Overview of Climate Change, GHG Emissions, and Accounting Challenges
Question:
Discuss about the Climate Change Accounting Research.
It can be observed from the article that there are significant opportunities and challenges concerning climate change, emission reduction, assurance and reporting, accounting, and greenhouse gas emissions into the atmosphere. Nevertheless, in the current scenario, auditing and accounting for issues like GHG and carbon emissions has become enormously challenging because of uncertainties that exist in estimation methods. As the adequacy of present formulation of policies to stop such emissions is inappropriate in nature, this is the reason why implications have been raised for all nations, sectors, organizations, and individuals through this article. Besides, the methodology adopted assists in overviewing the climate change issues together with an extensive collection of inter-disciplinary and independent contributions to accounting for such change of climate. Furthermore, the methodology of shadow carbon account and accounting analysis assists in shedding light on how nations and organizations are responsible for and communicate their GHG emissions and behavior. Based on the current findings, it is observable that the policies to stop or curb emissions is ineffective in nature and therefore, such challenge is expected to increase on a wider scale in the upcoming future if corrective actions are not implemented. The article also evaluates the significance betwixt research of social and environmental accounting of interdisciplinary viewpoints. Further, with the help of Air New Zealand organization, the article scrutinizes the complexities, challenges, and uncertainties associated with accounting for GHG and carbon emissions. Nonetheless, a series of questions are raised through this article on the effectiveness of offsetting and feasibilities for timely reducing the emissions 9 Milne & Grubnic, 2011). Therefore, the aim of this article is not to seek a reduction of all climate-change based research of accounting to evaluations of corporate carbon footprints. However, even if it did, various interesting and different methods to encounter such issues are also prevalent. In simple words, the article intends to frame an agenda for future research that remains different and interesting as a whole (Milne & Grubnic, 2011).
Accounting academics are increasingly moving beyond traditional zones of tax, finance, auditing, and accounting services. Such academics possess the ability to assist clients, sectors, nation, and organizations to identify significant areas of problem in relation to climate change and recommend opportunities for improvement of profitability and reduction of costs (Milne & Grubnic, 2011). More than simply reducing costs, attaining sustainability is a significant target for companies given their liability to deliver long-term value and sustain risks for the interests of all stakeholders. In relation to this, the risk management and core analytical skills of accounting academics can be taken into account to understand the practical and strategical implications of a reduction in emissions of GHG or carbon, thereby facilitating in the achievement of sustainable business practices (Milne & Grubnic, 2011). Senior management may fail to identify the relevance of energy as a material business cost but accounting academics can play a role in illustrating a compelling business case that can capture the return on investment (ROI). Further, by combining business and energy data and translating these into economical metrics can influence the stakeholders in an organization. This is the reason why accountants in many organizations act as a bridge betwixt people liable for driving sustainability and the management team as a whole. Moreover, such additional efficacies come on top of savings of energy cost, enhancing the bottom line of the business. Accounting academics can play a key role in utilizing their insight into financial metrics to assist clients to capitalize on financial gains (Milne & Grubnic, 2011). Nowadays accountants are also engaged in offering valuable advice to companies on seeking the optimum position of tax for the green projects, government incentive strategies, and reporting and measurement of carbon emissions. Besides, this has become an EU-wide necessity for larger firms. Therefore, accounting academics must engage in climate change accounting research.
Methodology of Shadow Carbon Account and Accounting Analysis
BHP Billiton supplies energy and mineral commodities that are vital for its economic growth. The products in the company’s portfolio require emissions of GHG and carbon into the atmosphere. However, in relation to the management of climate change issues, the company has an integrated and comprehensive approach to prepare for all risks that climate change poses to it and further actions are also being taken to deliver an efficient international response (Milne & Grubnic, 2011). It is also adapting to impacts in climate change by building resilience to the same. Furthermore, the company is also accelerating the deployment and development of low-emissions technology as a major response for management of climate change issues. Moreover, BHP is also operating with others to increase the international response to issues of climate change. Effective evaluation of climate science is vital for the purpose of planning. BHP collaborated with CSIRO to obtain regional analyses of climate science. Therefore, it can be witnessed from the activity that the climate resilience planning is being undertaken as it will help in understanding of the vulnerabilities of the climate. The major response will rests upon the lifetime of the asset and exposure to climatic factors and the critical function.
