Can accountants help clients create sustainable businesses?
Opportunities are opening up in a world keen to move on from the recent pandemic.
This is fuelled by the ways and rules of business fundamentally changing.
During the pandemic, it became the norm to use videoconferencing tools such as Zoom and Teams for face-to-face meetings, for example, and this flexibility hasn’t gone away as things go back to some form of normality.
Research from Sage digs into details such as this by examining the mood and sentiment of accountants and small and medium-sized enterprises (SMEs) in today’s business landscape.
We feature that and more in this article.
Here’s what we cover:
Apps vs paperwork
Most accountants (63%) say clients prefer to use apps, email and other virtual channels over speaking to accountants, according to the Sage research.
And the survey showed that 99% of all accountants use some form of digital accounting.
So, it would seem at first glance that this is a profession correctly aligned for the way the business world is moving to digital ways of working—both now and in the future.
But this might not be the full picture.
When the researchers asked how accountants currently store client records and internal documents, more than four in 10 said they continue to use old-fashioned paper records saved in filing cabinets, or similar.
This raises a question: how do accountants truly accelerate the move towards a paper-free, digital-first workplace that’s truly ready for the coming decade?
This needs to be encapsulated within the wider and more vital question of how accountants can move to be environmentally friendly at a time when many of their clients are creating Environmental, Social and Governance (ESG) policies.
After all, paper manufacturing was responsible for 2,239,000 metric tons of CO2 in 2019, alongside a similar slew of other pollutants such as methane, nitrous oxide and hydrofluorocarbons (HFC).
Later in this article, we take a look at some of the steps that can be taken.
But first, it’s vital to understand the wider picture.
For this, we turn to Richard Spencer, director of sustainability at ICAEW.
Supply chain considerations
Although most of us are sympathetic to environmental concerns, they can feel abstract.
Richard says: “It can be difficult to relate to forecasted increases in emissions and global temperatures over the century that are driving climate change to business activity today.
“A different and more relatable approach is to think of the immediate impacts of climate change such as droughts, floods and fires.
“Extreme weather events increasingly make up the news. Think of how they have disrupted business.
“When looked at through the lens of climate change, these events can be seen as connected, and not one-offs, but events that are likely to occur with greater violence next year and the year after that, and so on.
“In this way, climate change can be seen as a business issue about resilience and strategy.
“I was thinking about a recent event from August 2019, which was reported on the BBC. Heavy rainfall destroyed the cauliflower crop, meaning prices soared—not just for cauliflowers, but all kinds of brassicas.
“Some farmers suffered financial troubles because of it.
“All the way through that supply chain, right up until food is served on the table, there would’ve been a chartered accountant somewhere, I’m quite sure, worrying about the business.
“How are we helping our clients think about their business resilience? What are you going to do when crop failures become a regular thing?
“How do you flex your business model to cope?”
Increasing legislative requirements
But the need for change and adaptation runs deeper even than this.
Businesses are increasingly making reporting commitments around net-zero as part of their ESG policies.
“This involves all their supply chain,” adds Richard. “So, it’s going to come at you through the supply chain. It’s going to involve you.”
In other words, to maintain business relationships, you may need to prove you have environmental credentials. If not, you could lose clients.
What’s more, as increasing environmental legislation is introduced in the coming years, accountants are positioned perfectly to assist.
At the moment, such legislation is aimed at larger businesses but there can be little doubt businesses of all types and sizes will be targeted.
“It doesn’t need to be a story of gloom,” says Richard. “What are the opportunities here?
“Accountants will maybe help clients measure their emissions as a value-added service and helping them understand what their emissions base is.”
An example of this kind of requirement can already be found in the plastic packaging tax, introduced in April 2022.
Larger businesses must pay £200 per metric tonne of plastic packaging that doesn’t contain 30% or more recycled material. Businesses must register for the tax, pay it quarterly, and be aware of numerous reliefs or credits.
All of this is within the wheelhouse of any accountant.
Practical measures for practices
The ICAEW’s own move to becoming carbon neutral has ranged from replacing inefficient heating and air conditioning to sending waste food from the banqueting centre to biomass generators.
Richard says the organisation’s carbon footprint was “tiny”, but adds that this is beside the point.
The actions taken need to be seen in the context of the ICAEW’s ability to influence and support its students and members.
In other words, it’s a similar kind of supply chain consideration.
Richard says: “If we’re saying to our members that they need to be acting on climate, then we have to be acting on climate too. This is how we’ve done it. What are the things you can be doing?
“And then our members can learn from that and take it out to their clients.”
This is the method that savvy accountants are already adopting.
They’re becoming a sustainability paradigm that their clients can both admire and use as a template within their own businesses. This is not just good for the planet, but also good for new client acquisition too.
Remember, clients tend to sign up with practices that mirror their values, beliefs and culture.
So, what does a sustainable practice look like?
Videoconferencing and the cloud
Once upon a time, it was perhaps insincere to hold face-to-face client calls using the likes of Zoom or Teams.
But the pandemic made everybody comfortable with the technology. It can save huge amounts of carbon that would otherwise be spent travelling to client premises, or vice versa.
But Richard points out that this isn’t necessarily straightforward.
A degree of insight and rigour is required when using the cloud technologies that power videoconferencing services, as well as online storage.
He says: “How much carbon is embedded there? What are the servers that you’ve got stuff on?
“Are those servers powered by coal-fired electricity? Or are they being provided by service providers who use green electricity? Are you buying green electricity yourself?”
On the topic of travel, Richard says: “When the ICAEW measured our carbon footprint, we realised a big chunk was our staff travel.
“We can only influence how staff choose to travel and then we can’t make that means of travel carbon-free. We have no control over Transport for London’s carbon ambitions.”
Again, rigour and often in-depth examination is required to ensure that one seemingly superior option doesn’t also contribute to your net carbon.
As Richard mentioned earlier, your choice of office location can have a huge impact on your carbon footprint.
Attempting to heat older buildings, or cool them during increasingly hot summers, means net-zero can be near-impossible without significant offsetting costs.
Switching to a modern building created with energy efficiency in mind can provide a night-and-day transformation in terms CO2 emissions—not to mention bills.
But, again, rigour is required to understand how different building technologies affect heating and cooling requirements.
It’s certainly not enough simply to target new-build properties without understanding what environmental measures—if any—have been implemented.
Working practices and employees
A flexible working policy with home workers can reduce the need for large office spaces too, again reducing the energy required to heat them.
(Although it’s worth considering the fact that those working at home will be using energy to heat their homes and power their devices.)
But while the environmental cost of commuting is removed, and is a good thing, this is typically considered by experts to be a carbon saving for the individual, rather than the business employing them.
Indeed, research shows that home working is a more subtle consideration than it might first seem.
Increased purchasing leads to increased manufacturing of equipment such as laptops and office furniture, which impacts the individual’s carbon footprint, along with home adaptations such as converting garages into workspaces.
Furthermore, the same considerations for videoconferencing as mentioned earlier apply—there’s a need for businesses to ensure data centres hosting cloud services use green energy.
The ICAEW is working on an information pack to help practices, and this indicates the path forward for many accountants in that they should seek help on the most effective way forward.
True net-zero and carbon neutrality is more complicated than it first appears.
But achieving such a goal puts you in the best possible position to face a future of evolving client demands.