KPMG's carbon accounting checklist

KPMG’s carbon advisory group has published a comprehensive list of environmental reporting and legislative requirements for larger companies, which can be used as a reference manual for finance directors managing a growing palette of green issues.

Accounting for Carbon, the fifth white paper from the group, outlines reporting and accounting responsibilities on business, explains the various government green schemes that affect business such as the Kyoto Protocol and UK Carbon Reduction Commitment, and provides guidelines setting out ways to implement a carbon strategy across a business.

It also clarifies the groups that are affected, including:
• Emitters under the European Union Emissions Trading Scheme;
• Emitters under the Carbon Reduction Commitment;
• Creators ­ companies investing in or developing emissions-reducing projects ­ under the Clean Development Mechanism;
• Traders, brokers, or aggregators dealing in emissions reduction certificates, allowances or derivatives; and
• Investors and consultants assisting companies in reducing emissions or claiming Certified Emissions Reductions.

The white paper also provides information on which accounting standards apply to a company when reporting environmental issues. For example, companies using emissions trading schemes will need to consider the impact on their accounts of International Accounting Standards such as IAS 38 and IAS 39.

Richard Sharman, head of KPMG’s carbon advisory group, says, “It is essential for companies to understand the risks and opportunities and to know how to manage those risks.”

John Griffith-Jones, chairman and senior partner at KPMG, adds “Accounting for carbon emissions will take many companies into entirely new territory for which no specific accounting standard currently exists.”
The paper also sets out forthcoming changes to environmental legislation that will affect the carbon reporting and management responsibilities for large businesses.