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Why you should offer net zero advisory services

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Forward-thinking accountancy practices are introducing greenhouse gas (GHG) accounting and net zero advisory services, recognising their crucial role in supporting businesses' transition to a sustainable economy.

22nd May 2023
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Like traditional cost accounting, GHG accounting begins with estimating a business's total GHG emissions, categorised according to their source. These categories help pinpoint the causes of emissions and, subsequently, evaluate strategies for reduction. The output is an agreed GHG emission reduction plan that guides future actions.

There is a growing demand for this service. Larger businesses are already mandated by law to measure and report their carbon emissions. Soon, this requirement will extend to all businesses, regardless of size, creating a need for 'carbon accounting'. Accountants, as trusted advisers, are ideally positioned to fulfil this need.

Therefore, forward-thinking accountancy practices should consider offering this service to their clients or helping them to appoint a third party who specialises in this field. It will be difficult for accountancy practices to ignore the relationship between GHG reduction plans and the finances of their clients, ignoring this opportunity could be costly to practices in the longer term.

Getting started

To kickstart the process, accountants must invest in training programs to expand their team's knowledge about environmental, social, and governance (ESG) issues and GHG emissions. Accountancy bodies are now offering sustainability training for accountants and embedding it into their qualifications. Commitment to training is an essential demonstration of the firm's intent to remain at the forefront of the field.

Accountancy practices providing a GHG accounting and net zero advisory service should also consider partnerships with environmental and energy experts. This alliance combines the accountant's practical knowledge of business operations, accounting, investment appraisal, critical thinking, and target setting with the partner's innovative methods for reducing carbon emissions.

Alternatively, accountants can outsource the work to specialised companies like Net Zero Now, Auditel, or Greenly. Whether an accountant manages the whole process or outsources, it is also essential that carbon targets are aligned with financial budgets and cost-benefit appraisals to ensure that sustainability initiatives are integral to the business's financial planning and decision-making processes.

Measure

Understanding what's being measured is a vital aspect. GHGs trap heat in the earth's atmosphere, contributing to global warming. Key GHGs include carbon dioxide, methane, nitrous oxide, and fluorinated gases. Human activities have increased GHG concentrations, leading to accelerated climate change. 

Emissions are categorised as Scope 1 (direct emissions), Scope 2 (indirect emissions from energy purchased), and Scope 3 (all other indirect emissions). Scope 3 emissions often represent over 60% - 80% of a business's emissions, and accounting for them can significantly hasten the global net zero target.

Accountants can establish a comprehensive GHG accounting and net zero advisory service by integrating GHG emissions estimation tools and add-ons into cloud accounting systems like Xero, QuickBooks and FreeAgent. Platforms such as Normative, Sage Earth, or Ecologi Zero can seamlessly connect with these accounting systems, enabling efficient tracking of an organisation's carbon footprint.

Analyse options to reduce

After measuring emissions, businesses should explore practical and cost-effective plans to reduce their GHG emissions across all three scopes. These plans can range from regular maintenance of heating and cooling systems, using electric vehicles, installing LED lights, sourcing renewable energy, choosing sustainable purchases, encouraging low-carbon commuting, and implementing recycling programs.

Accountancy skills are essential for setting and monitoring targets. For example, to make comparisons over time it will be likely that adjustments are necessary to make meaningful comparisons, such as carbon intensity per employee or per unit of expenditure or unit of output/activity.

Set targets and commitments

Setting annual targets is crucial for a successful net-zero reduction program. Targets provide a benchmark for monitoring progress, fostering accountability, adapting strategies in response to evolving market conditions, and boosting employee engagement.

Accountants' skills are vital in setting and monitoring these targets. They can help businesses create realistic, specific, measurable, attainable, and time-bound (SMART) goals aligning with their strategic objectives. Accountants can also help businesses adhere to these targets by integrating them into their budgets and financial plans.

