ICAEW and other industry groups want climate risk to be integrated into company audits

The world’s accountants must put the climate crisis at the forefront of their work to spur global companies to adopt green policies and help prepare them for the risks, according to the Institute of Chartered Accountants in England and Wales (ICAEW) and other industry groups.

They have called on a global alliance of accountants, representing more than 2.5 million professionals worldwide, to put their skills to use by helping companies prepare for a climate emergency.

The groups want all members of the Accounting for Sustainability Project (A4S) network to integrate climate risk into their company audits to drive companies to set more sustainable business strategies.

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Michael Izza, the chief executive of the ICAEW, said it is crucial that chartered accountants use their “unique position” at the core of almost every business, government and non-governmental organisation to make the case for sustainability.

“Chartered accountants bring practical skills like measurement and management to the table, and can work with business to build green policies into their working practices. We need to make this a decade of transition for business; failure to make this move will make the inevitable adjustments required much more difficult,” he said.

Accountants should demonstrate the risks to business posed by the climate crisis, such as the impact of flooding or the effect of drought on the price of crops needed in the supply chain, the industry groups said.

The call for climate action comes after the accounting watchdog, the Financial Reporting Council, launched a review into whether companies and their auditors are adequately reflecting the financial risks of the climate crisis in their annual financial accounts.

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Sir Jon Thompson, the FRC’s chief executive, said auditors have a responsibility to challenge management to face up to the financial risks of the climate crisis and provide clear information to investors.

Bruce Cartwright, the chief executive of Icas, the global professional body, said there are “dramatic implications for failing to tackle climate change – environmental, social and economic”.

He said: “It is our future that is at risk and the urgency at which we are required to act must remain front of mind. Icas is working with fellow accountancy bodies to act now to limit the negative effects of climate change. Our individual actions, collectively, have the ability to make a difference.”