How accountants can help fight climate change
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hello everyone
my name is yulin and i’m an accountant
for a good proportion of my
professional career i was a financial
auditor
but a few years ago i pivoted to
something else
so nowadays when people ask me yulin
what is it that you do
that’s it i’m in sustainability and
climate change
then they ask me how is it that you can
become
from accountant to become in climate
change
then also they asked me this question
what do
accountants have to do with climate
change
well i’ll answer that question in a bit
but first
i wanted to take you to this year about
500 years ago
- now this year is pretty special
it was the period of the italian
renaissance
so there was art and also commerce
booming
in italy and there was a man
a franciscan friar a mathematician
called luca pacioli
so luca pacholi was a mathematician
and he created and published this very
important book
called the summary of arithmetic
geometry
proportions and proportionality it’s a
bit of a mouthful but it’s actually a
very important book
it’s so important because it actually
helped to establish
the principles of accounting
particularly around
debits and credits many people have said
that it’s because of these principles
that trade
commerce continued to develop
so maybe let me give you an example why
are these principles so important
say you are an investor okay you want to
have a look
at a company on whether or not to invest
and you say
let me have a look at those financial
information the financial statements
so you get the financial statements and
you turn to the balance sheet and you
say
hmm pretty healthy balance sheet return
to the p
l and say lots of profits as well i’ll
invest in this company
so these financial information actually
engenders
trust and accountability
and it’s these principles that have been
used by accountants
that have been actually also relied on
by investors
and also stakeholders that engendered
trust and accountability
now i want to move on to another topic
something that is i think close to
everybody’s heart
in this audience today something that
affects all of us
your families your future families
investors companies as well
and something that i feel now that i’m
in this space we haven’t properly
accounted for
and we also haven’t been felt
accountable to
and guess what that that the issue is
climate change i want to now
dish out three numbers and also three
letters
418 ppm what is 418 ppm
so firstly ppm stands for parts per
million
and that’s a measure of the
concentration in carbon dioxide
in the atmosphere 418 is the level
of the carbon dioxide in the atmosphere
and
it’s not a good level let me tell you
why
so as far as we could actually record
the amount of carbon dioxide in the
atmosphere and we could go back pretty
long time and quite surprised
800 000 years the carbon dioxide is
always
oscillated between 200 and 300 parts per
million
never above 300 and the changes
in the oscillation of carbon dioxide
over 200 to 300 ppm
it occurred over tens and thousands of
years
so very long time frames and the earth
could adapt accordingly
naturally but something happened
about 100 plus years ago
pre-industrialization happened
and our parts per million managed to
actually go through the
300 ppm level and smash
through 400 ppm so
we are here at 418 ppm
and some might ask like what’s the big
deal
it’s just a number some of you may know
that greenhouse gas emissions actually
traps
heat in the atmosphere greenhouse gases
like
carbon dioxide that increases
the surface temperature of earth so some
ask me so
exactly how much has the temperature
increased from pre-industrial levels
i’ll show you a number
1.1 degree celsius from pre-industrial
levels
people always ask me actually that is
quite trivial
what’s the big deal about 1.1 degrees
celsius
actually people are already feeling the
effects of climate change
even at this level i’ll share with you
two other numbers
1.5 and 2 degrees celsius
scientists always talk about these two
numbers 1.5 and 2.
people always tell me what’s the big
deal what’s the difference
and i say actually there’s a world of
difference
scientists say that in the 1.5 degrees
celsius world
70 to 90 percent of our coral reefs will
vanish
and in a two degree celsius bowl 99
and another case in point in the 1.5
degrees celsius bowl
we talked about reproduction decreasing
by seven percent
and in the two degrees celsius well that
will increase to
16 reduction in wheat production in the
tropics
scientists are also saying that in a two
degree celsius world
there will be more heat waves and
extreme weather events as well
so scientists are saying please try to
keep it
at 1.5 degrees celsius
now that we understand why it is
important
to cap that increase to 1.5 degrees
celsius
people often ask me so how much of this
carbon dioxide is there in the
atmosphere
how much of it and i said to understand
this let me show you this picture
so this picture here is a orange ball
but it’s a very special orange ball it’s
actually a very big orange ball
probably larger than this or taller than
the stage
it’s two stories high and it represents
one ton
of co2 people ask me
so how much of these orange balls if it
represents one ton of co2
are there in the atmosphere i’ll give
you another number
51 gigatons which actually translates to
51 billion of these balls in the
atmosphere
being emitted every year scientists say
if you want to keep within a 1.5 degree
scenario you can
but you need to half those emissions by
a time frame
20 30 which is eight to nine years time
and then
you need to get it to zero by twenty
fifty
you might think so is this very tough or
what
well based on the study by pwc
of the g20 countries which is the
largest countries in
the world you need to decarbonize by
11.7 percent a year
to get to that 1.5 degree scenario
so you say actually quite doable maybe
we can get there
but i’ll give you a reference point
last year 2020 was the year
where covet was raging
