role of accounting firms - pwc
TRANSCRIPT
Green Economy Roundtable Opportunities, Challenges & Priorities
Role of the Accounting FirmsRob Evans PwCApril 2012
www.pwc.com
PwC 2April 2012
Business-as-Usual is not sustainable
PwC
Will a move to a “Green Economy” be the solution?
The UNEP Green Economy Coalition define the green economy as:
• An economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive.
Without a clear definition of “green” industries, however, it is hard to determine the size of the “green economy” and/or put in place policies and practices to support it. Definitions are therefore increasingly shifting from “what is it” to “how is it measured”
• Industries that provide products or services related to renewable energy, increased energy efficiency, clean transportation and fuels, agriculture and natural resource conservation, and pollution prevention or environmental cleanup. (Michigan Department of Energy, Labor & Economic Growth)
Most green business activities are, however, still bundled with those that are not. So who decides what is a green business? Traditional accounting and Economic methods haven’t helped: Organic food processors are typically categorized no differently from other food processors when collecting and reporting typical production and employment data.
So where does this leave a firm like PwC, with its traditional service lines of Assurance, Advisory and Tax services?
3April 2012
PwC
8 key megatrends
Mega trend Business Implications
Climate change
Transformation of global business practices to function in a carbon constrained world with costing of carbon related externalities in several major jurisdictions (EU, US, Japan, Korea, Australia)
Energy challenge Investment in renewable energy and increased focus on demand side reduction activities
Natural resource depletion and ecosystem collapse
Reduced material consumption across the value chain and widespread deployment of closed loop operating systems
Water and food availability Securing access to water resources for both industrial production and human consumption
Population demographic change
Transformation of recruitment and retention strategies including global labor mobility and empowerment of women in declining population regions
Digital convergenceDevelopment and deployment of integrated business solutions offering “smart systems” such as “smart energy grid”, “smart transportation” and “smart city” systems
Geopolitical trend to Asia Analysis of sovereign risk and country/ city level barriers and incentives to resource allocation
New financial systemEnabling capital flows to emerging economic opportunities to generate long term value flows with reduced “bubble” speculation
PwC
What this means to our clients…
Val
ue c
reat
ion
Val
ue e
rosi
on Developing and integrating sustainability into strategy
Identifying and building a sustainable business model
and engaging employees
Embedding sustainable business practices and ways
of working
Maintaining embedded sustainability through
continuous Improvement
Complying with local / industry regulations through Sustainability – license to
operate
BARCLAYS
HSBC
ALLIANZ
TRIODOS
CO-OP
CSR function driven Sustainability initiatives influencing
strategy
Sustainability initiatives integrated into operational
& commercial strategy
Embedded Sustainability
AXA
GRUPO SANTANDER
ARCELOR MITTAL
PUMA
BASF
GOLDMAN SACHS
THE COCA-COLA COMPANY
VODAFONE
CR focus
Business strategy focus
Business operations focus
Sustainability Maturity
PwC Sustainabilityn One Firm services map
Education & training services Governance & regulatory compliance services
Systems development & implementation
Stakeholder engagement & framework development
Taxation services (R&D, corporate tax, TTC)
Data measurement & reporting
Integrated/ CSR report assurance
Process & compliance assurance
Internal audit & third party assurance
IFRS & carbon accounting services
Policy & regulation development and research studies
Strategy development & implementation
Risk & opportunity analysis (business impact analysis)
M&A and project finance services
Value chain design & strategy development & implementation
And what it means to us
PwC
The Market Opportunity
-
10
20
30
40
50
60
70
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
FTEs
USD
thou
sand
s
Advisory Assurance Headcount
$25 bn +Estimated market size
PwC
Implications: Modelling the Green Economy
The Challenge Most economic growth models fail to value the services that nature provides such as carbon sinks, water and air purification, flood protection and pollination.
As a consequence, the world’s ‘natural capital’ is being eroded faster than it can be restored. This reduces its availability to support economic activity and reduce society’s exposure to natural disasters and climate change.
There is an alternative that does value natural capital , and that has the potential to create new jobs, products, services and wealth. This is named ‘green growth’.
How we help
We work with a range of government, donor and private sector organisations to accelerate economic growth whilst reducing pollution, greenhouse gases and resource use.
We use bespoke economic modelling and programme management techniques to develop and implement strategies that transform economic activity by balancing the different risks and opportunities facing society today.
Key Questions
How will you capitalise on and accelerate green growth opportunities?
Are you exposed to and managing risks that are associated with unsustainable growth patterns?
