Oren Cass, former director of domestic policy for Mitt Romney and senior fellow at the Manhattan Institute in New York, where he focuses on energy and economics, told this publication that the effect of accountants measuring the environment might weaken the quality of financial accounting.

Cass also suggested that companies that deploy accountants or financial experts to record their environmental impacts do so for "PR purposes".

Ahead of climate change talks in Paris (COP21), CEOs from twelve global accounting bodies signed an open letter urging world leaders to show the "political will" and "determination" necessary in a sustainable future.

The letter has been written in conjunction with The Prince of Wales’s Accounting for Sustainability Project, which works alongside the Accounting Bodies Network (ABN) to represent more than one million professionals across the world.

The signatories (see list below) have outlined that initial action plans governments submitted to the UN ahead of COP21 had fallen short of reaching the goal of 2 degree global temperature limit vital to slow global warming.

Any deal reached in Paris will be underpinned by these action plans, called Intended Nationally Determined Contributions (INDC), which explain how each country will cut their carbon emissions and by how much.

Whether countries will follow through with their climate-saving targets is still difficult to forecast.

"INDC’s are deeply flawed," Cass said.

"Developing countries rejected the idea of [INDCs] having common metrics or formats that would allow carbon emissions to be evaluated and compared", he continued.

Given INDCs are nationally determined, different countries will focus on different carbon-lowering mitigation, adaptation and development goals.

Yet a crux of Cass’ argument is the lack of metric continuity within INDCs, which takes value away from the entire COP21 process.
"It is clear the INDCs simply show that most developing countries will continue on their emissions baseline trajectory or at weaker level".

Regardless of the turmoil surrounding INDCs and the open letter from rejects the idea accountants have the right skills to monetize issues of climate change for commercial reasons.

"The effect [of accountants measuring the environment] would weaken the quality of our financial accounting, which is a tremendously important function in a free market economy.

Cass suggests that most companies that deploy accountants or financial experts to record their environmental impacts do so for "PR purposes".

"If they want someone in their marketing department to come up with a glossy brochure on the subject then they are free to do that, but I think it is a real disservice to shareholders and companies at large."

So who is best placed to measure environmental impacts at a UN or company level?

"There is certainly good science that rests underneath the environmental economic analysis, but when that is then converted into a monetary benefit so many assumptions are piled on top of each other."

This will result in "political or marketing statements" rather than an objective assessment, he said.

Signatories are:

Mark Farrar Association of Accounting Technicians (AAT)
Helen Brand Association of Chartered Certified Accountants (ACCA)
Lee White Chartered Accountants Australia and New Zealand (CA ANZ)
Charles Tilley Chartered Institute of Management Accountants (CIMA)
Rob Whiteman Chartered Institute of Public Finance and Accountancy (CIPFA)
Alex Malley Chartered Professional Accountants of Australia (CPA Australia)
Kevin Dancey Chartered Professional Accountants of Canada (CPA Canada)
Gerardo Longobardi Consiglio Nazionale dei Dottori Commercialisti e Degli Esperti Contabili (CNDCEC)
Klaus-Peter Naumann Institut der Wirtschaftsprüfer in Deutschland (IDW)
Michael Izza Institute of Chartered Accountants in England and Wales (ICAEW)
Anton Colella Institute of Chartered Accountants of Scotland (ICAS)
P. V. Bhattad Institute of Cost Accountants of India

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