Green Accounting- What Is It And Why Is It Important?
Keeping up with new accounting trends...
...by Beck Mease 12/14/2009
With the way the world is moving toward a more environmentally sound future, is it time for accountants to go green as well? It just so happens that carbon accounting is the next “up and coming” in the accounting world with many positions to be in demand. Companies like Groom Energy stated that 2009 would be the year for enterprise carbon accounting, and a study completed by Greenhouse Gas Management Institute found that there was indeed a shortage of skills in green accounting. But I have to ask, “What exactly is it?”
Green Accounting, or carbon accounting, is an area of accounting that undertakes the measure and tracking of carbon dioxide equivalent levels that will not be emitted into our atmosphere due to the Kyoto Treaty. This treaty places responsibility on each nation to follow through with compliance to the Kyoto Protocol, making carbon emissions accounting an important avenue in our country. The treaty has even impacted markets in carbon offsets- including sellers and buyers who do not fall under the Protocol.
There are approximately 3,000 + companies globally who have taken to the practice of documenting and reporting GHG emissions. This process is very similar to how businesses use financial reports to judge operational performances. This new area of expertise can be recognized as Enterprise Carbon Accounting (ECA), and many companies already have in place expert accountants who use GHG emissions reporting to oversee their sustainability performance. Due to President Obama’s statement about his commitment to sustainability and its importance, companies nationwide are preparing for increased efforts involving sustainability- thus increasing the need even further for Enterprise Carbon Accountants.
It was determined by the 2009 Greenhouse Gas and Climate Change Workforce Needs Assessment Survey that most of the people who responded believe that there is a definite shortage of green accountants- or any accountant for that matter- who have the skill and knowledge necessary to undertake the task to ensure compliance to the Kyoto Protocol. Due to the shortage, ¾ of the respondents believe that the carbon market will experience similar accounting situations to those of Tyco, Enron, and WorldCom.
It is anticipated that greenhouse gas emission (GHG) reporting will triple within the next two years, and that the number of companies utilizing a GHG software product will quadruple. ‘Enterprise Carbon Accounting: An Analysis of Organizational-Level Greenhouse Gas (GHG) Reporting and a Review of Emerging GHG Software Products,’ is used by companies who are interested in tracking and/or reporting GHG emissions as a guide to get them going.
Financejobz.com feels it’s beneficial for new and veteran accountants alike to consider looking into green accounting. The job market for ECA’s is inevitably growing and it’s a specialized accounting area with a lot of money to be made.