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Roles of Accountants and Scientists in the Assurance of Greenhouse Gas Statements

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Ethics and Sustainability in Accounting and Finance, Volume III

Abstract

This chapter chiefly explores the role of accountants in greenhouse gas (GHG) assurance process, especially in the absence of any existing or upcoming relevant assurance standards. In this regard, we critically discuss the characteristics and patterns of GHG emissions statements, motivation of getting such statements assured, and factors influencing the selection of accountants and/or scientists to certify those GHG statements. Unlike non-accounting background assurers, professional accountants enjoy a monopolistic power in financial audits. We argue that because of their experience with financial audits, the assurance market could be more lucrative for accountants, than for non-accountant assurers.

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Notes

  1. 1.

    Carbon emissions and greenhouse gas statements are parts of sustainability reporting and are often used interchangeably (Datt et al. 2019; Dhaliwal et al. 2011; Trotman and Trotman 2015). For the purpose of this chapter, we use Greenhouse Gas (GHG) throughout the chapter for consistency, except where the original reference specifically states other terms.

  2. 2.

    Conference of the Parties (COP) refers to the countries that have signed up to the 1992 United Nations Framework Convention on Climate Change. The main objective of the annual COP is to review the Convention’s implementation. The first COP took place in Berlin in 1995 and significant meetings since then have included COP3 where the Kyoto Protocol was adopted. The COP in Paris is the 21st such conference. The Rio Convention in 1992 adopted the UN Framework Convention on Climate Change (UNFCCC) and set out a framework for action aimed at stabilising greenhouse gases (GHGs). The UNFCCC became enforceable on 21 March 1994 and has a membership of 195 countries.

  3. 3.

    https://www.gov.uk/government/publications/environmental-reporting-guidelines-including-mandatory-greenhouse-gas-emissions-reporting-guidance, accessed on 10 December 2019.

  4. 4.

    https://www.cdsb.net/sites/default/files/wbcsd_japancasestudy_online_final_2019.pdf, accessed on 10 December 2019.

  5. 5.

    The major regulatory schemes requiring disclosures include those required by the U.S. State of New Mexico’s mandatory GHG reporting regulations, the Australian Government’s National Greenhouse and Energy Reporting System (NGERS), disclosures that are forerunners of, or are related to Emissions Trading Schemes (ETS) such as the EU ETS in Europe, and the Regional Greenhouse Gas Initiative in U.S. and Canada (Green and Zhou 2013).

  6. 6.

    The King Code of Governance for South Africa of 2009 (King III) is a voluntary attempt that requires independent assurance of sustainability disclosures. Although King III is a voluntary governance code, the Johannesburg stock exchange regulations require all listed companies to apply the King III principles, making it a de facto mandatory requirement for all JSE-listed companies. This regulatory requirement has made South Africa one of the first countries that require certain companies to provide independent assurance of sustainability statements (Ackers and Eccles 2015, p. 516).

  7. 7.

    The sample for this analysis consists of the comprehensive reports directory of CorporateRegister.com. Period of study: early 90s to 2008. Total sample: 17,000 published reports.

  8. 8.

    https://www.globalreporting.org/standards/, accessed on 10 December 2019.

  9. 9.

    https://www.santander.co.uk/assets/s3fs-public/documents/strategic_report_2017_stakeholder_review_assurance_statement.pdf, accessed on 10 December 2019.

  10. 10.

    https://pepsico.co.uk/docs/album/uk-reporting-pdf/deloitte-assurance-statement-for-puk-website-2015-data, accessed on 10 December 2019.

  11. 11.

    According to GRI (2013, p. 9), assurance providers often offer two levels: ‘reasonable assurance’ (i.e. high but not absolute) or ‘limited assurance’ (i.e. moderate).

  12. 12.

    https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/10/kpmg-survey-of-corporate-responsibility-reporting-2017.pdf, accessed on 10 December 2019. The sample for this analysis consists of the top 250 companies of Fortune Global 500 (G250). The KPMG report also surveys reporting and assurance practices of the N100 companies, comprising the 100 largest companies by revenue in 16 (for the KPMG 2005 survey) and 22 (for the KMPG 2008 survey) countries across the globe. Period of study: September 2004 to January 2005 (KPMG 2017); mid 2007 to mid 2008 (KPMG 2017). Total sample: not specified.

  13. 13.

    http://www.irrinstitute.org, accessed on 11 December 2019.

  14. 14.

    http://www.kpmg.com.br/publicacoes/cies_survey_2008.pdf, accessed on 11 December 2019.

  15. 15.

    https://www.gsk.com/media/4752/assurance-statement-2017.pdf, accessed on 10 December 2019.

  16. 16.

    https://www.cobham.com/media/2107400/cobham-assurance-statement-ghg-2018_issued.pdf, accessed on 10 December 2019.

  17. 17.

    Knowledge to be contributed by non-accountants, e.g. engineers, consultants, and scientists.

  18. 18.

    http://sustainability.hammerson.com/assets/2016AssuranceStatementpdf.pdf, accessed on 10 December 2019.

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Acknowledgements

Authors are thankful for the financial support provided by the TUT Development Program 2016-2022, code 2014-2020.4.01.16-0032 (European Union, European Regional Development Fund).

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Authors and Affiliations

  1. Department of Accounting & Information Systems, Faculty of Business Studies, University of Dhaka, Dhaka, 1000, Bangladesh

    Anup Kumar Saha

  2. Department of Business Administration, Tallinn University of Technology, Ehitajate tee 5, 19086, Tallinn, Estonia

    Istemi Demirag

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  1. Anup Kumar Saha
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Correspondence to Anup Kumar Saha .

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  1. Trakya University, Balkan YerleÅŸkesi, Edirne, Turkey

    Kıymet Tunca Çalıyurt

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Saha, A.K., Demirag, I. (2021). Roles of Accountants and Scientists in the Assurance of Greenhouse Gas Statements. In: Çalıyurt, K.T. (eds) Ethics and Sustainability in Accounting and Finance, Volume III. Accounting, Finance, Sustainability, Governance & Fraud: Theory and Application. Springer, Singapore. https://doi.org/10.1007/978-981-33-6636-7_14

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