Climate Change: Causes, Impacts, And Solutions Essay.

Climate change refers to long-term changes in temperature and weather patterns. It is indeed possible that the solar cycle is to blame for these alterations if they are natural. Human activity has always been the major cause of climate change because of the reliance on fossil fuels such as coal, oil, and gas for energy. When fossil fuels are burnt, a layer of greenhouse gases forms, trapping solar heat and raising global temperatures. Climate change refers to long-term changes in temperature and weather patterns. Despite the fact that human activity has been the dominant driver of climate change since the 1800s, fossil fuel combustion (such as coal, oil, and gas) has produced heat-trapping gases that may explain these movements (Berrang-Ford et.al, 2011).

Carbon dioxide and methane are two common greenhouse gas pollutants blamed for the current state of affairs. Using gasoline to drive a car etc., for instance contributes to these. Deforestation and other forms of land clearing can also result in the emission of carbon dioxide. Methane emissions from landfills are common. The primary sources of emissions include energy production, transportation, buildings, construction, agricultural, as well as land use. Drought, water shortage, fires, increasing sea levels, flooding and melting polar ice are among the impacts of climate change that have already taken place (Urry, 2015).

Health, food, shelter, safety, and work are all at risk as a result of climate change. Islands and other developing countries are particularly vulnerable to the consequences of global warming. In addition to the threat of malnutrition and famine posed by extended droughts, entire towns have been forced to relocate owing to rising sea levels and saltwater intrusion. It is expected that the number of "climate refugees" will rise in the near future. There are several ways in which climate change adaptation is beneficial to everyone. Both the immediate and long-term impacts are included in this concept. Everyone must begin preparing for climate change immediately, especially the most vulnerable among us who have the fewest resources to do so. These early warning systems can save lives and property and yield benefits up to ten times the initial cost of the device itself (Hoffmann and Sgrò, 2011).

Reducing emissions that contribute to global warming can be accomplished by replacing fossil fuels with clean, renewable energy sources like solar and wind. In order to prevent global warming to 1.5°C or less, a rising number of nations are pledging to have net zero emissions by 2050. However, nearly half of these reductions must be in place by 2030. Between 2020 and 2030, fossil fuel production must fall by about 6% each year (Linnenluecke et.al, 2015).

Concerns over climate change as well as the ongoing bushfires have made CEOs in Australia conscious of their organisations' responsibility to address the needs of stakeholders. However, their response to far has been more concerned with the dangers of climate change programmes than with the possibilities for new products and services. In contrast to their international associations Australian CEOs feel the climate problem is the main challenge confronting their companies, who have rated recovery from the Covid-19 outbreak as their top priority. Ernst & Young's study of 155 Australian executives found that "climate change consequences" were their top worry, followed by "technology disruption" and "the ongoing Covid-19 epidemic" (15 percent) (Haque and Deegan, 2010).

Impacts of Climate Change

The pandemic was ranked as the greatest threat by 18 percent of the world population, the economy was ranked second with 12 percent, and global warming was ranked third with just 9 percent. Many feel that the world is moving in the direction of a lower carbon, more environmentally friendly economy. Australia's companies, like its citizens, are not exempt from this. The route to a low-carbon economy is an important part of Australia's energy problem. Low Carbon Economy Index 2019 published by PwC shows the urgency of this issue: On the worldwide index, Australia ranks 13th with a decarbonization rate of 1.8 percent, behind Germany (the top performer with a rate of 6.5 percent) and behind China (3.9 percent) and Japan (3 percent). The efficiency of Australia's energy system is directly related to the country's economic well-being. For example, more system failures, less dependable supply, variable pricing and major environmental implications are all possible outcomes of inactivity or wrong energy decisions (Hutley and Hartford-Davis, 2016).

The discussion on this subject is frequently politicised and riddled with divisive assertions. Thus, there is uncertainty as to the real impact that different policy actions have on the economy. However, the majority of current estimates indicate that our economy will be predominantly powered by renewable energy sources in the future. As coal-fired power plants close over the next two decades, Australia will be able to shift to an energy mix dominated by intermittent renewables and reliable by a combination of dispatchable power plants. Australia's new policy is a 'no regrets' approach. As a consequence, by 2040, the country would be running on 80 percent renewable energy and emitting less pollution as a result of that generation (68 percent lower than 2005). It would also boost GDP by more than $13 billion and allow Australians to spend an additional $6 billion. Nevertheless, Australia's economy might benefit even more if this shift is accelerated and therefore, it is essential for Australian companies to keep their focus upon climate change (Haque and Islam, 2015).

