Impact Accounting and Recession

Impact Accounting and Recession

With the prospect of a global recession looming, precision GHG accounting is more important than ever for corporate ESG efforts

If finance and climate strategy share one tenet, it’s that knowledge is power. Whether tracking financial transactions or greenhouse gas (GHG) emissions, thorough accounting helps you stay ahead of economic and environmental strategy alike.

These dual concerns are especially top of mind for many corporate leaders today. Economists and corporate CEOs seem increasingly aligned on the prospect of an economic downturn — if not a full-blown global recession — coming in 2023 and into 2024.

Meanwhile corporate net-zero commitments have reached an all-time high. To date more than one-third of the world's largest publicly traded companies have laid out net zero goals, up from one-fifth in December 2020 according to Net Zero Stocktake. Meanwhile 75 percent of Climate 100+’s target companies have committed to reaching net zero by 2050 or sooner.

Yet a sizable gap remains between net-zero ambition and the real-world strategies and actions needed to achieve it. Together with talk of a recession, ESG leaders are under pressure to not only deepen impact with science-based targets — but to do so in the most financially judicious way possible, too.

Balancing budgets with ESG goals

Naturally, with a potential recession on the horizon, CSOs are asking themselves, “What’s going to happen to my ESG budget?”

No one has a crystal ball, and surveys are deeply mixed on the most likely outcome. On one hand, some expect to trim back their ESG budgets for the near future. On the other hand, others expect to actually boost their ESG spending, with a survey featured in CFO Dive finding that nearly half the finance leaders surveyed plan to increase spend this year.

In tandem, there’s growing recognition that sustaining ESG efforts could be central to successfully weathering recessions and emerging better than one’s competitors from the other side.

Regardless of where ESG budgets go in 2023, precision accounting can prove to be a crucial tool. So let’s take a closer look at what it is and how it helps.

Enter, precision accounting, your secret decarbonization weapon

From pursuing renewable energy and reducing direct emissions, to planning full-blown decarbonization, your entire ESG platform benefits when you have access to comprehensive, reliable emissions intelligence.

That’s usually easier said than done, though, considering that the biggest challenges to Scope 2 and Scope 3 GHG emissions details today are lack of confidence in the quality of data from third-party vendors (51%) and lack of data availability (41%), according to Deloitte research. It’s clear that companies need to further improve emissions data strategy.

Precision accounting provides the tools to do exactly that. It brings together all the variables CSOs need to be able to monitor and understand, including location- and time-dependent marginal emissions rates, induced emissions for load, avoided emissions for renewable generation, and more.

Following are key benefits you can expect with precision accounting:

  • Benefit #1 = Precision accounting identifies real emissions progress toward net-zero, not just nebulous progress wrapped in greenwashed marketing claims. During budget austerity, corporates can’t afford to invest in ‘fluff’ that doesn’t move the needle. They need to prioritize actual impact.

  • Benefit #2 = It spotlights the highest-impact emissions reductions efforts per ESG budget dollar spent, allowing corporate sustainability teams to stretch budgets the furthest while continuing to make meaningful progress toward long-term targets.

  • Benefit #3 = With precision accounting you can potentially turn corporate ESG into a profit center by tokenizing and monetizing avoided emissions credits, helping to bridge your organization through a recession and then resume the emissions-reduction glide path toward net-zero.

Emissions intelligence: The early bird gets the momentum

Precision accounting is already gaining favor among some of the world’s leading companies. These early adopters can attest to its ability to identify real progress, pinpoint highest-impact activities, and even potentially drive profit.

As the race to net zero heats up and pressure to maximize ESG spend intensifies, robust Emissions Intelligence is the game-changing tool your team needs to advance net-zero strategies through and beyond economic disruption.

Ready to learn more about how the leading option for precision accounting can support your decarbonization program? Get in touch with TimberRock today.

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