As The Guardian has reported this morning:
A study of almost 3,000 publicly listed companies found that just 18% have disclosed plans that are aligned with goals to limit rising temperatures to 1.5C of pre-industrialised levels by the middle of the century. The report, by investment data provider Arabesque S-Ray, found more than a third of the world's top 200 companies still do not disclose their greenhouse gas emissions. The firm's chief executive, Andreas Feiner, said companies “may appear to be taking steps to reduce their impact on climate change” but many are choosing to keep the full scale of their emissions under wraps to avoid losing investment.
Nothing about this surprises me. What I can add with some certainty are two further arguments. This first is that most of those making disclosure will be doing so in ways that are hard to compare, and which will not necessarily be verifiable. And second, most of those doing so will be the companies about which we might have least concern.
The explanation is also telling: these firms are seeking investment for activity that they know is unsustainable. They are deceiving the market and are seeking to ensure capital is misallocated as a result.
This is precisely why Sustainable Cost Accounting is required: this idea from the Corporate Accountability Network would require that companies appraise their carbon use and cost a plan to bring it to acceptable standards, and then provide for this cost in full in their accounts precisely so that markets would know the scale of the issue that they face. The only capital they could then seek would be to fund their transition to carbon neutrality. And if they could not get there? Then they would be carbon insolvent.
In the face of the crisis we know must be addressed this is the last that is required now, and the only way I yet know of that might force accounting to address the biggest issue of our era to ensure that markets are fully appraised, which is the current stated purpose of accounts. The time for Sustainable Cost Accounting has arrived.
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There is a lot of good stuff in the Sustainable Cost Accounting concept but I worry about the effect on certain industries. For example, I used be FD for a road haulage business with 200 trucks on the road. Clearly this business is a major polluter of CO2, diesel particulates etc. However, equally clearly, there is no economic alternative at present. Rail does not go to every quarry or factory and 44 tonne electric or hydrogen trucks which can drive 300 miles a day do not exist. How would a company like this account for their cost of being carbon neutral by 2030. By the logic applied in the Sustainable Cost Accounting paper I can see a scenario where every road haulage company in the UK would be shut down tomorrow for being environmentally insolvent? Any thoughts?
No one would be sht down tomorrow
SCA would require a plan to be carbon neutral or an orderly winding up of affairs
And if the government decided carbon offset was allowed then the customer would have to achieve that with the haulier – but compensate by going beyond carbon neutral
But what will be clear is that haulage is in trouble
And as a matter of tax it is, and action is needed
If SCA says that and says new capital is needed to solve the problem it is doing the exact job accoutn9ing is meant to do
I would like to make a comment that is (only slightly!) off-topic; if I may? This is completely ‘off-the-wall’, but big problems need new solutions.
We pay for energy; oil, gas, renewables – whatever. We should perhaps (albeit, realistically only at Government level) pay for oxygen. It would be for the major developed, industrial and post-industrial economies to pay for it.
I appreciate it sounds daft, but there is a case that the industrial and post-industrial world should pay the (local) populations in Brazil or Africa (for example) not to burn forests, but to replenish them; and pay them on an acreage basis for growing and retaining forestry as a an ”oxygen crop”. The price could be determined by the contemporary price of the relevant cash crops the forests would have been burned down to produce; adjusted for the increase in world supply. This would no doubt stimulate the desire worldwide to re-forest the world, and reduce the price required to be paid while giving the local economies time to invest in the localities without requiring the burning of the forests.
This is full of problems. Before long we would be paying for the whole Amazonian forest. So the real question is – just how important is this to us?
I know; how to pay for it? It all just seems plain daft, but the matter is, after all fundamental: oxygen. Either this is a serious issue or it isn’t ……. I just want people to think this issue through. Do you want to stop the burning of forests? Permanently? What will it really take? It is economics that creates the problem; and it will be economics that stops it. Not just hand-wringing,
It is permissible to laugh, hopefully with a little nervous ambivalence.
That’s so whacky it has to be considered….and I will
“That’s so whacky it has to be considered….and I will”
I don’t see it as ‘whacky’ exactly. If indeed the analogy of rain forests (and other forests) as the ‘lungs of the planet’ is valid then we all need them to function.
It is not fair that the developed Western economies which have capitalised on their own lungs to achieve their current economic dominance seek to prevent the developing world from doing the same. So one way or another we have to calculate the value of forests and offset that against the value to the ‘owner’ nations of destroying them, and then make appropriate payment.
I don’t think that as whacky in principle. In fact, I’d go so far as to say it makes ‘common’ sense. Or even ‘commons’ sense.
In practical terms assessing the values of forests would be complicated, perhaps, but as nothing compared to the establishment of the sort of global agreements which would need to be forged for it to have much chance of being implemented.
It would not be easy to get a government on board with the idea if it officially denies there is an issue with carbon emissions. If that government runs one of the single biggest economies on the planet the idea is not going to get very far.
Do we need to introduce oxygen production into the sums or could we better continue to think in terms of carbon capture and emissions is what I wonder.
” It would be for the major developed, industrial and post-industrial economies to pay for it.”
Erm…not really. Or at least not in principle. In principle every national economy pays its share. But some would be net creditors and some net debitors. So, yes the industrial economies would be the biggest payers in the short to medium term. It’s basically carbon trading looked at that way.
If it is useful to think in terms of oxygen production, then oxygen is the by-product of hydrogen production by electrolysis so a shift to hydrogen power would be a good business to be in because it generates two products.
The local authority I work for has 4 electric city cars that you can book out and use for appointments around the City. They are really useful and popular with staff. They do their bit but we need more of course.
When the LA invested in them, the local (and rather blue) rag that passes as a newspaper slagged them off. Typical.
In Berlin last year, we saw postmen/women cycling around on big bikes that had batteries in them being charged up for when they wanted to go electric.
We should be getting business to move away from requiring people using their commuting cars to drive around towns and cities and providing electric cars up front.
Government could help with that. It just takes a bit of imagination and commitment and I’m sure more imaginative schemes would follow on. But you have to start somewhere and somehow. People are trying.