Climate change poses a significant threat to the world economy, which might lose 20% of its production. Each organisation will be impacted by the expected implications on habitat, resource availability, and consumption. Combating climate change requires more than 'doing the right thing,' though. It is the responsibility of businesses to provide long-term value as well as mitigate risk to their customers, staff, and most importantly, to their shareholders. To put it another way: Sustainability has always been a primary strategic objective for the company. Climate change management and mitigation must be an integral part of our decision-making process (Haque and Islam, 2015).

The ideas of sustainable procurement must be applied to capital investment and growth decisions, for instance, and long-term consequences must be considered rather than just short-term expenses. Sustainable strategic and operational choices require the expertise of management accountants. Nevertheless, even when finance teams are involved in climate change-related operations, it is frequently done as needed. This has to be changed immediately. A management accountant's skill set includes tools and procedures that help companies assess the scope of an issue, devise workable solutions, and follow through on those ideas. For strategic and tactical reasons, they play an important role in supplying corporate intelligence. It may be hard to properly integrate sustainability into everyday corporate operations without the rigour as well as commercial acumen of the finance department. For businesses, a lack of involvement by management accountants might result in greater expenses, lost opportunities, or a decrease in competitiveness in areas such as emissions trading and adherence with new climate change-related rules. A lack of climate change preparedness can put organisations at significant risk: As a result of shifting risk profiles, infrastructure and supply chains are put at danger, as are business models and their constraints, as well as the reputation of the company and their investors, as well as legal and regulatory duties. Changing temperatures, harsh weather, and resource availability have a direct impact on a company's risk profile and competitive posture on the global and local levels. Climate change vulnerability, adaptive capability, and adaptation costs and demands must also be addressed by companies. Environmental repercussions and the consequences of investment decision - making are becoming increasingly important to investors, ratings agencies and lenders. Professional accountants have an important role to play and should commit to the following: As enterprises, capital markets, and governments develop and implement plans to mitigate and adapt to climate change, provide reliable advice and services (Pellegrino and Lodhia, 2012).

Benefits of Climate Change Adaptation

Many publicly traded Australian corporations in a wide range of industries are concerned about the impact of climate change. It is critical for listed firms' directors and officers to be aware of and constantly analyse the company's current and new risks (including climate risk). In both short and long terms, this applies. In order for investors to make well-informed decisions, publicly traded firms should offer significant and relevant risk information (Haque and Deegan, 2010). Listed firms may be required to disclose substantial business risks under the Corporations Act in particular instances. Individuals, communities, government, enterprises, industry, and the environment all face substantial challenges as a result of Australia's changing climate. More frequent hot weather, fewer cold days, altered rainfall patterns, and increasing sea levels have already occurred in Australia during the previous 60 years. One may anticipate more of the same in the future.' In order to manage these risks, it is important to manage culture, set the tone by the Board and senior management, and comprehend the difference between responsibility and accountability. Using the right payment and consequence management features to achieve success is a last stage in the risk management process. It is evident that directors must ensure that there are objective facts or conditions at the moment to justify these assertions, even when corporations feel the fire from investors and make climate aware promises. If the corporation and its directors fail to do so, they might be subject to legal and regulatory action, and their reputations could suffer (Governance Institute of Australia, 2020).

The public statement requires that the company indicates that where companies did mention the effects of climate change on their business growth and strategy, it was usually in a superficial manner or without any direct explanation of how climate change concerns were addressed or included into the management of the organisation in any case. The materiality of certain corporations' cross-references to their website content outside of yearly reporting responsibilities was not given much consideration by companies that made no disclosures about the impact of climate change. In the end, it is up to each corporation to decide how much information to include in its environmental disclosures about climate change risks. The importance of possible climate change consequences on a company's operations and industry can take on various meanings for different companies. As part of the ACSI research, companies were required to give some sort of reporting on sustainability as part of a management discussion incorporated in the entire annual report or through a distinct sustainability section. For the context of this research, reporting on environmental concerns from a compliance viewpoint was not deemed to be sustainability reporting, as organisations currently subjected to specific environmental regulation have already been legally compelled to report in respect of their compliance, like environmental licence and project approval criteria (Haque and Deegan, 2010).

