By Annie Makoff Climate change What accountants are doing to keep clients green in the cost-of-living crisis 31 Aug 2023 Business priorities for many SMEs have moved from environmental commitments to survival. Here’s how accountants are helping clients make the best of a bad situation. Despite growing consensus that greener business practices are essential, the cost-of-living crisis is forcing some firms to press pause on environmentally friendly initiatives. Survival is the more pressing concern, so businesses are prioritising revenue and attracting customers and clients. A body of research finds UK businesses are struggling to juggle environmental demands and managing money issues. Research for the British Standards Insitution (BSI) annual Net Zero Barometer showed 22% of businesses surveyed aren’t ‘currently’ committed to becoming net zero. A further 18% felt they weren’t ready to meet government targets. Some businesses (29%) are so focused on navigating the economic crisis that they’re prepared to face future penalties over their lack of progress to net zero. Separate surveys by small business lender Iwoca and financial services company Novuna produced similar results. Meanwhile, research by Veolia found just 29% of UK businesses have actually committed to net zero. The lack of government support and tax incentives is putting off many businesses, especially given the current climate. Who can blame them? This backdrop means that environmental, or ‘green’ accounting – which balances financial, environmental and social costs in relation to business activities – is all the more important. Accountants can help clients’ businesses meet targets and embrace environmental practices by: Identifying business practices which cause environmental harm (eg, supply chain emissions, landfill, use of harmful chemicals, etc). Going paperless. Carrying out environmental audits. Switching to greener energy suppliers. Here, accountants explain how they’re helping their clients do what they can. I’m advising about environmental incentive schemes available Francis Fabrizi, Keirstone Ltd Some of my clients are reluctant to prioritise green initiatives, mainly due to upfront costs and uncertainty about potential return on investment. There’s also a lack of government support and a limited number of government grants and tax incentives. I’m working hard on educating clients about the benefits of going green: it can save money, improve the bottom line and boost reputation. I also help identify government grants and tax incentives, and work closely with clients to develop a plan to implement green initiatives. In particular, the initiatives and schemes I’m currently supporting clients with include: The Low Carbon Buildings Programme, a business grant for energy-efficient building improvements. The Carbon Emission Reduction Target (CERT) scheme, which requires energy suppliers to help their customers to reduce their carbon emissions. The Energy Saving Trust, which provides free advice and support to businesses on energy efficiency. The Green Business Directory, which lists businesses that offer green products and services. Verdict: I’m advising clients on the green initiatives, grants and schemes that are available to businesses. We’re providing specialised green-focused accountancy services Steve Aston FCCA, Director, AGS Accountants and Business Advisors Our clients range from small start-ups to larger, more established enterprises and they’re all making concerted efforts to reduce their carbon footprints whether through waste reduction, use of renewable energy solutions or sustainable supply chain management. However, the cost-of-living crisis is restricting spending power so many clients are having to delay investments which would potentially make their business more environmentally friendly. For example, in Birmingham – where we’re based – many of our clients are affected by the new clean air zone requirements. They now need to make existing fleets of vehicles comply with these new zones, which is an expensive transition. The transition to sustainability is rarely straightforward, given the myriad complexities such as compliance with ever-changing environmental regulations and upfront costs of sustainable technology. Yet clients view these challenges not as obstacles but as stepping stones towards a greener and more sustainable future. We’re supporting them by: Offering specialised accountancy services focusing on financial aspects of sustainability through carbon accounting, securing green grants or tax planning which takes advantage of government incentives for sustainable practices. Providing advice on a range of green subsidiaries and tax incentives. Running a green tax and electric car awareness campaign. Verdict: We offer specialised, environmentally focused accountancy services as well as advice on green subsidiaries and tax incentives. We’re preparing for ESG regulations by promoting better data handling and reporting Neil Parsons, Managing Director, Wolters Kluwer Tax & Accounting UK Green initiatives are extremely important, but with the cost of living crisis and other financial strain, some companies may elect to push these initiatives further down their priority list. Yet Environmental, Social and Governance (ESG) has become one of the defining trends for business in recent years, and companies both big and small will have to prove and report on their compliance in the near future. Digital transformation will play a key role and there’s no time like the present to explore what it will take to get your sustainability data in line, and your reporting functionality fit for purpose. We’re therefore promoting better data handling and better reporting practices to help companies demonstrate the strength of their green initiatives. Accountancy firms know their own clients may ask questions surrounding their sustainability position, and accountants must be equipped with the appropriate answers. Having an ESG strategy in place is essential to ensure accountants meet the requirements of customers and stakeholders. Verdict: All firms will soon have to demonstrate ESG compliance so we’re promoting better data handling and reporting to ensure clients are ready. Annie Makoff is a freelance journalist and editor.