 

A commitment to reducing GHG emissions also involves significant investment. Accountants can use their financial expertise to help businesses appraise these investments, considering their financial and environmental returns. They can assist in identifying cost-effective reduction strategies and prioritising investments that yield the most significant emission reductions for the least cost. Additionally, accountants can help businesses secure funding for these investments, either through internal sources or external finance.

Advice and accreditation

Once GHG accounting and net zero advisory services are established, they can be incorporated into the overall advisory services offered by the accountancy practice. This could involve providing ongoing advice on maintaining and improving GHG reduction efforts, supporting businesses in meeting their targets, and ensuring their actions align with current regulations and standards. It could also incorporate GHG emissions data into financial reporting and decision-making processes.

Finally, it is essential for businesses to obtain accreditation for their net zero plans. Accreditation options include PAS2060 – Carbon Neutral (BSI), ISO 14064 (based on greenhouse gas protocol), B-Corp (broader and overlaps with ESG), and SBTi Carbon Footprint Certification (certified carbon neutrality).

Why should accountants offer this service?

The integration of GHG accounting and net zero advisory services into the overall advisory services could significantly enhance the value proposition of accountancy practices. It could make them more attractive to businesses looking for comprehensive, forward-thinking advice. It could also open new revenue streams, as businesses will likely pay for these specialised services.

Given the growing awareness about climate change and the increasing regulatory pressures on businesses to reduce their GHG emissions, the demand for GHG accounting and net zero advisory services are likely to grow. By offering these services, accountancy practices can contribute to the global effort to tackle climate change and secure their future by staying relevant in a rapidly changing business environment.

In conclusion, GHG accounting and net zero advisory services represent a significant opportunity for accountancy practices. By embracing these services, accountants can play a critical role in supporting businesses' transition to a sustainable economy while enhancing their value proposition and future-proofing their practice.

Replies (32)

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By Hugo Fair
22nd May 2023 13:22

"In conclusion, GHG accounting and net zero advisory services represent a significant opportunity for accountancy practices" ... says it all (in terms of where the priorities lie).

But really, "Soon, this requirement (mandated by law to measure and report their carbon emissions) will extend to all businesses, regardless of size":
1. Soon = by when?
2. 'reporting on carbon emissions' does not = GHG accounting?
3. all businesses = *all* (the newsagent, window-cleaner, nanny, etc)?

Interesting information in the background (once the 'positioning' has been stripped out), but the forced conclusions are not much of an advance on the old 'all animals are dogs' logic fallacy!

Thanks (5)
Replying to Hugo Fair:
Ellington
By Peter Ellington
22nd May 2023 18:25

Thank you for your insights and critical feedback on the article. I am very grateful for your comments about my articles and insights. Do you ever offer positive comments rather than picking out the aspects you disagree with or seizing on potential faults?

Let me address your points one by one:

The "soon" phrase was meant to convey a global trend, with many jurisdictions enacting more stringent environmental regulations. The timeline for such laws to be implemented varies greatly depending on the specific jurisdiction, governmental decision-making, and legislative processes.

You're right that reporting carbon emissions doesn't equate to comprehensive GHG accounting. GHG accounting includes carbon dioxide and other greenhouse gases such as methane, nitrous oxide, and fluorinated gases. Additionally, it involves a more in-depth analysis of emissions sources and strategies for reduction. It's a more comprehensive and strategic approach than simple carbon reporting.

In terms of 'all businesses,' this is likely to depend on the legislation enacted. In some cases, this means 'all businesses of a certain size or sector,' while in other cases, it could indeed mean all businesses, no matter how small.

The article aimed to highlight the opportunities and responsibilities that come with GHG accounting and net zero advisory services for accountancy practices. A more comprehensive article on the topic area will be issued in International Accounting Magazine in June; maybe you will also be kind enough to cast your eye over this when it is published. Anyway, I appreciate your scrutiny of this shorter article, which helps to foster a more nuanced understanding of these issues. It's important not to oversimplify complex topics like this one. Thank you for your critical engagement with the article, and I look forward to your critique of this response.

