Understanding Trace: Insights from Joanna Auburn

Accountancy Industry Proven Unprepared for Demand in Carbon Reporting
Although accountancy industry leaders certainly do see value in offering carbon reporting services to clients, they are still largely unprepared to do so, according to a new study from climate reporting platform Trace.

This has been said through the report entitled Climate Reporting: The Future of Accounting, wherein accountants believed, at 75%, that it is through accounting that their respective industry will help stop climate change. Plus, 96% think climate reporting service to be a "good idea."
However, massive gaps are marked when recognition meets lack of readiness to act.
Only 7.7% of accountants consider themselves "well prepared" to discuss climate reporting with clients, and 67% said they are not ready. This lack of expertise could become an obstacle as mandatory carbon reporting grows.

By 2028, some 80,000 companies will have started reporting their carbon emissions by implementing regulations newly passed into law. The increasing necessity to do so, in any way, will offer fantastic opportunities for expert climate reportage accountants to put themselves forward. More importantly, accountants are not aware of whether any client currently reports any emissions, and if no client would be surprised at future requirements to have fallen into a hole.

This is an indication that 30% of accountants do not know whether their clients will be required to report under mandatory regulations, thus exposing a significant knowledge gap. The second point is that half of the respondents identified lack of skills and education as the biggest obstacle to launching climate reporting services.

Implications for Accounting Firms
More stringent ESG regulations are anticipated to flow into businesses beyond the policy requirement. The indirect impact on small businesses in the supply chains of large firms will thus increase demand for climate reporting services.

Otherwise, it may find the accountants completely skipping the emergent market. The carbon reporting requirement means that the financial professional needed in a compliance advisory situation will look towards guiding it. Regulatory frameworks do not end up being static but keep on evolving, and hence, a matter of time might just make the case for climate reporting upskilling a no-choice affair in this industry.
There is a sense of Urgency for Action
The research calls for an immediate change. Accounting professionals should invest in training and education to eliminate knowledge gaps and adjust their services to meet the emerging needs of their clients. As demand for carbon reporting increases, the firms that adapt early will better be in a position to capitalize on the shaping landscape.

Conclusion
Climate reporting will soon be financial compliance, but the accounting industry is not ready for it. More regulatory pressure and the surge in reporting demands means that firms that don't develop expertize will lose their competition advantage. The industry needs to address growing carbon reporting service demands proactively so that it doesn't lose relevance in the changed business environment.

Source: Climate Reporting: The Future of Accounting