Can professional services firms save the planet?

September 19, 2023

The news headlines have been dominated by climate change and there is increasingly clear evidence that there will be catastrophic consequences if we don’t take action to reduce greenhouse gas emissions. Temperature records are being shattered with greater frequency, and extreme weather events, such as deadly wildfires, hurricanes and floods, are becoming more common. The corporate world is now making the “E” is ESG (Environmental, Social and Governance) a top priority. Many investors, clients and stakeholders now require strict reporting of carbon emissions on a company-wide level. Professional services organizations are no different and are making proactive strides to become more sustainable. However, their unique position as advisor to the world’s largest organizations provides a unique opportunity. Can they help their clients do the same? Can outsourcing business partners contribute to reducing carbon emissions?

Climate change can impact revenue

It’s clear that climate risk has risen rapidly up the corporate agenda and the accounting implications are considered more seriously. Seventy-two percent (72%) of CEOs worldwide are concerned about climate change, according to the 2023 PwC Global CEO Survey. This is up from 67% in 2022 and 58% in 2021[1]. One of the reasons for this is that, according to PwC, climate change can increase costs and/or reduce revenue. These could be from increased costs of raw materials, energy costs, and change in customer preferences such as those who mandate verified sustainability commitments from their third-party vendors.

Carbon accountants are playing a crucial role in achieving sustainability goals

In June 2023, experts from professional services organizations and recognized institutions, including PwC, the Chartered Institute of Public Finance and Accountancy (CIPFA), and the Adam Williamson Association of Accounting Technicians (AAT), gathered to talk about how accountants can help to save the planet. A focus was on implementing training modules and embedding the net zero agenda in their training. Carbon accountants have risen to prominence in helping companies evaluate their impact on the climate, and guide them towards reaching net zero, while also auditing them to ensure that they are not promoting misleading claims that their policies are environmentally friendly, or “greenwashing”.  The challenge is setting standardized rules and practices, similar to financial accounting, that need to be established by larger companies, and can subsequently be adopted worldwide. Standards established from bodies such as the International Financial Reporting Standards (IFRS), the Global Reporting Initiative (GRI), and the United Nations Global Compact are already helping guide businesses with standard sustainability disclosures, take responsibility, and take action to improve their positive impact on climate change.

Climate change lawyers are also playing a vital role in policy and education

The legal sector has shifted rapidly towards a sustainability agenda in light of the worsening climate crisis. According to the Sabin Center for Climate Change Law[2], for some years now, lawyers have played a significant role in shaping climate policy around the world. For example, lawyers have helped to develop and implement the Paris Agreement, the Clean Power Plan, and the California Global Warming Solutions Act. On the corporate level, lawyers are helping businesses comply with climate regulations, such as the UN Global Compact and develop strategies to reduce their environmental impact.

Lawyers are also playing a valuable role in this effort by providing clear and concise information about the science of climate change and the need to take action. In 2022, the International Bar Association (IBA) launched a new Climate Change Taskforce to help lawyers around the world address the legal challenges of climate change by developing a set of principles for climate change lawyers, which provide guidance on how lawyers can use their skills and expertise to help address climate change. The IBA is also creating a global directory of lawyers who are specialized in climate change law. Meanwhile, in the UK, the Legal Sustainability Alliance (LSA), a UK-based network of law firms, schools of law, and in-house counsel committed to sustainability, has developed resources to guide the legal sector to achieving net zero carbon emissions. For example, it developed a carbon calculator for law firms to measure their emissions and published a toolkit for law firms to develop sustainability policies. With clients of law firms, many of which are large corporations and financial services organizations making hard sustainability pledges, law firms also acknowledge the importance of making genuine efforts to prioritize their sustainability initiatives.

Partners also affect carbon emissions for professional services firms and their clients

A recent study by the World Economic Forum found that companies that outsource to sustainable suppliers can reduce their carbon emissions by up to 25%[3]. The study also found that companies that partner with sustainable suppliers are more likely to meet their sustainability goals. In July last year, we wrote about the importance of working with outsourcing partners who are making sustainability authentic. Many organizations from auditors, accountants, consultants, law firms, other professional services firms are working closely with business support providers to improve operational processes through workflow improvements and automation in support functions. For example, in consulting, where presentations, pitchbooks and marketing documents are core to deliverables for client facing teams, if graphic designers and presentation specialists are able to work efficiently, using energy efficient-computers, software, and cloud-based workflow tools, they can create assets more quickly. This reduction in time creating these materials can free them up to focus on other tasks, while also reducing electricity consumption required. This is backed by a 2020 study by the Carbon Trust, which found that businesses can reduce their carbon emissions by up to 15% by improving their operational processes and workflow processes[4].

While much progress has been made toward digitization and “paperless” working, there is still more work to be done. Working with outsourcers who are also experts in digital efficiency, and centralizing and digitizing mailroom and records management processes, can help set best practice digitization standards to quickly mobilize firm employees from the ground up; which will help your business reach its sustainability targets and ultimately help the environment.

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[1] PwC Global CEO Survey 2023: https://www.pwc.com/gx/en/news-room/press-releases/2023/pwc-26th-ceo-survey.html.

[2] United Nations Environment Programme, Sabin Center for Climate Change Law, Global Climate

Litigation Report: 2020 STATUS REVIEW, 2020

[3] The World Economic Forum, Boston Consulting Group, The Net-Zero Challenge: The Supply Chain Opportunity, 2021

[4] The Carbon Trust, The Carbon Footprint of Business Operations, 2020