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Replying to Peter Ellington:
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By Hugo Fair
22nd May 2023 19:43

Q: "Do you ever offer positive comments rather than picking out the aspects you disagree with or seizing on potential faults?"
A: Yes, as can be found distributed amongst my various comments on this site.

However my standards are high (not perfect as I'm human but possibly sharper than most) - and one of my 'skills' is in absorbing lots of info (even on topics in which I'm not an expert) and rapidly pinpointing aspects that appear to be less than they claim ... whether due to logic faults / missing data / self-contradiction.

[I say 'skill' because that's how it was used for much of my working life - whether govt policy and draft legislation, or system design and impact analysis, or simply finding a common path for adversarial camps within a business.
But this may not be the optimum environment in which to apply it - even if it keeps the grey cells exercised.]

And I did say there was "Interesting information in the background (once the 'positioning' has been stripped out)" ... which admittedly was a slightly double-edged compliment. I really did learn some useful facts, but felt (personally) that their impact was diminished by what felt like forced conclusions or preaching.

Ultimately that *may* say more about me than the purpose of the article - but, without getting on the psychiatrist's couch, I have a deep aversion to anything that sounds like a religion (where suspension of disbelief or even basic logic is a prerequisite to accepting whatever you're told).

So, full circle, yes I apply my skills (or nature if you prefer) to examine and dissect whatever is put in front of me ... which probably results in more brickbats than plaudits ... in this particular case *after* stripping away the 'incentivisation' part with which I don't feel comfortable or indeed agree.

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Replying to Hugo Fair:
Ellington
By Peter Ellington
23rd May 2023 22:15

Thank you for your detailed response. It's clear that you possess a critical eye and a rigorous analytical mindset. These traits are incredibly valuable, especially in discussions around complex subjects such as environmental policy, GHG accounting, or net zero strategies. The ability to dissect, question, and evaluate information is crucial in today's world, and I commend your approach.

The article's purpose was to inform readers about the role of accountancy practices in GHG accounting and discuss the potential benefits of such services. Of course, your analysis and critique are valid and appreciated, and open dialogues and constructive criticism are essential for refining and developing ideas. It is disheartening when minimal credit is given for the information provided about a possible service.

Regarding your comment on 'forced conclusions or preaching', the tone might not appeal to everyone. However, it is also essential to understand that the issue of climate change is urgent, and taking action is necessary. The intention was not to preach but to emphasise the subject's urgency and importance. It is a shame that your perception of the style should get in the way of seeing value in the content.

The application of your skills in this context is undoubtedly productive and appreciated. It leads to a deeper and more nuanced conversation, which is beneficial to all participants in the discussion. Please continue providing your insights and perspectives, as they contribute significantly to the quality of the discussion.

Once again, thank you for your engagement, and I look forward to hearing more of your perspectives in the future.

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Replying to Peter Ellington:
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By Paul Crowley
23rd May 2023 10:34

Member Since: 12th Mar 2015
Blogger
Send Hugo Fair a private message
Recognition Likes: 162 Thanks: 15852

Look at the contributions
You have no likes or thanks

Your comment:
Do you ever offer positive comments rather than picking out the aspects you disagree with or seizing on potential faults?

is unworthy of either a genuine accountant in practice or an academic

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Replying to Paul Crowley:
Ellington
By Peter Ellington
23rd May 2023 22:24

A apologise, I let my frustration get the better of me and I agree my criticism of Hugo Fair was unnecessary and rude. I agree that my attempt of criticism was indeed unworthy of an accountant in practice and an academic. I must remind myself not to adopt the style of criticism that appears to be the trend towards authors of articles when responding to bloggers. Thank you for pointing out the error in my judgement.

