With the USA possibly in the process of pulling out from the Paris agreement and definitely reducing the scope of EPA climate change activities it is chilling to learn from Jeff Tollefson, Major Report Prompts Warnings That the Arctic Is Unraveling (Nature magazine on April 28, 2017), that parts of the Arctic are already warming at double the rate elsewhere in the world. Tollefson indicates warming at 3.0 C, compared with the 1971-2000 baseline when the Paris agreement is looking at restrictions to 1.5 – 2.0 C. The figures agreed in Paris are the absolute maximum we should be accepting for increases in average world temperature. With higher increases in the Arctic the impact on sea level rise could arrive sooner than expected, with implications for companies currently bronzing themselves near the beaches, something about which The Climate Institute is concerned.
Into this scenario the Australian Senate’s Economics Reference Committee has produced a report entitled ‘Carbon Risk: A Burning Issue’. From an accounting perspective where actions are to be taken to restrict temperature change globally to a 1.5 – 2.0 C rise material company risks, associated with the need for companies to transition to a lower carbon economy, are acknowledged.
While in Australia government consideration seems to be given to improving disclosures about such risks, promoted through the Commonwealth Corporations Act 2001, and in the USA empathy looks to be moving in the other direction, the real need is for accounting information which can guide corporate action. Whether your government is onside or not it is time for some serious scenario planning about and accounting for carbon emissions, water, energy, their interaction and your business.