CO2 reduction barely features on corporate financial agendas

Achieving the Paris climate goals requires huge efforts from every section of society. However, there are very few companies that have put CO2 reduction high on their agenda. Despite having worked out measuring and recording methods, many of them either neglect to set goals or have no CO2 administration. These are the findings from research carried out among financial professionals, such as chief financial officers, financial managers and auditors, by the UG's Institute for Governance and Organizational Responsibility (iGOR) and the ‘Accountants in business’ group of the NBA Netherlands Institute of Chartered Accountants.

A lack of knowledge and concrete CO2 reduction goals is preventing financial professionals from making a real contribution to reducing greenhouse gases. But according to researchers, these financial professionals could play a significant part in solving this problem. They fulfil a key role in gathering financial and non-financial corporate information. Financial professionals occupy a unique position in this respect and could play an important role in measuring and recording greenhouse gas emissions, leading the way to achieving reduction goals.

Main findings

1. A mere 28% of respondents measure their organization’s CO2 emissions. These are mainly the larger organizations. CO2 policy is currently a subject of much boardroom discussion, but little ground-level action.
2. V ery little CO2 reporting has been standardized and most of it fails to comply with international standards, such as the global Greenhouse Gas Protocol for industry.
3. Only 8% of respondents are seriously committed to CO2 policy, and 44% show no commitment at all. A staggering 82% think they should be more involved as financial professionals.
4. Concrete CO2 goals and statutory regulations are seen as important measures for stimulating greenhouse gas reduction within companies.
5. Financial professionals know very little about policy in this area.

Concrete steps

Three concrete steps can be taken towards a solution, claims Professor Dick de Waard from the University of Groningen and board member Paul Slegers RA from the ‘Accountants in business’ group of the NBA.

1. First, all large, medium-sized and small organizations must develop policy on greenhouse gases and use it to construct concrete measurements and goals. Financial professionals are in the perfect position to implement this in their organizations, preferably in line with prevailing international standards such as the Greenhouse Gas Protocol.
2. In addition, knowledge of measuring methods and greenhouse gas instruments must be taught through training courses. This is needed in both the initial training programmes for financial professionals, and in permanent education.
3. Finally, CO2 registration can be made a voluntary or a compulsory standard. The process of monitoring greenhouse gases per organization could be simplified and made cheaper if large numbers of organizations were to take part in CO2 registration and external reporting. It would be fairly simple to introduce small-scale, administrative indicators by stating CO2 emissions on invoices, for example. Energy companies already share this information. A more far-reaching option would be to anchor CO2 reporting in the purchasing conditions. This would reveal the CO2 emissions of the entire value chain and make it possible to compare performance within the chain. Finally, the law could be changed to make CO2 reporting a statutory element of annual accounting.

More information

• Contact: Dick de Waard and Kees van Veen, tel.: 050-3633768 (secretary)
• For the full report [in Dutch], go to: CO2-staat-nauwelijks-op-de-financiële-agenda

About the NBA and iGOR

The Institute for Governance and Organizational Responsibility (iGOR) is an expertise centre operating under the Faculty of Economics and Business at the University of Groningen. It focuses on corporate governance, corporate reporting and corporate responsibility.

The Accountants in business group of the NBA Netherlands Institute of Chartered Accountants represents over 9,200 RAs and AAs, most of whom work as CFOs, financial managers or auditors.