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By Yossarian
22nd May 2023 16:32

I'll gladly give my net xero advice for free. The UK produces around 1% of the world's total CO2 emissions, and whilst we are reducing our emissions China is meanwhile building new coal-fired power stations like there is no tomorrow. Therefore even if the UK achieved net zero by 9am tomorrow morning it would make not the slightest difference to anything.

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Replying to Yossarian:
Ellington
By Peter Ellington
22nd May 2023 18:10

Thank you for your comment. You bring up an important point about the global nature of greenhouse gas emissions. It's true that the UK's contributions to global emissions are a fraction compared to larger economies like China or the US. However, this doesn't absolve individual nations or businesses of their responsibility to mitigate climate change. It also demonstrates a fundamental misunderstanding of the issues at hand. Your response illustrates why it is so crucial that accountants get some training and a basic understanding of the issues. I am, of course, presuming that you are an accountant and can take on new skills.

First, climate change is a global problem that requires a global solution. As a developed nation, the UK has a responsibility to lead by example and share its best practices with other countries. By achieving net-zero emissions, the UK can demonstrate that economic prosperity and sustainability coexist.

Second, many global supply chains are interconnected, which means that actions taken in one part of the world can have significant effects elsewhere. By implementing green practices, UK businesses can influence their international partners to do the same. This indirect influence can multiply the impact of the UK's efforts.

Third, while the UK's direct emissions might be relatively small, its consumption-based emissions (emissions associated with consumer goods and services, regardless of where they are produced) can be significantly larger. Thus, the UK can contribute to global emission reductions by reducing its demand for high-carbon goods and services.

Lastly, businesses in the UK and elsewhere have moral and social responsibilities to minimise environmental impacts. Businesses, including accountancy practices, should strive to operate in a way that preserves our planet for future generations. Accountancy practices can assist other businesses in fulfilling their environmental responsibilities by offering services like GHG accounting and net zero advisory services.

The situation you've described with China's coal power is a concern, and it's crucial to advocate for stronger international cooperation on climate change. However, suggesting that one country or business's efforts are meaningless because of others' actions is not a productive approach to solving global issues like climate change. Every effort counts, and every reduction in emissions brings us closer to mitigating the worst impacts of climate change.

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Replying to Peter Ellington:
paddle steamer
By DJKL
23rd May 2023 10:41

Given governments continually fudge their measurements of their Nationally Determined Contributions, that there appears to be no consistent measurement framework for same from one country to another, perhaps action that is top down re consistent measurement standards, applied on a country by country basis, might be slightly more beneficial than asking individual business entities to measure everything down at the bottom of the pyramid?

I might observe that measuring everything to the nth degree in schools has really not done much for improving educational achievement, so why should business measurement radically improve climate outcomes, will it not , perhaps, become just another box tick exercise?

Imho you maybe more ought to concentrate your concerns at the top, COP26 to me looks like a cop out, an occasion when countries could virtue signal to their hearts content what they would achieve safe in the knowledge that as measurement standards were fluid, and individually chosen, they could announce their wonderful progress irrespective of what they really achieved ; they were both judges and judged.

IMHO Government announcements regarding progress on emissions are generally all spin and no substance, similar to their announcements re Education, Immigration, the NHS and Law and Order.

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Replying to Peter Ellington:
By Silver Birch Accts
23rd May 2023 11:32

Not just China as Australia, Brazil, India to name but a few are all a major concern.

The UK is responsible for 1% should you not be talking to the remaining 99%

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Replying to Silver Birch Accts:
By Duggimon
23rd May 2023 12:38

Silver Birch Accts wrote:

Not just China as Australia, Brazil, India to name but a few are all a major concern.

The UK is responsible for 1% should you not be talking to the remaining 99%

Why should we only look at the other 99%? The other 99% are in fact, per capita, less guilty of polluting the planet than the UK. We produce more emissions on average than the rest of the world. If you are splitting the camps between the 99% and the UK, the UK is the worse offender and really ought to look at tackling their problems before anyone else does anything.

Of course I'm being facetious there because it would be immensely stupid to suggest only the worst offenders need to do anything to help resolve the problem.

