AU & NZ Leaders: Climate Change A Collective Challenge That Requires A Collective Response

Over 1,300 chartered accountants were joined by business, government, academia and governance leaders for Chartered Accountants Australia and New Zealand’s (CA ANZ) Navigating climate risks and opportunities online event, and while the discussion was broad, one underlying message was clear - climate change is a collective challenge and only a collective response, including the accounting profession, will have the power to deliver the change needed to reach net zero by 2050.

Facilitated by Chair of the G100 and REA Group CFO Janelle Hopkins FCA and hosted by CA ANZ President Nives Botica Redmayne FCA and CEO Ainslie van Onselen, the event explored the outcomes of COP26 and the accounting profession’s role in supporting the journey to net zero and a just transition.

And there was no better panel to undertake such a broad conversation than one comprised of New Zealand Minister of Climate Change Hon James Shaw, Group CFO Qantas Vanessa Hudson, professional director Bella Takiari-Brame CA and Australian economist Professor Ross Garnaut AC.

Their perspectives were in clear alignment with an early comment from Ms van Onselen, that “Climate change is a collective challenge, and therefore only a collective response will deliver the global change we need to reduce emissions and slow down temperature increases.”

COP26 was naturally a conversation starter for the group of sustainability experts.

“There’s been a lot of media about COP26 having either been a huge success, or a complete failure, and the answer of course is that it’s actually a bit of both,” said Minister Shaw, who attended the event in Glasgow.

In detailing the progress made, and the commitments made by COP26 attendees, Minister Shaw agreed that now was the time for accounting profession to lend their skillset to the collective climate response.

“The focus really will change from writing the rulebook, to what we’re going to do about it, and the flowthrough effects into the private sector, and the signal that sends to the private markets is enormous,” continued Minister Shaw.

With 84% of those registered indicating in a pre-event survey that they feel professional accountants have a role to play in supporting organisations to address the risks and opportunities associated with climate change, agreement was broad.

Qantas CFO Vanessa Hudson gave an on-the-ground testament to this.

“If I think about Qantas’ role in reaching net zero by 2050, we’re going to have invest in new capital, and revamped industry, and a CFO needs to be taking a long-term planning view of this.”

When asked about the challenge of short-term profitability versus long-term gain, Group CFO Qantas Vanessa Hudson was clear.

“I think it’s a dangerous place to not get on a long-term journey for fear of short-term profitability,” she said.

“There’s no reason why you will have material impact to profitability if you’re having the right conversations with the right stakeholders.

“If you don’t think like that you will lose customers, you will struggle to access employment markets, because people want to work for a company with high ambitions around sustainability targets, your competitors will be moving, and investors and debt markets will keep you accountable.”

A director at New Zealand’s Crown Infrastructure Partners, with experience in oil, gas and utilities, as well as deep connections to Waikato Tainui, Bella Takiari-Brame CA reiterated this point for small to medium sized enterprises.

“When we look at our SMEs coming out of COVID, there’s two types of businesses; those that no longer exist, and those that have been able to adjust accordingly, whether engaging online, or reimagining their work.

“As trusted advisors it’s paramount that we encourage SMEs to take a step back and think about the long term and what’s important for their values, because I think that’s what will make a difference in encouraging sustainability in everything they do.

“SMEs take contracts from larger businesses and if they are prioritising sustainability, then SME competitors who also prioritise sustainability will get those contracts instead.”

“You have to appeal to the workforce. Millennials and Gen Z are selective about who they work for, and you can’t deny that. If you’re clear on your purpose and incorporate sustainability you will benefit in that regard.”

Her comments support a new playbook released by CA ANZ today, How SMEs can create a more sustainable world, that provides a variety of tools, resources and practical steps for embedding sustainable practices within SMEs.

The thoughts of storied Australian economist Professor Ross Garnaut AC were likely a favourite for many attendees, as he shared his thoughts on the action needed, while emphasising the role accountants must play.

“The game of investment and trade in zero emissions goods and services is all about certification. If the reductions in emissions are going to come through the decisions of private businesses, whether the pressures are mandatory compliance with the law or voluntary, investors and consumers want to know they’re buying low emissions products.”

“If a business is telling consumers and investors ‘we are zero emissions,’ an accountant has to certify that they are.”

While the consequences of not acting as a collective in response to climate change were existential, Garnaut expressed that on the flipside, there were significant domestic opportunities.

“Australia has a massive interest in the success of global action to contain climate change. It is the country most vulnerable to climate change. It is the country with the renewable energy and land best to prosper most from successful movement to a zero emissions economy. And Australia and New Zealand would both be damaged immensely by the regional political disorder, in the South Pacific, Southeast Asia and South Asia, that would accompany failure of climate change mitigation”.

“Australia is the odd country out in the developed democratic world on the crucial commitments to action over the next decade. We need to join other developed democracies including New Zealand on a strong 2030 target and methane and coal reductions.”

“Phasing out coal is harder for us and New Zealand of course. But if we joined the US in commitment to zero emissions in power generation by 2035, and managed it well, we would have cheaper, more secure, and more reliable power.”

His comments highlighted both the cost of failure on international cooperation on climate change, opportunities from full participation in successful climate change mitigation, and the important role accountants must play.

In closing, a quote from CA ANZ President Nives Botica Redmayne FCA delivered the call to action for all those in attendance.

“We are well known for charting the best course of action, for making a difference, so shaping a sustainable future is a task fit for us as chartered accountants.”

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