As the FT has noted this morning:
They added:
As part of a raft of green measures announced on last week, the UK government said it would consult later this year on making transition plans — where companies outline how they will cut emissions and the associated costs of doing so — mandatory for all large companies, including private businesses.
EY are suggesting that whilst maybe 80 per cent of FTSE 100 companies have plans of some sort in place only 5 per cent would comply with the new disclosure framework.
I am not surprised for three reasons. First, most transition plans are greenwashing.
Second, the new International Sustainability Standards Board (ISSB) standards on environmental disclosure do not require companies to take this issue seriously by leaving sustainability reporting out of accounts and even audit, meaning that this greenwashing can continue.
Third, the fight against having plans in place is spearheaded by companies like EY, who only last December wrote this in one of their own publications on the issue:
Decode that and what they are saying is that companies must not make commitments or they might have to include the financial consequences of doing so in their accounts. This, of course, they would not wish to do. Such commitments will be very costly.
I have long argued that such commitments should be made by promoting sustainable cost accounting. This requires that:
- A company have a full transition plan.
- That plan be costed, in full.
- Provision for that cost be included in the plan in precisely the way that EY is trying to avoid its clients having to do.
- Those companies unable to finance their transitions should be declared carbon insolvent (if emissions are the issue) or environmentally insolvent if abuse of the biosphere is the issue instead.
Sustainable cost accounting has not gained traction as yet, I admit. But the campaign for i is ongoing. I suspect it will happen, one day. Big business and accountancy continue to pretend that the environment is someone else's concern. It isn't: it's theirs, and they need to deal with it.
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If they chose to comply with the standards you advocate, what would oil company shares be worth? – and then, of course, not just oil companies?
Might that mean that our money isn’t safe with bankers like Barclays who have been keen on oil shares?
And, are our children safe from climate over-heating?
There would not be much value left in stock markets
That is a for reflection of the inappropriate investment made by current models of capitalism using the false assumptions that they use
Whatever happened to “sustainable cost accounting” premise?. have you given up on it?
Not at all
This is a pro sustainable cost accounting article – which is precisely what we need
And I am doing academic work on it literally right now
“This is a pro sustainable cost accounting article “
Well perhaps the direction of travel but the article is miles away from your accounting suggestions a which would bankrupt 99.9% of companies large or small across every sector of business.
So we learn:
a) You’re trolling
b) You don’t understand the subject you are trolling about
c) You have never read sustainable cost accounting
d) You don’t understand that if sustainable cost accounting delivers this outcome it is because these companies are actually bust
When I moved to Ireland to take up a job at Galmoy mines, some 20 years ago, one of the items on my criterior for buying a house was to be over 80m above sea level for when all the ice melts.
A company or business must have a long term plan and if it has not factored in mitigating climate change the it is planning it’s own bankruptcy.
“Decode that and what they are saying is that companies must not make commitments or they might have to include the financial consequences of doing so in their accounts. This, of course, they would not wish to do. Such commitments will be very costly.
I have long argued that such commitments should be made by promoting sustainable cost accounting. This requires that: Acompany have a full transition plan. That plan be costed, in full. Provision for that cost be included in the plan in precisely the way that EY is trying to avoid its clients having to do.
Those companies unable to finance their transitions should be declared carbon insolvent (if emissions are the issue) or environmentally insolvent if abuse of the biosphere is the issue instead.”
But the quote is stating the opposite. You can’t make a provision under IAS 37 for your future actions and plans. Therefore having such plans doesn’t;t give rise to a provision that you’d prefer not to hit the accounts.
Oh, also, you’d not be declared carbon insolvent if you did because you can’t.
You clearly need to learn about IAS 37
The provision is, of course, with regard to past events
Eliminating carbon is the consequence of building a business based on carbon in the past that now needs closing hence IAS most definitely applies and EY knows it
But because I extended the concept of provisions in IAS 37 I did also propose a new standard
I think you’ll find I am right
And so are EY
SCA is the feather in your cap and the key to unlocking and revealing the true nature of capitalism’s degradation of the planet.
“It is time the accounting profession – and big business – took the environment seriously”
There is a bit of a problem with “big business”. I don’t usually buy the weekend FT, but I made an exception this weekend. And there it was: the weekend FT magazine, now renamed HTSI aka “How to Spend It” – one of the house magazines of “big business” . HTSI (& thus the rich) does not & never has “taken the environment seriously”. Page after page of adverts promoting serious and conspicuous consumption sometimes one is never quite sure what is being sold, the product or the models very obvious “assets”. The nadir was reached in an article called “the Spitfire restoration team who’ll give you wings” (for circa £2.5 million). Or for the car-heads the Peugeot 205GTI is now the car-de-jour the cost of a restored one starts at £50,000 (or the salaries of 1.5 NHS nurses – the Spit would get you 75).
When I was training as an engineer 45++ years ago, the expectation was that you would lead by example. With respect to the climate disaster, the rich most definitely are not (leading by example) and given they control much of “big business” is there any surprise that much of what happens with “big business” is at best green washing. Nobody cares, least of all the accountants (nodding dogs to a man – they are mostly men) and so we spiral downwards.
On a lighter note – “How to Spend it” promoted a holiday villa in Tuscany – cost for a week – one third of the yearly wage for an NHS nurse – cheap at twice the price …pass the Dom Perignon Pricilla would you darling – & lets book for a month. (for Americans – that was a bit of irony)
I started buying the FT at the beginning of the 70s and the weekend copy was a must but not because of the section that was for the very rich only. I had left the UK before the magazine first appeared. There used to be an always interesting piece by Kevin Goldstein Jackson who was told on leaving school that he would only ever be factory fodder material – he started and sold Westward TV.
Ironically for a journal that is primarily concerned with investments it’s news articles are free of left or right bias, does not contain salacious material or page 3 boobs, they are in fact genuine news unlike the extreme right wing Daily/Sunday Mail or the now defunct News of the Screws.
Before the i/net came along their country specific reports were superb. By the end of the 70s it was the only newspaper I bought. I can order the FT but the international copy is not the same and the price now is outrageous and I now have the i/net.
I don’t always agree with the editorial bias of the FT
But it does let its journalists write pretty mush what they want