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Replying to Silver Birch Accts:
By ireallyshouldknowthisbut
23rd May 2023 15:40

Based on the same logic no-one need to pick up their own dog turds and can throw their litter in the road as how can one person make a difference?

I mean ***my*** litter and dog turns is nothing compared to everyone else's, why should I take any responsibility for my actions?

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Replying to Silver Birch Accts:
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By Postingcomments
31st May 2023 16:53

I doubt he dares to go to China to market this grift I doubt he'd make it back.

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Replying to Yossarian:
By Duggimon
23rd May 2023 10:22

Yossarian wrote:

I'll gladly give my net xero advice for free. The UK produces around 1% of the world's total CO2 emissions, and whilst we are reducing our emissions China is meanwhile building new coal-fired power stations like there is no tomorrow. Therefore even if the UK achieved net zero by 9am tomorrow morning it would make not the slightest difference to anything.

You're right, also millions of people die every day so I see no reason to punish murderers for increasing that number of deaths by a statistically insignificant margin.

The UK produces 1% of the world's carbon emissions with less than 1% of the population. We're punching above our weight in the race to burn the planet and really should be doing a lot more to stop it. Naysayers like yourself who come out the woodwork every time the subject is raised to say "actually I can't be bothered" could at least consider doing the absolute bare minimum they could possibly do to help the climate and not wade in with their idiotic justifications of inaction.

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Replying to Yossarian:
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By Paul Crowley
23rd May 2023 11:20

Quite sage to give net xero advice for free, maybe even Intuitive.

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By indomitable
23rd May 2023 13:14

I think I should write an article why you SHOULDN'T offer net zero services. What exactly does net Zero actually mean anyway. So you have a Zero carbon footprint? But you mess up the environment in other ways, mining rare elements that are used in batteries that exploit poor labour, unsightly windfarms that are an eyesore on the land or sea for that matter and ruin natural habitats for wildlife. Having lots of children because they emit CO2 where does this nonsense end

The world needs sensible policies to protect our planet!

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Replying to indomitable:
By Duggimon
23rd May 2023 14:30

I'd love to hear your sensible policies, please do write that article.

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Replying to indomitable:
Ellington
By Peter Ellington
25th May 2023 12:02

Thank you for your comment. Your concerns are valid, and it's essential to consider the broader implications of any sustainability initiatives. When we talk about "net zero," we're referring to balancing the amount of greenhouse gases emitted and the amount removed from the atmosphere. It's a commitment to minimise emissions as much as possible and offset the remaining emissions through activities such as planting trees or investing in renewable energy projects.

However, you're correct that not all methods of reducing carbon emissions are without their environmental impacts. Mining for rare earth elements, which are used in technologies such as wind turbines and electric vehicle batteries, can cause significant environmental damage if not done responsibly. Wind farms and solar arrays can disrupt local ecosystems if not thoughtfully planned and implemented.

It's important to adopt a holistic approach to sustainability that considers all these factors. The objective should be to minimise environmental harm while achieving our sustainability goals. We must also work towards more sustainable technologies and practices, such as developing better ways to recycle batteries or more wildlife-friendly ways to generate renewable energy.

As for your suggestion about writing an article on why accountancy practices should not offer net zero services, that could be a fascinating perspective to explore, the purpose of any discussion around climate change and sustainability should be to scrutinise all perspectives, weigh the pros and cons of different strategies, and strive for the most effective, least harmful solutions.

Your voice in this discussion is vital, and I encourage you to continue sharing your thoughts and concerns. We should all work together to find the most sensible policies to protect our planet. Only through collaboration and exploring the wealth of different views will we develop realistic solutions.

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Replying to Peter Ellington:
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By indomitable
25th May 2023 12:39

I am afraid I am too busy to write an article, preferring to concentrate of growing my practice.