BHP has also released its climate change portfolio analysis report that sheds light into its scenario planning strategy that includes significant portfolio implications of a transition to two-degree Celsius world wherein the international average temperature enhancement stays below such scale relative to pre-industrial stages. In order to manage climate change issues, the company has also accepted IPCC (Intergovernmental Panel on Climate Change) evaluation of climate change science. In relation to the same, the company is focused on sustainable development in order to reduce GHG emissions and improve the efficiency of energy.
This report intends to shed light upon the key issues that exist in the field of climate change and problems encountered by organizations to manage such issues in order to attain sustainability. Further, this report purposes to highlight the responsibilities of an organization towards its society and stakeholders so that they are taken well care of. Besides, it is also highlighted that even though world must possess the twin objectives of restricting climate change to lower ends of IPCC emission situations in line with global agreements while offering affordable and reliable energy to assist economic development, yet no organization must prioritize one objective over the other.
In the past, BHP Billiton had encountered severe issues in managing climate change issues and as a result, it had to suffer massively. From the perspective of normative-stakeholder theory, if the company had conducted adequate stakeholder analysis as a response to management of climate change issues, it would not have captured worldwide media attention. Besides, the company failed to understand that their actions could pose a direct influence on its stakeholders. The most basic significance of this perspective is that organizations must be well aware of the fact that stakeholders have a possession of normative power even by the powerless (Milne & Grubnic, 2011). This means that without identifying the needs of stakeholders, an organization cannot progress further. Moreover, in relation to public relations, this theory plays a significant role because it gives rise to clear ethical or moral obligations.
For the purpose of this report, secondary or desk research methods have been adopted in order to gather additional information from the website, financial statements, and other research articles. From the annual report and website of the company, details of its management of climate change issues have been attained that contributes to further body of knowledge. This report intends to shed light on the fact that organizations must not deviate from their path of becoming the top company but they must also look after their stakeholders and society in order to become one. Moreover, issues of climate change pose a big threat to the environment and if effective strategies or corrective actions are not taken at the earliest, future generations will surely have to survive. Hence, this report can be taken into account for scrutinizing the strategies that can be adopted to fight climate change issues.
The research method and contribution will help in:
- Climate portfolio analysis
- Sustainable development
- Evaluation of the strategies.
- Alignment with interesting and different characteristics
In relation to the aforesaid report, attributes like values, understanding, fear about a change of climate, etc have been reflected. Furthermore, the strategies or approaches of the management of BHP in response to climate change issues is also depicted in the report. Moreover, approaches like IPCC have been provided through this report, which every organization can accept in encountering climate change issues. Nevertheless, many organizations that prioritize development of economic growth over management of climate change must keep in mind that price on carbon must be implemented in a way that can not only address competitive concerns but also attain low-cost emission reductions. Moreover, not every company releases its climate change portfolio analysis report to its stakeholders so that they can overview the company scenario directly. This highlights the fact that the company is well aware of transparency measures across all parts of its business as there will be a time when the contribution of the entire workforce may be required in order to sustain risks and plan ahead for the future (Milne & Grubnic, 2011). Furthermore, BHP’s voluntary involvement with its stakeholder’s sheds light on the fact that it is aware of their importance as they can easily influence decision-making. In addition, it is also observable that BHP Billiton’s approach towards portfolio planning and investment decisions is robust in nature. Nonetheless, the approaches adopted by it proves that it is well-placed to react to risks and opportunities coming in its way.
References
Milne, M.J & Grubnic, S 2011, ‘Climate Change Accounting Research: Keeping it interesting and different’, Accounting, Auditing and Accountability Journal vol. 24, No.8, pp.948-977.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
