JIMMY GREER, Head of Sustainability, ACCA
The risks connected to climate change are mounting. Across the Caribbean, the increasing frequency and growing intensity of extreme weather events is a sign of a future that is already here. Without action, these problems, and their social and economic costs are on a trajectory that will only accelerate and intensify. But the pathways to a low carbon, socially just transition – and a more climate resilient future – are emerging. Alongside global action, this transition will also bring resilience to the impacts of climate change to the Caribbean. And, if properly supported, it will also usher in a new era of quality economic development and job creation. A new future for energy is the key to this transition, not least here in TT.
Last week in Port of Spain, at the third Biennial UWI Faculty of Law Oil and Gas Law Conference and the Just Transition Initiative Conference 2019, the focus was on the way that the physical and institutional infrastructure around energy is making the shift to renewables. It was clear that taking a multidisciplinary approach to this transition is a vital. The legal, regulatory, political, technological and economic factors that will make this possible were debated and shared at the conference. Hearing from legal experts and regulators from TT and the region, alongside academics and experienced practitioners from around the world, it was set out that only by working together, across government, industry, academia and civil society, will the momentum exist to determine a joined-up approach to shaping the frameworks that will set the landscape for making this change.
At the conference, the message was clear. TT can leverage its 110-year oil and gas history to make sure that new skills and jobs in renewable energy can be created that set up the country for the next century. And in turning the region into a global hub for renewables research and development, it can become a model for those around the world with similar characteristics – that are also trying to find the best way to make the transition to a low-carbon and quality livelihoods future – be they biodiversity-rich island nations or smaller energy-importing countries.
Over three days of knowledge sharing, signs of this new future for TT were put forward again and again, demonstrating that this momentum is indeed gathering. From wind power auctions that are taking place, to advanced research into third generation algae-based biofuels, regional leadership was on display.
But alongside support for these efforts, what next for making this happen? How to generate the broad-based will to kickstart further action? In the first instance, a large part of this rests on greater transparency and knowledge as to the scale of the risks and opportunities ahead.
Greater understanding around the social economic and environmental risks attached the oil and gas development is a critical starting point. That is because the ability to have a big conversation as a society about this important issue is so important. And it also provides finance with the information it needs to make informed decisions about future risks and opportunities.
From an accounting perspective, climate risk disclosures by companies and investors are an essential element. The effective disclosure of financial risk linked to climate impacts are an important part of the puzzle to pull investment and activities into renewable energy development to build the next-generation infrastructure that will power the Caribbean’s future demands.
And that is why companies with a combined market capitalisation of over $7.9 trillion, including finance firms responsible for nearly US$100 trillion, have signed up to the Task Force for Climate related Financial Disclosures (TCFD). These disclosures ask signatories to provide decision-useful information that demonstrates what they are doing at a governance, strategy and risk management level to engage with this risk. And critically, it demands that they publish performance metrics that tell the story of this risk within financial filings.
Professional accountants are well placed to support the development and reporting of this information. Their skills in producing reliable, faithful and high quality information will be vital if the information is to be truly decision-useful. Developing the strategy, systems and controls to manage and report on climate risk, to the same degree of rigour as other elements that sit within financial reporting, points to future trajectory for professional accountants that demonstrates that their skills, in partnership with others, will be in demand for the next generation of economic development for the region.
Jimmy Greer is head of sustainability at ACCA. He creates global research and advises on policy issues for ACCA related to sustainability, social impact and business model innovation. He is a member of the UNCTAD-ISAR Consultative Group on Enterprise Reporting on the UN Sustainable Development Goals and is also a member of the Climate Disclosure Standards Board Technical Working Group. He holds an MSc in Globalisation and Latin American Development from the UCL Institute of the Americas.