How big accounting firms are working towards net zero
Plans are in motion for many organizations to achieve net zero over the next eight years (Getty Images/Westend61)
The push for environmental, social and governance (ESG) commitments has become a top priority for today’s leaders. As such, a growing number of accounting bodies—including CPA Canada—are committing to achieving net-zero greenhouse gas emissions by or before 2030 for their operations. Over the past two years especially, efforts have been formalized and reported in key areas that include emissions reduction, operations, supplier/partner relationships, employee empowerment, and education and customer support.
Here is a look at some of the ways accounting firms are making this happen.
MNP PUTTING CUSTOMERS ON NOTICE
Edward Olson, CPA, leader of environmental, social and governance for MNP says client education is a critical link in achieving net-zero goals. He cites three key areas they are addressing with customers: raising awareness; understanding targets and transition plans to achieve them; and emissions reporting.
“Many still don’t believe net-zero targets will impact their business, but it is critical that they understand that executing on those targets will have a direct connection to enterprise value,” he says.
Setting and executing targets is essential, he adds. “Execution will need to be based on setting a sufficiently defined transition strategy so they can assess if they are achieving their targets in a meaningful manner. That’s the piece that is usually missing.”
MNP is also educating clients on the extent of their reporting requirements moving forward. This is an effort to help clients understand what the emission sources are within their operations and throughout the supply chain.
“Companies need to know they will eventually face, if not already, requirements to report their emissions to their customers [and investors] and quantify them in a meaningful way. This will demand some type of assurance to enhance the reliability of disclosures.” (The recently released ISSB exposure drafts on its first two standards gives an indication of what is to come.)
DELOITTE’S WORLDCLIMATE PLAN
“Reducing emissions is a very important pillar of our net-zero strategy,” says Sheri Penner, CPA, WorldClimate executive, Deloitte Canada.
The company shares a goal with many organizations to reduce business travel emissions by 50 per cent per full-time employee from FY2019 level by or before FY 2030. “We can’t simply rely on a robust carbon offset strategy. A lot more proactive things need to be done for that piece to get to net zero.”
This aligns with the Science-Based Targets initiative (SBTi) that provides a clear path to limit the earth’s temperature increase to under 1.5°C.
Details of Deloitte’s net-zero initiatives can be found in its WorldClimate Plan as well as its 2021 Impact Report. Among many other initiatives, Deloitte has a Green Champion Network that encourages climate-friendly activities at work and at home, says Penner. “They have identified many community projects that align with climate action, from establishing an Indigenous Carbon Fund to using e-bikes for commuting.”
It is equally important to engage the ecosystem of suppliers and customers, she adds. “We have a unique role to play because we can work with different organizations and dedicate resources to helping solve climate problems. For example, we have convened 30 relevant companies around aviation to look at adopting sustainable aviation fuel or working with companies with carbon sequestering technologies.”
A NEW EQUATION FOR PWC
PwC Canada’s net-zero commitment is fully integrated into its global strategy, The New Equation,
The company’s strategy is being used internally, as well as with its clients, to support their efforts to make a net-zero future a reality, says Mike Harris, CPA, partner and ESG practice and net-zero leader, PwC Canada. “We are building on existing client work in sustainability and net-zero transformation and augmenting that through our broader focus on helping clients bridge the gap between their current state and ESG ambitions.”
To help leadership keep pace with reporting requirements, PwC has published the 2022 Canadian ESG reporting insights study. The report highlights a commitment to “decarbonize their value chain,” embrace ESG standards, as well as partner with vendors who share the same sustainability priorities. “Climate change and net-zero transformations are top of the leadership agenda,” says Harris.
“Companies are under pressure to provide information that’s relevant, reliable, complete, comparable and of the same calibre as investment-grade financial reporting.”
KPMG ACCELERATING THE ESG PACE
For KPMG in Canada, there has been a growing desire from its own people, its clients, and the communities they serve to further act on its environmental commitments, says Heather Baker, FCPA, Canadian managing partner, quality and risk management and social impact leader.
In 2021, KPMG joined RE100, the global corporate renewable energy initiative that brings together large businesses committed to 100 per cent renewable electricity. “Membership in RE100 reinforces our global commitment to becoming a net-zero carbon organization by 2030,” says Baker.
The company is also implementing carbon-reducing steps within its operations, including upgrading to LED and sensor lighting where possible, implementing green roofs and gardens, and targeting LEED standards on new buildings and retrofits.
“In addition, we have created a Green Champions Network that will help mobilize our people around its environmental commitments while tapping into our people’s passion for the environment,” she says.
In March 2022, the company introduced a three-part global learning program to increase employee ESG knowledge and the fundamentals behind what it is, why it matters, KPMG’s commitment and how it can make a positive impact.
EY CANADA CHAMPIONS ESG EDUCATION
To reinforce its commitment to ESG, EY Canada appointed Kent Kaufield as its first chief sustainability officer in 2021. “We’ve been very ambitious in terms of where we wanted to go and how fast,” he says. “Globally, we were carbon neutral in December 2020, carbon negative as of October 2021 and will be net-zero by 2025.”
Across the whole firm, EY is looking to have all offices 100 per cent renewable energy by 2025, he adds.
One of the core tenets of its plan is to work with the entire ecosystem of clients and suppliers. “By 2025, 75 per cent of EY suppliers will be required to set SBTi approved science-based targets,” says Kaufield.
Much of the effort has been led by employees. EY Ripples, for example, enables people to work on community-based initiatives across the country. “As part of Ripples, we are formally launching the Eco Innovators Group in Canada that is focused on environmental initiatives.”
The focus for 2022 into 2023 will be on the acceleration of climate disclosures being introduced and standardized by regulatory bodies, he adds, noting that standards, such as those being set by the International Sustainability Standards Board (ISSB) “are clearly setting out high-level expectations.”
EY has also established a relationship with the Hult International Business School that allows employees to acquire a Masters in Sustainability. “It will be part of how we grow and retain people. I believe we’re one of the first in our industry to do this in Canada, but we certainly won’t be the last.”
STAY GREEN
CPA Canada has a wealth of sustainability resources, from reports to reviews of net-zero disclosures and details of our own commitment.
For those looking to upgrade their skills in order to be future ready, online courses are available, including Climate change for CPAs in audit and assurance, as well as Climate change for executives.