Workshop Title:

Sustainable Finance Workshop: Accounting for Greenhouse Gases

Date:

13 October 2023 (GMT+1)

Organizer:

Brunel University London

Keywords:

• Sustainable finance
• accounting for greenhouse gases
• non-financial reporting
• financial modelling

Workshop Chair:

Personal Bio:

Kevin McMeeking is a Professor of Accounting at Brunel University, London and a Visiting Professor at the University of Exeter in the UK. Kevin completed his undergraduate degree in Accounting and Financial Analysis at the University of Newcastle upon Tyne, a PhD in Accounting at Lancaster University and researched and taught at the University of Exeter from 1998-2020. His research interests are interdisciplinary in nature and seek to use financial analysis, financial- and non-financial reporting to secure effective sustainable corporate governance. His teaching specialisms lie in financial accounting - at the undergraduate, postgraduate and executive levels.

Workshop Description:

Background:

Countries from around the world agreed in the 2015 Paris Agreement to work towards keeping global warming below 20C - and ideally at 1.50C - to avoid the worst impacts of climate change. 97% of peer-reviewed scientific journals on global warming support the consensus that it is primarily caused by human activities. Humans emit approximately 38 Gt of CO2 (billion tonnes) per year - the remaining budget [for 1.5oC) is about 420Gt CO2). For human-induced global warming to stop (i.e. only to stop increasing) we need net-zero greenhouse gas emissions. Against the Paris Agreement target we are currently at 1.250C - and are already seeing the consequences; and scientists contend there will be greater consequences at 1.50C and significantly more consequences at 20C.

Global warming is arguably the most important issue mankind has ever faced. Sustainable accounting and reporting needs to meet climate science objectives to tackle this wicked problem. However, accounting standard setting bosies, regulators and corporations often focus on wider sustainability issues - such as the UN Sustainability Development Goals - and (at least publicly) fail to disclose the impact of their business activities on CO2 emissions. This interdisciplinary workshop seeks to address the financial accounting and sustainable finance issues pertaining to the most significant impact facing mankind - the effect of greenhouse gas emissions on global warming.

Goal/Rationale:

The aim of this online workshop is to bring together researchers from multiple fields that are interested in global warming / climate change to foster the development of joint interdisciplinary research activities.

Scope and Information for Participants:

The workshop targets climate-focused academics, banks, regulators, students and investment professionals from the public- and private-sectors. Insights and solutions are sought on issues such as forecasting, modelling, risk management, resilience, disclosure, etc.

Specific attention is drawn to the following areas:

• Adaption and resilience to global warming
• Loss modelling for extreme weather conditions
• Climate adaptation disclosure: saving the Earth or greenwashing?
• Climate and weather forecast-based financing
• Defining and assessing climate resilience
• Digital developments in climate analytics and forecasting
• Environmental performance and credit ratings
• Integrating climate-change scenarios & analytics into decision-making
• Innovations in climate risk management and scenario analysis
• Modelling the impact of weather volatility
• Scaling up green investments and technologies
• The effects of climate change on the economy of Arctic/Antarctic/indigenous communities
• The physical, economic and financing impacts of climate change

Highlights:

A highly interactive workshop was run to investigate and debate issues relating to climate change. In his keynote address, McMeeking spoke to the under researched area of accounting for greenhouse gases.

McMeeking started by outlining the debate surrounding whether there is a case for climate change. If we focus on the high calibre academic literature (i.e. those papers published in peer reviewed academic journals) there is a strong case for climate change. For example, 97% of papers in the biochemistry field support the argument that the earth's temperature is increasing. However, the media (certainly in the UK) have an obligation to project a range of opinions (in this case the arguments for and against global warming) and hence the message being projected can become confusing to the audience. McMeeking noted parallels with other subject matters - e.g. the health risks associated with tobacco. There have been efforts by leading politicians and corporations to dismiss the arguments of global warming as fake and/or part of the Earth's natural warming and cooling.

To address this, McMeeking drew from Ed Hawkins (University of Reading) work to set out the evidence on reported temperatures from 1850 to 2020. Using a spiral chart he showed how temperatures have risen, particularly since the 1980s. McMeeking then drew from University of Oxford research to highlight how these temperature rises were almost exclusively due to human influences. He also noted that the rises had reached the 1.25 degrees Centigrade level - and we are already seeing the adverse effects (in terms of extreme weather events) - and how 1.25C is significantly better (in terms of fewer and less violent adverse events) than 1.5C.

McMeeking noted the volume of work on sustainable development and then spoke to the lack of academic research in the fields of accounting and finance on the issue of accounting for greenhouse gases. He also identified the void between scientists and business scholars and reported that the physical climate does not respect whatever accounting and finance scholars and practitioners might report! The global challenge is to construct accounting and finance standards that speak to physical climate.

McMeeking then spoke to the concepts of emissions and offsets and the related net zero equation. He has started a conversion framework that equates emissions of different greenhouse gases into millions of tons of Carbon Dioxide.

He concluded with the case for reductions of emissions, starting immediately, and the role that sustainable accounting and finance can play in helping to focus the mind to deliver on that promise.

Venue:

Brunel University London, Kingston Ln, London, Uxbridge UB8 3PH, UK

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