AICPA & CIMA offer climate accounting education resources

The Association of International Certified Professional Accountants unveiled a new educational report on climate resilience Monday, the fourth in a series of online documents aimed at educating accountants about sustainability.

Accounting for Climate Resilience  aims to help finance professionals lead their organizations with initiatives like scenario analysis and adaptation planning so they can build greater resilience. It comes amid alarming signs of climate change, as record-setting temperatures have hit the U.S., Europe and other parts of the world in recent days. 

The Association of International Certified Professional Accountants is the umbrella organization for the American Institute of CPAs and the London-based Chartered Institute of Professional Accountants, together known as AICPA & CIMA.

"Finance professionals are at the heart of business and therefore are well-placed to help create resilient business models and implement strategies for organizational sustainability in a changing world," said Martin Farrar, associate technical director at AICPA & CIMA, in a statement. "They have connections within the business and can join the dots with stakeholders outside the business to start conversations about what resilience looks like in relation to the risks posed by the climate emergency."

This and the other educational briefs try to help organizations and their accountants consider sustainability issues, integrate them into long-term decision-making, and incorporate them within internal and external reporting.

The previous reports included Accounting for the Sustainable Development Goals, Accounting for Carbon and Accounting for Nature. 

Accountants have increasingly become involved in providing assurance services for sustainability reporting, in line with the trend toward greater environmental, social and governance reporting, as more companies provide shareholders with ESG reports. 

The AICPA & CIMA have been encouraging accountants to provide such services. "With their skills and knowledge, finance professionals can provide insights into organizational governance, strategy, risk management, and performance to support sustainable decision-making built on sound business analysis and assurance of both financial and non-financial information, including sustainability-related data," said Jeremy Osborn, global head of ESG at AICPA & CIMA," in a statement. "They are ideally placed to support climate scenario development and build this into organizational adaptation plans."

Last month, the Center for Audit Quality updated its analysis of the number of S&P 500 companies providing ESG assurance, and found the number of S&P 500 companies reporting ESG information grew from 93% to 99%. The number of companies seeking assurance over certain ESG metrics increased by 13% from 2020, from 52% to 65%. Of the companies that assured their ESG information, 18% engaged a public company auditor. The majority of companies that used a public company auditor to assure their ESG information used the same firm that performed their financial statement audit. In 2021, the scope of information being subject to assurance increased, especially when public company audit firms provided the assurance

There has been a backlash against ESG investment funds in some conservative-led states like Florida and Texas, and Republicans in Congress have been holding hearings in recent months in an effort to discourage ESG investment funds and sustainability reporting. Nevertheless, such reporting is likely to remain in demand, especially with the Securities and Exchange Commission expected to finalize the rule it proposed last year for climate-related disclosures sometime this fall. Many other countries have already begun moving forward with the European Union imposing a Corporate Reporting Sustainability Directive, and the International Sustainability Standards Board finalizing its sustainability and climate disclosure standards late last month.