Researchers working in partnership with the Chartered Institute of Management Accountants, have laid out a practical, ten-step process to address global climate change, based partly on their interactions with NHS England and Wales Sustainable Development Unit.
Organisations are in the process of translating strategic issues into management action in relation to their carbon impact, and a recently published report details the findings of research into these organisations that are at the leading edge of responding to global climate change (GCC).
The researchers, Jan Bebbington and Nick Barter, of the University of St Andrews, Scotland, based their work on interviews conducted with a cross section of public and private sector groups. They said the aim of the report is to support the development of management accounting for organisations as they respond to the threat of global climate change.
Among those interviewed was Sonia Roschnik, Operations Director at the NHS England and Wales Sustainable Development Unit. She was questioned about the NHS strategic response to the challenges of global climate change itself as well as regulatory requirements that emerge to address the issue. The implications for management accountants and accounting were also explored in the research.
Potential action plan
Taking the interview findings as a whole, the researchers developed the various actions of the groups into a ten-step process.
This process provides example actions and links to potentially useful resources, using examples taken from the NHS England and Wales Sustainable Development Unit.
“This unit has produced a comprehensive set of publically available resources in this area and is an exemplar of how to systematically address GCC concerns. As a result, any organisation wishing to ensure they are responding to GCC across the board and in a manner that is likely to ensure their success should consider the elements of the action plan outlined and adapt these to their particular organisational setting,” the report says.
Ten-step process to address GCC
1. Establish consensus - The case for a response and the appetite to respond
The Department of Health and the NHS conducted a widespread survey where 95% of respondents indicated that GCC was an area of importance and concern. The Faculty of Public Health also produced a declaration, ‘Climate change is the public health challenge of the 21st century and that, unless decisive action is taken now, the world will face global public health and environmental catastrophe.’
2. Develop a data baseline – Greenhouse gas (GHG) emissions footprint
The NHS footprint is: building energy (24%), travel (17%) and procurement (59%). This process identified the importance of procurement and, in particular, the high carbon intensity of pharmaceuticals. These figures impact practice and highlight there are GHG emissions benefits from preventative health spend.
3. Develop a procurement plan
The NHS plan focuses on whole system reductions in GHG emissions and includes roadmaps, hierarchies of interventions and prioritisation tools.
4. Co-create a vision of a low carbon future
Use that vision to prompt thinking about how to respond to current challenges. A series of scenarios for low carbon healthcare in 2030 were published through a participative process and these have been used to stimulate thinking, including the idea of ‘low carbon treatment/patient pathways’.
See Fit for the future at: www.sdu.nhs.uk/publications-resources/4/Fit-for-
5. Support current and future leaders
Support the current and future leaders that will need to tackle the challenges of the global climate change agenda by helping them understand the issues and support required actions that they will need to take.
6. Develop process standard for the sector
Develop governance routines that support the delivery of desired GCC outcomes. A good corporate citizenship guide could form a part of this process.
7. Place GCC in a wider SD approach
Place GCC considerations within a broader framework of sustainable development (SD) and taking a whole systems approach will help avoid dysfunctional effects of a narrow focus on GHG emissions and undermining the purpose of the organisation. This might lead one to consider, in the context of healthcare, the GHG and social benefits of health prevention activities versus treating illness.
8. Fund the transition
Access or create the facilities that would allow you to fund the transition to low carbon. In the case of the public sector there is a rolling investment facility for investment in energy efficiency.
9. Ensure financial accountability includes GCC concerns
Ensure the financial accountability mechanisms include GCC thinking. For example, in 2010 the Foundation Trust Network published a report titled Making sustainability add up: accounting for sustainability – a strategic priority for foundation trusts.
10. Develop an adaptation plan
Develop an adaption response. For example, the Department of Health has a National Heat Wave Plan, first published in 2004 with most recent plan published in 2010. In addition the Government has an adaptation report power that is applicable for some strategic assets/ organisations such as water and energy companies.
Whole systems approach
The interviewees indicated that in order to address GCC, a whole systems approach is necessary, the report states, adding that the approach should be one that develops partnership working with others in sector – where appropriate – as well as significant stakeholders – such as suppliers, employees, customers, regulators and funders.
Because of this, GCC is viewed as a strategic challenge for all parts of the economy and reductions in GHG emissions are required at every stage of all production and consumption activities.
“These two observations suggest we might expect that organisations are engaging all stakeholders – to a greater or lesser degree – in their responses to GCC,” it says.
The research shows that at its simplest, there is a need for all parts of an organisation to be involved in supporting GCC responses and this includes the accounting function. There are three ways in which support from accountants and accounting could be – and was being – realised:
The key message of this work is that organisations that are being proactive in this area are looking to the wider effects of their interactions and to longer-term horizons in order to formulate their strategic responses.
Organisations are also starting to be concerned that the physical realities they have previously worked within are going to change radically and rapidly.
Furthermore, the regulatory environment within which organisations operate will continue to evolve in this area. As various regulatory systems for GCC emerge – especially from international and supra-national levels – there will be a need for other regulatory processes to change in order to come in line with these GCC aspirations (termed cross compliance).
At that point in time, there will be another array of GCC related governance changes to respond to.
One of the organisations interviewed noted that: “It’s broadly recognised that… the entirety of the European framework of legislation that’s been transposed into law was written in a pre-carbon era.”
When that legislation is GCC proofed, demands for organisational change will accelerate.
Organisations that have taken a whole-system, long term and strategic approach to the issues will be well placed to ride out that trend. Initial conclusions from the work undertaken here suggest the accounting profession is essential to the realisation of a low carbon economy and well placed to contribute to such a journey