It’s time to make climate change a business issue

The business cost of climate change is real and growing. But, not everyone is aware of the issues. Are you prepared?

Defining climate change

One of the biggest risks facing businesses, economies and societies around the world is climate change.

Many are already feeling the impact of climate change on operations, financial results and prospects for future value creation.

There is strength in numbers and together we can bring about real and effective change to make Canadian companies more sustainable.

The challenges currently posed by climate change pale in significance compared with what might come […] Once climate change becomes a defining issue for financial stability, it may already be too late.”

Mark Carney is a Canadian economist serving as Governor of the Bank of England and Chairman of the G20’s Financial Stability Board. His September 2015 statement above underpins CPA Canada’s work as a leading sustainability and climate change voice for over 25 years through its legacy bodies. Our commitment to inform and advance best practices remains firmly entrenched today.

“Climate change is a critical environmental, social and economic risk,” says Sarah Keyes, principal, Research, Guidance and Support, CPA Canada. “From a business perspective, climate change can have implications on strategy, competitiveness, risk management, stakeholder relations, and business resilience. An organization’s ability to recognize and address these issues will likely determine its effectiveness in achieving long-term business sustainability.”

World leaders have recognized climate change as one of the greatest challenges of our time. At COP21, over 195 countries signed the Paris Agreement, which subsequently came into force in November 2016. Under this agreement, Canada’s federal government has committed to reducing the country’s greenhouse gases by 30 per cent below 2005 levels by 2030.

“Now that ratification of the Paris Agreement has caused the agreement to enter into force, the real work begins,” says Gord Beal, vice-president, Research, Guidance and Support, CPA Canada. “Implementation is key to achieving global commitments. A major element toward marking that work is accountability — having both government and the business community playing leadership roles.”

The cost of inaction is real. A 2011 report from the National Roundtable on Environment and Economy says, “in Canada alone, it has been estimated that, in the absence of action to address global warming, we could face annual costs of between $21 billion and $43 billion by the 2050s.” These costs would be shared by governments, businesses and our broader society.

We are already experiencing the impacts of climate change. Shifts in weather conditions such as temperature, precipitation and wind have become more frequent in the last years, resulting in severe damage to land, property and products. In fact, the costliest natural disaster for insurers in Canadian history were the Fort McMurray fires in May 2016 – resulting in approximately $3.7 billion in insured damages.

Do Canadian financial executives see climate change as a business issue?

In April 2017, CPA Canada and FEI Canada collaborated on a short pulse survey of FEI members and stakeholders (who are mostly CPAs) that focused on climate change as a business issue. Some of the findings included:

CPA Canada Climate Change Infographic

 

The results of the survey set the context for a panel discussion at FEI Canada’s three-day national June conference in Whistler, B.C. As a key national strategic partner, CPA Canada partnered with FEI Canada to convene a moderated discussion on climate change and the implications for Canadian businesses.

 

FEI speaker panel, business professionals speaking at a conference

Gord Beal, vice-president, Research, Guidance and Support, CPA Canada, introduces panel members at the 2017 FEI Canada National Conference.

In order to gauge the perception of climate change as a business issue, the audience at the conference participated in live polling before and after the session. The results are surprising:

  • Before the panel discussion, 62 per cent of session attendees did not consider climate change to be a top business issue, while 33 per cent thought it was.
  • Following the session, the same number of attendees were polled and asked the same question. Fifty-two per cent agreed that climate change is and should be a top business issue, while 44 per cent still disagreed. Only four per cent were unsure.

 CPA climate polling infographic

 

CPA Canada: Your key partner

CPA Canada has identified climate change as a strategic priority for the profession and is committed to driving awareness to business leaders and boards through a number of initiatives:

  • The launch of The Prince of Wales’s Accounting for Sustainability Project (A4S) Canadian Chapter of the A4S CFO Leadership Network
  • An information session for the business and investment communities to learn about the work of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, featuring Mark Carney, Bank of England Governor and Chair of the Financial Stability Board.
  • An initiative with Natural Resources Canada (NRCan) to help organizations better understand and adapt to the implications of climate change.
  • Ongoing thought leadership and resources.

Role of CPAs in supporting and leading climate change efforts

“We need to keep the dialogue going among our diverse stakeholders while continuing to invest in research, thought leadership and action,” says Keyes. “Given the size and scale of the challenge, it is clear that a collaborative, multi-disciplinary response to the complex issue of climate change is essential – and CPAs have an important role to play.”

Although CPAs can help identify those challenges and opportunities for effective business planning, we recognize this work can’t be achieved by accountants alone.

“The interconnectedness of social and economic development is indisputable,” says Joy Thomas, president and CEO, CPA Canada. “The CPA profession works towards a passionate yet practical commitment to economic development that is inseparable from social development. This is a meaningful part of who we are as a nation, and what makes the CPA profession so unique. At the core of all we do is compassionate prosperity — our Canadian Ideal of Good Business.”

Editor’s note
The next issue of Member News will land in your inbox on September 11, 2017. Enjoy the issue and, as always, let us know what you think!