Climate climate change poses a unique set

change is one of the most pressing sustainability issues of our times. There is
mounting evidence that businesses are beginning to respond to climate change at
a strategic level. Given the role of accounting in developing ‘the processes
and techniques that focus on the effective and efficient use of organizational
resources, to support managers in the needs of enhancing both customer value
and shareholder value’ (Langfield-Smith, Thorne and Hilton, 2005), it is
important to consider the implications of climate change for accounting.
Despite the recent advances in sustainability accounting and environmental
accounting, climate change poses a unique set of challenges for accounting. For
example, there are complex technical issues in measuring and managing
greenhouse gas (GHG) emissions. The emerging regulatory environment, which
seeks to use market forces to recognize the previously unmeasured social cost
of (some) emissions, affects not only liable emitters but businesses up and
down their value chain. It has also produced entirely new market mechanisms
such as the carbon markets for emissions allowances (also referred to as
emissions permits, or emissions rights), and emissions credits. While environmental
accounting and sustainability accounting (particularly sustainability
reporting) can offer general guidance on this critical issue, the technical
complexities, unique combination of market and regulatory responses, and the
remaining externalities warrant specific consideration of climate change and
accounting. This research work begins by establishing how managers are
responding to climate change and what this implies for their information
requirements. We review the climate related accounting literature to seek an
insight into accounting responses to climate change. Next we set the context by
exploring the guidance available on climate change from the international
accounting profession. We consider the key climate related information
requirements in more detail and the tools and techniques that have emerged to
meet these needs. On this basis, the research work identifies them challenges
to and opportunities for accounting in responding to the new business agenda
that is emerging as a result of climate change.