Ep. 191: New IMA Insight: A Guide to Reducing a Carbon Footprint

Read the report here: Management Accountants’ Role in Sustainable Business Strategy: A Guide to Reducing a Carbon Footprint
Connect with the Speakers:

• https://www.linkedin.com/in/arnaudbrohe/
• https://www.linkedin.com/in/jaxiefriedman/
• https://www.linkedin.com/in/regisedu/

Full Episode Transcript:
Adam: (00:05)
Hello again, welcome back to Count Me In, IMA's podcast exploring the world of business from the management accountants perspective. I'm Adam Larson and today we are discussing exciting new thought leadership from IMA, which shows how management accountants are on the front lines, making businesses more sustainable. The name of the report is Management Accountants Role and Sustainable Business Strategy: A Guide to Reducing Carbon Footprint. And I'm excited as brought some of the researchers and authors involved in the project here today, including Kristine Brands, management professor, the US Air Force Academy, Arnaud Brohe CEO of Agendi, a leading consultancy for climate and sustainability programs, and Jaxie Friedman, a sustainability consultant at Agendi. Make sure to follow a link in the show notes to access the full report. Let's start the conversation.

Adam: (01:03)
So before we can talk about reducing carbon emissions for a company or for anybody, we kind have to start talking about the drivers that kind of led us up to this point that would make companies and other folks realize, Hey, I need to start paying attention to this and can, so let's start there. Kristine, can you, can you start that off for us?

Kristine: (01:21)
Yes. Before I speak, I have a disclaimer because I work for the Air Force. The views that I am speaking about are entirely my own and do not reflect any policy or position from the Air Force, the Department of Defense or the US government. Drivers are huge and what astonishes me is the awareness and the rising of the consciousness of people towards climate change. And they take several dimensions of clearly external and the physical drivers, which are the data behind climate change and the astronomical risk that we're facing globally as a society. And that carries over to internal drivers, into organizations that are going to be put in a position, which I predict is going to come faster than people can imagine to address that risk as well as their strategy so that they can adapt and adjust and be agile to the threats that we're all facing as a society.

Adam: (02:34)
Arnaud, Jaxie, do you have anything to share?

Arnaud: (02:37)
Yeah. I agree with what Kristine said. I just think that people don't realize how fast this is going to evolve. But that's critical. Basically we have 10 years to change the way we consume, the way we produce, the way we are organized as a society. We have 10 years to start thinking about how to change our mobility systems, you know, shifting from thermite combustion engines to electric cars, that's going to be very visible, but that's just the tip of the iceberg, frankly. We have, we need to revolutionize the way we consume energy in factories, the way we consume energy in agriculture. So the changes are just enormous. The drivers of course are the physical climate risk, but that's not the first drivers that companies are going to experience what we see today and taking the automotive industry as one example, to trade is that transition risk are going to affect businesses even before physical risk and by transition risk I mean, the pressure that customers, the regulators, governments are putting on existing businesses. So if you are an automotive manufacturer today, and you wanna sell your car in no way, or the Netherlands or Germany, you better be ready to switch to much more efficient cars and to gradually shift 200% electric cars. And we know that these trends are going to come here as well in the US and in order jurisdiction.

Jaxie: (04:03)
Yeah. I think it's true. What both of you guys are saying that, you know, the science is showing it's, it's more and more significant and gonna be incredibly problematic, but I also think that there's in relation to that a lot of pressure coming from businesses and consumers as well, that is really driving this action. You know, of course it's true that the science is showing that more work needs to be done. But I also think that there's more awareness around that fact. So it's not just a matter of, you know, the, IPCC reports saying that, you know, there's targets we need to hit. It's also a matter of more public awareness that's trying to push us forward. And some of that is, you know, more just reputational. So investors encouraging companies to be integrating climate into their business strategies. Some of it is regulatory like Arnaud I were just speaking about kind of the SEC regulations and how there's kind of current movement towards there being potential regulatory requirements related to climate. And I think, you know, the fact that, you know, those new SEC kind of papers have come out to suggest that we're moving in that direction, I think is gonna be continuing to intensify the speed at which climate becomes integrated, not just into sustainability functions, but across entire business operations.

Adam: (05:44)
So it almost seemed like you needed the customer and the government regulators to say something cuz otherwise businesses probably wouldn't have done anything.

Kristine: (05:54)
I think you're absolutely right. There's been a lot of resistance. There is pressure. There's reputational pressure as was mentioned, but the real push is to pass the regulations which the European union has done. And there are daunting proposed regulations from the SEC. And I think that that's what is necessary to close the deal.

Jaxie: (06:22)
I think also, you know, it depends company to company. I think, you know, considering company culture is a really important factor. There's more and more businesses that really have sustainability within their DNA evolving as it's becoming a bigger part of our society as climate action is becoming more integrated at a public perspective. So I think in order to move the needle among kind of the mainstream body of companies, I think it's completely true that the regulatory pressure helps really push things along. But I also think it's important to acknowledge that there are many companies that have taken really huge steps in this direction before regulation was even on the table. And so I think it's important to consider that fact, I think that, you know, a lot of companies get a lot of or you know, with a corporate world in general, I think gets flack that they're, you know, the causing so much of the emissions and that they're, you know, the source of the problem, but the truth is like also, they're also a big part of the solution and they've been a real driver of innovation towards our climate solutions.

Jaxie: (07:31)
And so I think it's important to acknowledge that I think regulation is not, it is a kind of like a compounding force, but I think even in its absence, there've been a lot of massive growth opportunities that have evolved because of companies that are really, you know, recognizing the need even without the enforcement.

Arnaud: (07:55)
To compliment what Jaxie just said, that I would say we should stop thinking about ...