An increasing number of shareholders have called on publicly traded firms to declare carbon reduction targets but also take some action in accordance with the Paris Agreement, which has put pressure on them during this year's annual general meetings. Environmental and CSR organisations with no regard to industry, such as Market Forces and the Australasian Centre for Corporate Responsibility (ACCR), have experienced an increase in support from stakeholders for their ESG activism including climate change-related resolution proposals (Governance Institute of Australia, 2020).

Solutions to Climate Change

During the 2021 Annual General Meeting of a large ASX listed firm, a shareholder advocacy group introduced a resolution in support of requiring companies to adhere to emissions reduction objectives in accordance with the Paris Agreement. Another major Australian bank's board allegedly came under fire at its annual general meeting from noisy shareholder activists who demanded a halt to fossil fuel financing despite current net zero by 2050 commitment. This pressure came from shareholders and other stakeholders. Following public engagement, the UK Treasury announced a new update on the Sustainability Disclosure Requirements (SDR) on October 18, 2021. Companies will be required to report the impact of their operations on climate change under the SDRs in order to provide investors and consumers with all the knowledge they require to make investment choices that have a good influence on the planet. If companies' sustainability claims and pledges cannot be convincingly supported, then they will be examined to fight 'greenwashing'. Corporate entities are being urged for the first time by ASX Corporate Governance Council Recommendations 7.4 to take climate change risk into account and report on it. Tshe Corporations Act of 2001 and the ASX Listing Rules impose a variety of financial as well as non-financial information disclosure duties on Australian firms, even though there is no specific legislative need for sustainability reporting at this time. It has also been agreed upon by Australian financial authorities that the Task Force on Climate-Related Financial Disclosure should be implemented. We believe that in light of increasing pressure from shareholders and the worldwide trend toward mandating sustainability reporting, Australia is likely to follow suit in the near future and implement obligatory reporting requirements. As an example, under the Australian Consumer Law, a corporation can face a fine of $10 million, three times the amount of the benefit obtained, or 10% of annual revenue in the preceding 12 months if that cannot be proven. To be held responsible for "greenwashing" or failing to carry out their responsibilities with care and attention, directors may be held personally responsible (Miklosik and Evans, 2021).

The company's climate change plan should be understood by the company's directors in terms of regulatory and legal needs. As a result, a comprehensive analysis of the plan's compliance with current and anticipated statutory and contractual commitments, relevant frameworks and laws, reporting standards and disclosure requirements is necessary. As a result of this evaluation, the board should ensure that there is proper governance, monitoring, as well as reporting in place. Ensuring that all stakeholders have access to accurate and timely information is critical to ensuring transparency in all aspects of the ecosystem.

References 

Berrang-Ford, L., Ford, J.D. and Paterson, J., 2011. Are we adapting to climate change?. Global environmental change, 21(1), pp.25-33.

Governance Institute of Australia, 2020. New guidance on climate change risk disclosure. Governance Directions, 72(2), pp.94-97.

Haque, S. and Deegan, C., 2010. Corporate climate change?related governance practices and related disclosures: Evidence from Australia. Australian accounting review, 20(4), pp.317-333.

Haque, S. and Islam, M.A., 2015. Stakeholder pressures on corporate climate change-related accountability and disclosures: Australian evidence. Business and Politics, 17(2), pp.355-390.

Hoffmann, A.A. and Sgrò, C.M., 2011. Climate change and evolutionary adaptation. Nature, 470(7335), pp.479-485.

Hutley, N. and Hartford-Davis, S., 2016. Climate change and director's duties: memorandum of opinion.

Linnenluecke, M.K., Griffiths, A. and Mumby, P.J., 2015. Executives’ engagement with climate science and perceived need for business adaptation to climate change. Climatic Change, 131(2), pp.321-333.

Miklosik, A. and Evans, N., 2021. Environmental sustainability disclosures in annual reports of mining companies listed on the Australian Stock Exchange (ASX). Heliyon, 7(7), p.e07505.

Pellegrino, C. and Lodhia, S., 2012. Climate change accounting and the Australian mining industry: exploring the links between corporate disclosure and the generation of legitimacy. Journal of Cleaner Production, 36, pp.68-82.

Urry, J., 2015. Climate change and society. In Why the social sciences matter (pp. 45-59). Palgrave Macmillan, London.