continue to struggle to redefine success the accounting profession will continue its journey as well.
“To be very honest there’s also a challenge for this profession. While some of the leadership and some others appreciate the need to think a little more broadly than historical financial numbers and include more non-financial information not everybody in the profession is there,” says Desjardins.