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Role of accounting firms - PWC


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Role of accounting firms - PWC

  1. 1. Green Economy Roundtable Opportunities, Challenges & PrioritiesRole of the Accounting FirmsRob Evans PwCApril 2012
  2. 2. Business-as-Usual is not sustainable April 2012PwC 2
  3. 3. Will a move to a “Green Economy” be the solution?The UNEP Green Economy Coalition define the green economy as:• An economy that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. In its simplest expression, a green economy can be thought of as one which is low carbon, resource efficient and socially inclusive.Without a clear definition of “green” industries, however, it is hard to determine the sizeof the “green economy” and/or put in place policies and practices to support it.Definitions are therefore increasingly shifting from “what is it” to “how is it measured”• Industries that provide products or services related to renewable energy, increased energy efficiency, clean transportation and fuels, agriculture and natural resource conservation, and pollution prevention or environmental cleanup. (Michigan Department of Energy, Labor & Economic Growth)Most green business activities are, however, still bundled with those that are not. So whodecides what is a green business? Traditional accounting and Economic methods haven’thelped: Organic food processors are typically categorized no differently from other foodprocessors when collecting and reporting typical production and employment data.So where does this leave a firm like PwC, with its traditional service lines ofAssurance, Advisory and Tax services? April 2012 PwC 3
  4. 4. 8 key megatrends Mega trend Business Implications Transformation of global business practices to function in a carbon constrained world with costing of carbon related Climate change externalities in several major jurisdictions (EU, US, Japan, Korea, Australia) Investment in renewable energy and increased focus on demand Energy challenge side reduction activities Natural resource depletion and Reduced material consumption across the value chain and ecosystem collapse widespread deployment of closed loop operating systems Securing access to water resources for both industrial production Water and food availability and human consumption Transformation of recruitment and retention strategies including Population demographic global labor mobility and empowerment of women in declining change population regions Development and deployment of integrated business solutions Digital convergence offering “smart systems” such as “smart energy grid”, “smart transportation” and “smart city” systems Analysis of sovereign risk and country/ city level barriers and Geopolitical trend to Asia incentives to resource allocation Enabling capital flows to emerging economic opportunities to New financial system generate long term value flows with reduced “bubble” speculation PwC
  5. 5. What this means to our clients… Business operations focus BASF GRUPO SANTANDER TRIODOS CO-OP PUMA Maintaining embedded VODAFONE sustainability throughValue creation THE COCA-COLA continuous Improvement Business strategy focus COMPANY HSBC Embedding sustainable business practices and ways GOLDMAN SACHS BARCLAYS of working ALLIANZ ARCELOR MITTAL Identifying and building a Sustainability Maturity sustainable business model CR focus AXA and engaging employeesValue erosion Developing and integrating sustainability into strategy Complying with local / industry regulations through Sustainability – license to operate CSR function driven Sustainability Sustainability initiatives Embedded PwC initiatives influencing integrated into operational Sustainability strategy & commercial strategy
  6. 6. PwC what it means to us One Firm services map And Sustainabilityn Strategy development & implementationPolicy & regulation development and research studies Risk & opportunity analysis (business impact analysis) Education & training services Governance & regulatory compliance services Data measurement & reporting Systems development & implementationIntegrated/ CSR report assurance Stakeholder engagement & Process & compliance assurance framework development M&A and project finance Internal audit & third party assurance services IFRS & carbon accounting Value chain design & strategy services development & implementation Taxation services (R&D, corporate tax, TTC)
  7. 7. The Market Opportunity 8,000 $25 bn + 70 7,000 Estimated market size 60 6,000 50 5,000 40 USD thousands FTEs 4,000 30 3,000 20 2,000 10 1,000 - - Advisory Assurance HeadcountPwC
  8. 8. Implications: Modelling the Green Economy How we helpThe Challenge We work with a range of government, donor andMost economic growth models fail to value the services private sector organisations to acceleratethat nature provides such as carbon sinks, water and air economic growth whilst reducing pollution,purification, flood protection and pollination. greenhouse gases and resource use.As a consequence, the world’s ‘natural capital’ is beingeroded faster than it can be restored. This reduces its We use bespoke economic modelling andavailability to support economic activity and reduce programme management techniques to developsociety’s exposure to natural disasters and climate and implement strategies that transform economicchange. activity by balancing the different risks andThere is an alternative that does value natural capital , opportunities facing society today.and that has the potential to create new jobs, products,services and wealth. This is named ‘green growth’.Key QuestionsHow will you capitalise on and accelerate greengrowth opportunities?Are you exposed to and managing risks that areassociated with unsustainable growth patterns?Do you have the skills, capacity, policy and strategy todevelop and implement economy-wide reform? PwC
