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Research on the current state of internal corporate functions regarding climate and ESG risks found slow response and significant challenges in meeting accelerating demands
SINGAPORE, Dec. 20, 2022 /PRNewswire/ -- IMA® (Institute of Management Accountants) today released a green paper that offers insights on how the finance functions of companies are responding to climate-change and other sustainable business risks, often referred to as ESG for environmental, social, and governance. Based on a survey of IMA's diverse, international membership, "Climate Risk and Strategies: Finance Function Readiness to Meet Accelerating Demands" provides a snapshot on the current state of risk management processes around these emerging areas. The perspectives of IMA's unique constituency, accounting and finance professionals in businesses of different sizes, industries, and geographic regions, provided a means for understanding internal practices and dynamics.
Despite both internal and external drivers to advance corporate reporting mandates around climate change, the results suggest that while large, public organizations have taken some steps toward identification, assessment, and management of these risks and potential opportunities, movement among companies in the broader economy remains slow. As a green paper, the study invites other researchers and thought leaders to continue to investigate deeply into the perspective and needs of participants in the broader economy, particularly small and medium sized businesses, in responding to climate change and similar ESG matters.
"There are significant opportunities for businesses to shift from initial climate risk identification to the valuable activities of assessment, mitigation, and management," said Shari Littan, CPA, director of corporate reporting research and policy at IMA and co-author of the study. "Developing risk management and accounting processes around climate-related and other sustainability risks can help businesses identify opportunities that can become the basis of carefully developed and resilient strategy and objectives to preserve assets, enhance business performance, and build long-term value."
"Management accountants have a key role to play in internalizing a strategic response by businesses, and managing and controlling effective systems of implementation. Our survey shows the lack of preparedness that exists in dealing with scenario analysis tools and points to the need for revised portfolio risk views as indicated by the COSO Enterprise Risk Management Framework," said Cornis van der Lugt, study co-author and senior lecturer at Stellenbosch University business school.
"Management accountants can support organizational climate and sustainability adaptation by advancing their skills in risk identification, assessing vulnerability, strategy development and process management in these areas. This report synthesizes the research findings and sets the scene for future research and practice in these areas," said Josh Heniro, Ph.D., Senior Director, Southeast Asia at IMA.
To read the report, visit IMA's website: https://www.imanet.org/insights-and-trends/the-future-of-management-accounting/climate-risk-and-strategies-finance-function-readiness-to-meet-accelerating-demands?ssopc=1.
About IMA® (Institute of Management Accountants):
IMA® is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) and CSCA® (Certified in Strategy and Competitive Analysis) programs, continuing education, networking, and advocacy of the highest ethical business practices. Twice named Professional Body of the Year by The Accountant/International Accounting Bulletin, IMA has a global network of about 140,000 members in 150 countries and 350 professional and student chapters. Headquartered in Montvale, N.J., USA, IMA provides localized services through its four global regions: The Americas, Asia/Pacific, Europe, and Middle East/India. For more information about IMA, please visit www.imanet.org.
