Researchers: Jayanthi Kumarasiri, Leanne Morrison and Laura Maran
According to the World Economic Forum 2019, Climate change has been identified as one the biggest current threats to the world economy, environment, and society. A very significant proportion of the carbon emissions that contribute to climate change have been attributed to corporate activity. Companies have a responsibility not only for the impacts they cause directly, but also for impacts they contribute to through their business relationships. Achieving a low emission economy cannot be delegated to government interventions or to market adjustment criteria (i.e. emission trading schemes) alone. Neither can it be attacked by organisations through simply reporting of their impacts according to global reporting frameworks. The complex challenges of climate change require a fundamental shift in organisational strategy and, in turn, a change in organisational cultures. Recognizing the entirety of potential cash flow effects associated with an organisation’s social and environmental impact might not be possible, but accounting and management accountants have a pivotal role in creating awareness of impact through the application of costs and benefits.
While the TCFD has made profound inroads in bridging the gap between corporate decision making and climate change, fundamental issues remain which could further inhibit organisational responses to their climate change responsibilities. For instance, the TCFD requires companies to demonstrate the resilience of their strategy and operations in different scenarios of future global warming. While scenario planning is commonly used by business for strategic decision making, climate change related scenario analysis has introduced significant challenges for companies due to the involvement of multiple unknown parameters. However, as emphasised by the recent TCFD 2019 report, financial function and risk management specialists who have the expertise in traditional scenario analysis can make significant contributions towards effective development of climate related scenarios. Present opinions call for management accountants to become active decision facilitators within organisations. The objective of this study is therefore to provide a better understanding of how management accountants can contribute to corporate responses to TCFD requirements.
This project is funded by CIMA (Chartered Institute of Management Accountants).
Acknowledgement of Country
RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Luwaytini' by Mark Cleaver, Palawa.
Acknowledgement of Country
RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business.