lots of business stopped we had the
circuit breaker
we had lockdowns activities decreased
planes or airports shut down hazard a
guess
about the decrease of carbon emissions
during the year of 2020 has it a guess
close not close sorry it was
unfortunately only seven percent
some sources even say six percent
when i saw this number i said to myself
oh my goodness despite
all this reduction in terms of
activities
we only decrease our carbon emissions
around the world
by to six to seven percent
how are we going to decarbonize the
whole world henceforth
but you know something there are three
areas that actually give me hope
let me share with you the first area
is technology and innovation my first
ball of hope
including innovation in sustainable
finance
and there’s a really great innovation
that’s happening
with renewable energy and even in
geoengineering
like carbon capture
the next area of hope i think is
nature-based solutions
using inland forests and mangroves to
sequester
the carbon dioxide in the atmosphere and
last but not least
the third one which i think is us
the community businesses governments
individuals setting ambitious targets
coming together to confront and to fight
climate change you know
during 2020 i thought there was
a lot of issues in the world kovit was
raging
and i thought you know i think climate
change would be in the back burner
but i was very surprised in 2020
the number of companies and also the
number of countries
that actually committed to net zero had
doubled
from 2019. you had
japan new zealand south korea
china all saying that it would be carbon
neutral
and then just this year you have the u.s
that’s it they will slash their carbon
emissions
by half by 2030.
i think this is good news we also talked
about investors
investors as well are very interested in
companies who are climate and esg
resilient
so the ambition is there i think there’s
lots of work to do
so how is it that we can keep companies
organizations accountable
and decrease the carbon emissions
just now i talked about financial
information
actually the financial information world
is actually a very well
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taken and also a very clear path very
well traveled path
however in the esg area or the climate
area
the path is less well traveled
and also it’s foggy let me explain why
well firstly there are quite a number of
sustainability
and climate related standards around
so people will use different different
organizations would use to some
standards
this actually makes it very difficult
for stakeholders and also
investors to cast and compare it can be
confusing
the next area is about carbon
footprinting or carbon measurement
well to be honest i don’t think all
companies actually know what’s their
carbon footprint
and even if they’re measuring the carbon
footprint
they’re not measuring it completely
there are no complete boundaries there’s
also no complete measurement of their
scopes
as well so how do you actually then
baseline your carbon emissions
set meaningful targets to actually
decarbonize
you can’t do it it just surprises me
that in an area where trust and
accountability is most needed
in the climate and esg area that
there’s not much of it
so when people ask me
you len who do you think can help in
this
what do you think we can do and i say
actually i think accountants can help in
this i think
accountants are able to fight climate
change they can save the world
and then people say you learn you’re mad
i say yeah i think accountants can be
mad
i think accountants can be mad for
climate change and let me tell you why
firstly measurement and disclosure
accountants have been doing this for
hundreds of years
they have been great at measurement and
accounting
and also disclosures this is going to be
a very natural adjacency
for accountants actually if you look at
the greenhouse gas protocol
it does have quite a number of
accounting principles hidden within as
well
the next area is adding credibility
accountants like auditors have been
verifying
financial and non-financial information
for the longest time too
say for example you wanted to buy some
high quality carbon offsets a quantity
of it
wouldn’t you want to know that the
amount that you bought is indeed
high quality carbon offsets accountants
can play a part
in that too and last
but not least is driving change and
accountants already doing so
in the world of global governance the
international financial reporting
standards
or ifrs the trustees have come out to
say
that they will make a start in making
a combine or harmonize reporting
standards of sustainability
so you see accountants can play a part
they can drive change and on an everyday
basis
i’m also seeing accountants putting up
their hand
young accountants putting up their hand
and say i want to join this fight
i want to join this fight against
climate change and i will use my skills
and experience
to fight this so i guess
to answer that question there’s some
ways
the accountants can help to fight
climate change
you know i think our world can be very
different in the future
in the future we might not hear the
roaring sounds
of internal combustion engines but
we will hear the humming sounds of
electric vehicles
in the future we won’t see forest fires
red skies but we’ll see clear blue skies
with air that we can breathe in the
future
our energy sources won’t be reliant on
fossil fuels
those things need to be kept in the
ground where they belong
instead our energy sources will come
from the sun it will come from the wind
and it will come from gushing waters
in the future everybody will have a
right
to a good education from the start
so that they can realize their dreams
so isn’t this a future worth fighting
for
isn’t this a future worth fighting for
in every role that we undertake
whether or not we are an educator
whether or not we are a young person
whether or not we are mother a ceo
a chief sustainability officer a banker
whether or not we are a accountant
thank you very much