Do you have the skills, capacity, policy and strategy to develop and implement economy-wide reform?
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Implications: Integrated Reporting
Food crisis Water scarcity
Population demographics
Geopolitical power shift
Economic rebalancing
Natural Disasters
Physical capital
Human capital
Knowledge and IP
Financial capital
Natural capital
Bio diversity
Revenues profit dividends
Total tax
Community impacts
Employment
Knowledge and IP
Products & services
Climate change
Energy security
Biodiversitycollapse
Natural resource depletion
What is the market and regulatory landscape today and how is it changing?
Is your business model and supply chain designed to be resilient to the impacts of climate change, technology failures, cyber crime and natural disasters?
What assumption has been made regarding the availability of resources?
How are the inputs of business changing, in terms of volumes, price and availability?
What does your business consumption map look like and is it sustainable?
How will the introduction of prices on free goods (such as water, carbon and bio diversity) change the dynamic of your business?
Does your license to operate look secure?
Is your corporate contribution in the round something that will enhance your reputation and build trust with key stakeholders?
What is your weakness and who will exploit it?
PwC
Implications Measuring Total Impact
10April 2012
PwC
The value of thought leadership
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Adapting to Climate Change in the Infrastructure SectorsPwC study for the UK Government's Infrastructure and Adaptation Project (IAP) on the role of market, policy and regulation in encouraging long term resilience to climate change within four key economic infrastructure sectors in the UK: energy, water, transport and ICT. Organisations within the energy, water, transport and ICT sectors as well as investors and insurers were consulted as part of this study. The government will set out in spring 2011 its future approach on adaptation and infrastructure as a result of the IAP, of which the PwC report forms an integral part.
http://bit.ly/e7tHY7
World Economic Forum - Sustainability Projects 2010/2011PwC has worked on a number of projects for WEF over the past year. Sustainability has actively participated in the following: Corporate Global Citizenship in the Environment (CGCE), Scaling Up Renewables (SUR), Critical Mass Initiative, and Financing Sustainable Land Use (FSLU). For more information on these projects including background and the final papers, please see the following Gateway link.
https://knowledgecurve.com/global/gkg/insurance_gwy.nsf/1A576D770ECD4381802572C10032D477/076D0DCD8E83A7CD80257823005C7340
Business Leadership on Climate Change adaption. Encouraging Engagement and ActionThis latest study, presents the views of a range of businesses, from major multinationals to local enterprises, on adaptation to climate change.
www.pwc.co.uk/eng/publications/adapting-to-climate-change.html
Green Race is on, Low Carbon Economy Index 2010The Low Carbon Economy Index assesses the G20 countries’ achievements since 2000 in cutting their carbon intensity levels – defined as the ratio of emissions to GDP
www.pwc.co.uk/west/publications/low_carbon_economy_index_2010_west.html#ns_source=site_search
Green Electricity Making a DifferenceAn analysis of green electricity markets in relevant national and international markets and an overview of the country specific situation regarding renewable electricity..
http://www.pwc.ch/en/dyn_output.html?content.void=19167&collectionpageid=1838&containervoid=8923&comefromcontainer=true
Crisis or not: renewable energy is hotA study on the Europe’s renewable energy market’s potential, a comparison of approached in various countries and recommendations on how governments and companies can reap the rewards.
http://www.pwc.co.uk/eng/publications/renewable_energy_report.html
100% Renewable Electricity - A roadmap to 2050 for Europe and North AfricaExploring the potential to transform the energy sector in Europe and North Africa.
http://www.pwc.co.uk/eng/publications/100_percent_renewable_electricity.html
Smart from the start. Managing smart grid programmesA discussion paper reflecting an industry debate on the smart grid issue.
http://www.pwc.co.uk/eng/publications/smart_from_the_start.html
PwC
But also “walking the walk”
• We cannot advise our clients on sustainability without being serious about it ourselves.
• Regionally, we have over 20 staff working full time on delivering our internal, award-winning , Sustainability strategy, based around our 4 pillars of Workplace: Marketplace; Community; Environment
• All PwC staff are encouraged to help bring this strategy to life through by calling on their expertise in a way that is good for the world and the Firm. Examples include:
• Volunteering time to mentoring tomorrow’s responsible business leaders, whilst raising our profile.
• Provision of pro-bono support to our charity partners to strengthen their business skills whilst enhancing our employees learning.
• Raising US$>6m in donations to charity partners and disaster relief appeals
• Contributing to thought leadership and research to strengthen the not-for-profit sector.
PwC
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to [insert legal name of the PwC firm] which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
Thank You
http://www.pwc.com/sustainability
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