  9. 9. Implications: Integrated Reporting Food crisis Water What is the market scarcity and regulatory Is your business model Natural Population and supply chain landscape today and resource demographics how is it changing? depletion designed to be resilient to the impacts of Geopolitic climate change, Biodiversit al power ycollapse shift technology failures, cyber crime and natural Energy Economic disasters? security rebalancin g What assumption has Climate Natural been made regarding change Disasters the availability of resources?Does your license to Products & Physicaloperate look secure? services capital How are the inputs of business changing, in Knowledge terms of volumes, priceIs your corporate and IP Human and availability?contribution in the capitalround something that Employmenwill enhance your What does your business treputation and build Communit Knowledge consumption map look and IP like and is it sustainable?trust with key y impactsstakeholders? Total tax Financial How will the introductionWhat is your weakness Revenues capital of prices on free goods profit Natural (such as water, carbon andand who will exploit it? capital dividends Bio bio diversity) change the diversity dynamic of your business? 9
  10. 10. Implications Measuring Total Impact April 2012PwC 10
  11. 11. The value of thought leadership Adapting to Climate Change in the Green Electricity Making a Difference Infrastructure Sectors An analysis of green electricity markets in relevant national PwC study for the UK Governments Infrastructure and and international markets and an overview of the country Adaptation Project (IAP) on the role of market, policy and specific situation regarding renewable electricity.. regulation in encouraging long term resilience to climate change within four key economic infrastructure sectors in the UK: oid=19167&collectionpageid=1838&containervoid= energy, water, transport and ICT. Organisations within the 8923&comefromcontainer=true energy, water, transport and ICT sectors as well as investors and insurers were consulted as part of this study. The government will set out in spring 2011 its future approach on adaptation and infrastructure as a result of the IAP, of which the PwC report forms an integral part. Business Leadership on Climate Change Crisis or not: renewable energy is hot adaption. Encouraging Engagement and A study on the Europe’s renewable energy market’s Action potential, a comparison of approached in various countries This latest study, presents the views of a range of businesses, and recommendations on how governments and companies from major multinationals to local enterprises, on adaptation to can reap the rewards. climate change. _energy_report.html change.html Green Race is on, Low Carbon Economy Index Smart from the start. Managing smart grid 2010 programmes The Low Carbon Economy Index assesses the G20 countries’ A discussion paper reflecting an industry debate on the achievements since 2000 in cutting their carbon intensity levels smart grid issue. – defined as the ratio of emissions to GDP m_the_start.html my_index_2010_west.html#ns_source=site_search World Economic Forum - Sustainability 100% Renewable Electricity - A roadmap to Projects 2010/2011 2050 for Europe and North Africa PwC has worked on a number of projects for WEF over the past Exploring the potential to transform the energy sector in year. Sustainability has actively participated in the following: Europe and North Africa. Corporate Global Citizenship in the Environment (CGCE), Scaling Up Renewables (SUR), Critical Mass Initiative, and nt_renewable_electricity.html Financing Sustainable Land Use (FSLU). For more information on these projects including background and the final papers, please see the following Gateway link. wy.nsf/1A576D770ECD4381802572C10032D477/076D0PwC DCD8E83A7CD80257823005C7340 11
  12. 12. But also “walking the walk”• We cannot advise our clients on sustainability without being serious about it ourselves.• Regionally, we have over 20 staff working full time on delivering our internal, award-winning , Sustainability strategy, based around our 4 pillars of Workplace: Marketplace; Community; Environment• All PwC staff are encouraged to help bring this strategy to life through by calling on their expertise in a way that is good for the world and the Firm. Examples include: • Volunteering time to mentoring tomorrow’s responsible business leaders, whilst raising our profile. • Provision of pro-bono support to our charity partners to strengthen their business skills whilst enhancing our employees learning. • Raising US$>6m in donations to charity partners and disaster relief appeals • Contributing to thought leadership and research to strengthen the not-for-profit sector. PwC
  13. 13. Thank You For further details please contact: This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, [insert legal name of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2011 PricewaterhouseCoopers LLP. All rights reserved. In this document, “PwC” refers to [insert legal name of the PwC firm] which is a member firm of PricewaterhouseCoopers International Limited,PwC member firm of which is a separate legal entity. each