Climate change is not anymore a future thing but a reality of the present. With adaption and mitigation, the reverse of the adverse effect of global warming can be expected. Carbon pricing is now a well-known term used to capture the external costs of greenhouse gas (GHG) emissions. The main goal is to discourage the use of fossil fuels and address climate change by meeting national and international climate agreements. It also stimulates economic growth with clean technology and market innovation. Economists and business leaders emphasize switching to less carbon-intensive production and consumption which will also help to distribute the cost of eliminating climate change across all channels.

A carbon tax, on the one hand, guarantees the carbon price in the economic system against an uncertain environmental outcome. A carbon tax defines the tax rate by setting the price on carbon. It also defines a tax rate on greenhouse gas emissions or on the carbon content of fossil fuels.

With World economic forum, accountants are realizing that their engagement is important to speed up the climate action and can help to mitigate climate change by reducing emissions in the organization, letting their representatives know climate-smart policies, supporting businesses and organizations embracing renewable energy.

According to the Paris agreement, Market-based policies such as carbon tax or cap and trade programs must be introduced to achieve the ambitious target and help to reduce emissions at the lowest possible cost. The brand goal is to put an explicit price on carbon emissions and urge businesses to find cost-effective solutions.

Businesses do have the flexibility to select and adapt their own strategies into a company’s financial statements. It is important for businesses to know the social cost of CO2 emission and adapt the strategies to reduce demand for carbon-intensive products and services. The business will treat this cost of carbon tax or emission trading scheme like any other operating cost.

It is a greater need to act on the plans rather than just preparing the carbon pricing by the accountants. New sustainable models can help to tackle financial implications and risk on climate. Companies trying to apply internal carbon pricing can increase their energy efficiency in operations. For example, since 2007, Google has been carbon neutral each year, which means that their emission generated from fossil fuels are getting equalized by investing in energy solutions which are renewable and reduce the production of carbon dioxide.

Accountants hold great power with their expertise to mitigate climate emergencies and should participate in the discussion that will help to go down to the low carbon business models for sustainability and profitability.

As a part of the voice of the accountancy profession, AcoBloom International as an outsourcing company supports initiatives that will reduce climate risk with the low carbon business model.

It is important for every business to treat this climate action as an emergency and would take steps for the three-level approach for businesses in climate change.