In an era marked by heightened environmental consciousness and the urgency of addressing climate change, companies are under increasing pressure to be transparent about their carbon footprint. The forthcoming Corporate Sustainability Reporting Directive (CSRD) mandates that companies larger than SMEs disclose their carbon emissions. This push for transparency is driven not only by regulatory requirements but also by demands from stakeholders such as investors, clients, and employees who are seeking clear evidence of an organization’s commitment to sustainability.
While the necessity of carbon footprint reporting is clear, the execution remains a topic of debate. An essential consideration is whether companies should build internal capabilities for this task or opt for external expertise.
Internalize ownership, outsource reporting
We at Carbon+Alt+Delete propose a balanced model. Companies should internalize ownership of carbon reduction targets while outsourcing recurring carbon reporting to an external carbon accountant. This approach mirrors the dynamics of financial accounting, where internal leadership sets financial targets, and reporting is often outsourced to financial service providers.
It’s worth noting that the decision to insource or outsource varies based on the size of the company. Large corporations with multibillion turnovers often maintain internal financial accounting functions to some extent, while small and medium-sized enterprises (SMEs) often rely entirely on external financial accountants.
Benefits of an external carbon accountant
Engaging an external carbon accountant offers several compelling advantages for companies:
- Optimal resource allocation
Carbon reporting is typically an annual task that requires only a small fraction of an internal accountant’s time, often less than 5% of his/her time. Outsourcing this specific task allows internal resources to be used more efficiently.
- Navigating complexity
Carbon accounting, while not overly complex, demands up-to-date knowledge of regulations and standards to ensure accurate reporting. An external carbon accountant can provide the specialized expertise needed to navigate this landscape effectively.
- Risk mitigation
Inaccuracy in carbon reporting is not only a reputational risk but also a legal liability. As regulations evolve, organizations are becoming increasingly accountable for accurate and auditable climate reporting. An external carbon accountant can help mitigate these risks and ensure compliance.
The confluence of these factors makes outsourcing carbon reporting to an external expert a prudent and cost-effective choice for organizations.
Defining the role of the carbon accountant
The term carbon accountant encapsulates the multifaceted nature of this role:
- Carbon expert
A carbon accountant must possess comprehensive knowledge of carbon accounting principles, methodologies, and the intricacies of the Greenhouse Gas Protocol. This expertise ensures the accuracy and reliability of carbon footprint calculations.
- Accounting support
Just like a traditional accountant, the role involves consistent support. The carbon accountant assists companies in delivering the critical “commodity” of carbon footprint reporting on a recurring basis, aligning with the organization’s sustainability goals.
As the world grapples with the urgent need for sustainability, the role of the external carbon accountant emerges as a crucial enabler for organizations striving to navigate the complex landscape of carbon reporting. The impending CSRD underscores the growing significance of transparent and accurate carbon footprint disclosure, making the case for a dedicated professional who can ensure compliance, accuracy, and risk mitigation.
Ultimately, the decision to outsource carbon reporting reflects a commitment to prioritizing efficiency, expertise, and responsible reporting. By embracing the role of the carbon accountant, companies position themselves as active participants in the global effort to combat climate change, setting a course toward a more sustainable future. The value proposition extends beyond regulatory compliance, unlocking strategic insights, effective communication, and ongoing learning to drive meaningful change and contribute to a greener, more resilient world.