My clients incidentally would laugh at me if I started suggesting to them anything to do with 'net zero'. It is not my job, it is not yours either I would suggest and if my accountant suggested it to me I would get rid of him.

If I had an accountant I would want him to take care of my compliance, assist me in growing my business and make sure I minimise my tax.

It appears to me you are on a crusade and have been captured.

Nobody voted for 'net zero' and as I have said before it is just making people poorer. Tell it to China and India who are the biggest polluters. (how many coal fired power stations did China build last year?)

Just wait in a few years the government will make an about face on this nonsense as it's impractical (just like it does with many things like diesel cars).

Net Zero at present is impractical and unsustainable, we need better technologies to achieve it, so it needs to be slowed down and we still need to use fossil fuels until decent reliable alternatives can be found that do not ruin the environment in other ways or exploit child labour

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Replying to indomitable:
Ellington
By Peter Ellington
25th May 2023 16:48

Thank you for your perspective, and I completely understand where you're coming from. Accountants' core responsibility is ensuring compliance, assisting in business growth, and advising on tax minimisation. However, the evolving business landscape means new areas are constantly emerging where accountants can provide valuable advice - net zero and GHG accounting is one such emerging area.

Regarding your point about net zero initiatives making people poorer, there's a growing body of evidence that a well-managed transition to a green economy could significantly drive job creation, innovation, and sustainable growth. This isn't to ignore the costs involved or the complex transition required, but the long-term benefits outweigh the short-term challenges.

You're absolutely right on the issue of China and India's emissions. Climate change is a global issue and requires a global response. However, this doesn't negate the need for action on an individual or business level. Every little bit helps, and the collective efforts of small and medium businesses can make a difference.
Finally, your point about needing better technologies to achieve net zero is crucial. It's a transitional process that will take time, and we shouldn't rush it at the expense of creating other environmental issues or social injustices. It's a complex, multifaceted issue, but acknowledging the problem and starting the conversation is an essential first step.

Thank you for sharing your thoughts.

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Replying to Peter Ellington:
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By indomitable
25th May 2023 22:33

Hi Peter

You might find this article interesting

https://clintel.org/thorough-analysis-by-clintel-shows-serious-errors-in...

It is VERY important that people have a balanced view and not believe everything they are told or read.

There is a tendency for people to become almost brainwashed. It is important to read ALL sides of the argument. We are living in a post truth era

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Replying to indomitable:
Ellington
By Peter Ellington
26th May 2023 08:13

Thank you for pointing this out and for the link.

Who do you believe?

I think you have to verify the background on the “scientists” signing off these pronouncements and look to see where their vested interests lay.

I looked up a few reports on the link and read responses such as this:

Professor Alistair Jump, dean of the faculty of natural sciences at Stirling University, said: “This declaration wilfully overlooks, over-simplifies and misrepresents basic facts, as well as the vast breadth of scientific knowledge on the interaction between atmospheric composition, climate and living organisms.

“The small group behind the foundation rails against the economic cost of action – but the economic cost of inaction is far, far, greater.

“People sticking their head in the sand won’t make the global climate emergency go away –it will just remove the chance that we have to mitigate the impacts of the climate crisis and prepare economically and socially for the profound change that it is already bringing to individuals, communities and ecosystems across the globe.”

Personally, I am constantly questioning what I read and looking at the vested interests of the authors.

The consensus that I am seeing is that we are in the midst of a number of ecological crisis including climate change.

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Replying to Peter Ellington:
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By indomitable
26th May 2023 11:44

There is no definitive answer, as I have said before alot of the climate catastrophists views are based on modelling which produces a range of possible outcomes, the catastrophists choosing to believe the most extreme outcomes as the most likely

On top of that yes I believe the IPCC have been manipulating the data as well as people like the met office.

So is global warming caused mainly by us or is it a natural phenomenon, probably a bit of both

As I have said we need sensible policies not a dash to net Zero which isn't really net zero when you have to import from other countries. Get real we will never be energy self sufficient with solar, wind and hydro electric

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Replying to Peter Ellington:
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By Postingcomments
31st May 2023 16:59

"I think you have to verify the background on the “scientists” signing off these pronouncements and look to see where their vested interests lay. "

Well, you lecture at the University of East Anglia and I'm not sure you qualify as a scientist. So forgive me if I don't give too much weight to what you spout. You haven't derived it yourself - you are just parroting others.

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LL
By RickyRoark
24th May 2023 07:47

I see ChatGPeter is back with his green propaganda.

Reason #1 why I don’t (and won’t ever offer) net zero advisory services is that no client has ever asked for them.

The majority of clients barely want to understand their accounts and tax position, nevermind have their accountant work out their carbon buttprint.

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Replying to RickyRoark:
Richard Hattersley
By Richard Hattersley
25th May 2023 07:46

Your comment is incredibly rude and disparaging towards the author.

AccountingWEB is a professional site and language like this will not be not tolerated.

You can disagree with an article but all we ask is in you do it in a respectful way. Thats all. Easy, right? But "ChatGPeter" and "carbon buttprint" is not that.

The author has given up his time to share this article and the opportunities ahead. Its OK, if that doesn't fit your clients. Not every article is designed for every accountant. Just don't be rude about it.

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Replying to Richard Hattersley:
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By johnthegood
26th May 2023 09:31

Carbon Buttprint, LOL, I Like it

Richard, you need to chill out a bit lad

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Replying to RickyRoark:
Ellington
By Peter Ellington
25th May 2023 12:17

Thanks for your input. I agree with Richard Hattersley that your comments are disparaging. I am exploring using ChatGPT but doing extensive edits to get to the final outputs, and I am using it with much caution. Given its potential, I encourage everyone to use it as it is a great time saver and helpful tool.

I'm afraid I have to disagree with you when you refer to my work as propaganda; the dictionary definition of propaganda:
Information, especially of a biased or misleading nature, is used to promote a political cause or point of view. Climate change is not a political issue; it is an existential crisis. I'm still trying to understand what a carbon "buttprint" is; however, related to the [***] outputs, methane is a significant issue at the moment, so if it's related to that, keeping our carbon buttprints low is essential.

Regarding your comments about your services, understandably, not all clients are interested in or ready for a net zero advisory service. The day-to-day financial needs of running a business, understanding tax obligations, and meeting regulatory requirements often take precedence.

However, there's an increasing focus on sustainability and carbon neutrality at the global level. Governments, regulators, and consumers are becoming more aware of businesses' role in climate change, putting pressure on companies to be more transparent about their carbon footprints.

While it's true that some businesses may not see the need for GHG accounting or net zero advisory services right now, that could change in the future as sustainability becomes a more significant part of the business landscape.

If your clients are not currently interested in GHG accounting or net zero services, it makes sense to focus on the services they need. However, staying informed about the latest developments in sustainability and being prepared to offer these services if the demand arises can be a smart business strategy.

Thank you for being so interested in the article.

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John Toon
By John Toon
25th May 2023 12:06

The biggest challenge with this type of work is ascertaining the Scope 3 emissions accurately and reliably. All of the app options mentioned fail to effectively do this. However, if these can be identified and strategies put in place to minimise these it can have an effect on the 99% referred in the comments elsewhere.

Personally (and professionally) whilst some SMEs value this kind of work there is still a lack of frameworks, familiar to accountants, to take full advantage of these kind of opportunities. It's likely that until the legislation, inevitably, brings more businesses in scope to report on this that I suspect many firms will not cease the opportunity irrespective of it's size.

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Replying to johnt27:
Ellington
By Peter Ellington
25th May 2023 16:44

You've highlighted some significant challenges regarding GHG accounting and net zero advisory services, especially concerning Scope 3 emissions, which are notoriously difficult to quantify accurately.

These emissions, which include all the indirect emissions that occur in a company's value chain, often involve a significant amount of guesswork due to the need for precise data. Technology is evolving, and we can hope for better solutions in the near future. Meanwhile, businesses need to do their best to estimate these emissions and take steps to reduce them where possible. The estimators are getting more accurate. If the 80:20 rule is applied, we can look at the larger spend items and get a more precise view of the emissions from these more significant suppliers.

As for your point about the lack of familiar frameworks for accountants, this area needs more development. Professional bodies and institutions can play a critical role by providing training and developing standardized procedures for GHG accounting. The number of accountants that are providing this service will grow. The key reason is that the government will require clients supplying to public interest companies to do net zero plans, which will cascade throughout the economy. It's just a matter of time before it becomes the norm.

Your perspective on the role of legislation is also accurate. Many businesses will likely not see the need for GHG accounting and net zero advisory services until they are legally required to report on their emissions. However, accountancy practices that start offering these services now could gain a competitive advantage in the long run.

Thank you for your insightful comments.

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By Lets_Get_Fiscal_
26th May 2023 22:45

"In conclusion, GHG accounting and net zero advisory services represent a significant opportunity for accountancy practices."

To be fair, that might be true for the top 10 UK practices in the UK who prep and audit accounts for the largest companies and multinationals etc. Or if you have BP, Gazprom, BHP ot Exxon on your client book.

However for virtually every other small, medium and fairly sizeable practices in the UK, the vast majority of the client base does not and should not need to bother with this jargon.

This is so far removed from the practical reality of tax, accounting and financal advice. My clients (and I would hazard a guess most of the clients of the commenters on this site) want three things:

(a) Preparation of accounts / management accounts / tax compliance,
(b) Advice on how to minimise their tax liabilities with tax efficient business and family structures,
(c) How to maximise their wealth though sound pensions and investment planning.

My clients would not want me to rack up time costs lecturing them on how to reduce, monitor or record carbon and other polloutant outptus. They do not pay us for lectures on green practices. They pay us to help them make more money and protect what wealth they have.

Speaking with my clients in general conversation, I find that most are already quite environmentally mindful. However in the middle of a high inflationary environment and with an ever increasing spiral of HMRC and tax nonsenses (MTD, basis period reform, CT rate hike...), this doesn't represent an opportunity for accountants so much as it represents and opportunity to [***] clients off with green-preaching.

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Replying to Lets_Get_Fiscal_:
Ellington
By Peter Ellington
27th May 2023 12:27

Thank you for your comments, and it's clear that you have a solid understanding of your client's needs. You're right that GHG accounting and net zero advisory services may be a minor concern for many small to medium-sized businesses. As you've described, many are more focused on the day-to-day running of their business, compliance, and wealth maximisation.

However, it's also important to note that the corporate world is increasingly moving towards a more sustainable and environmentally conscious way of doing business. This is driven not only by regulatory pressure but also by consumer demand, investor expectations, and a societal shift towards sustainability. Even if it's not a priority now, it could become more relevant in the future.

It's also worth mentioning that engaging with these issues doesn't necessarily have to mean "green preaching." It can also be about identifying opportunities for efficiency improvements, cost savings, and risk mitigation. Future legislation or tax incentives may encourage or require more businesses to engage with these issues.

I'm surprised by how accountants replying to this article miss the point that lower carbon can equate to lower costs (when done correctly) with the input of accountants. Suppose the commentators put aside their biases (which appear to jump out as soon as they see anything related to sustainability, ESG, net zero etc.). If they could, they might notice that some of their clients could increase their profits by reviewing some of the potential green aspects of their business. ISN'T HELPING CLIENTS TO SAVE MONEY AND SUGGESTING SALES OPPORTUNITIES WITHIN OUR REMIT?

Your clients trust you to provide them with valuable and relevant advice. If and when the time comes that GHG accounting or net zero advisory services become applicable to them, I'm sure they'll appreciate your guidance.

In the meantime, focusing on the core services that your clients value is the best approach. Thanks again for sharing your perspective.

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