It has been over three months since the coronation of King Charles III in the United Kingdom. In the run up to the coronation day - another example of British pomp and circumstance - plenty engaged in speculation as to what contribution King Charles III will bring to the British Monarchy. Needless to say, for being a prince in waiting for 70 odd years it will surely be no easy feat to fit into his late mother's shoes. Undoubtedly, Queen Elizabeth II has left an indelible mark not only amongst her fellow British citizens, but also amongst the nations forming part of the Commonwealth.
Only time will tell but one area which King Charles III will surely continue to pursue throughout his reign is that of championing the challenges triggered by climate change. Throughout his endeavours as Prince of Wales, Climate Change was a top priority on his agenda, delivering his first ever major speech about the environment on February 19th, 1970. In that speech he highlighted amongst other issues the growing pollution from 'gasses pumped out by endless cars and aeroplanes' - isn't that still happening fifty odd years later!
As monarch, he will have to abide by certain rules and regulations, one of which is that he has to distance himself from demonstrating any form of political stance. However, that should not hinder him from demonstrating his strong beliefs about the environment. Indeed, he has already led by example by switching to biomass boilers and solar panels at his homes. Also, he has managed to convert his vintage Aston Martin to run on bioethanol made from wine and cheese. Through such actions it is safe to argue that King Charles III has come to appreciate more the importance of the issue than many politicians have.
As gatekeepers, he has also approached and involved the accountancy profession to support his endeavours on climate change. On the 6th December, 2006 he launched a project called Accounting for Sustainability. According to King Charles III, then Prince of Wales, 'sustainability and profitability need not be mutually exclusive'.
Accountancy is an ever evolving practice, a discipline that adapts to the culture and circumstances of the time. During the 1800s, given the initiation of the industrial revolution, it was natural to account for the tangible fixed assets such as plant and machinery, identifying both the direct and indirect costs involved in such processes. Many felt at the time that the natural resources were consumed as being endless, so any attempt to calculate the cost of exhausting them would have been considered to be a disruption - if not sheer madness too!
In the previous 20th century, accountancy moved in tandem with further business developments and installed a number of changes to account for new costs such as the recognition and disclosure of pension costs, as well as foreign exchange gains and losses, given the era of multinational corporations having cross border listings.
What about the current century? Well it has become crystal clear that the world's natural resources are indeed not infinite and with the increased awareness of global warming caused by increased atmospheric pollution, it is justifiable that businesses are held to account for such costs.
When King Charles III, then HRH Prince of Wales, launched the Accounting for Sustainability project in 2007, the objective was indeed to fetch a way how to address this issue i.e. fetching a way of measuring and recognising such costs in a set of financial statements.
Charles' commitment to mitigating climate change has never abated. In June 2021 just before the G7 summit kick started in Cornwall, he urged businesses to tackle the climate change emergency alongside businesses, suggesting that to overcome the battle against global warming and biodiversity loss, it is highly necessary to unlock cash within the private sector. He remained vocal about such matters in the lead up to the COP26 meeting in Glasgow, which occurred in October of that year.
It is noteworthy to point out that at that important gathering, the International Sustainable Standards Board came into being, with the first couple of standards now concluded. Simultaneously, the EU Commission through its accounting lobby group, EFRAG, has put in place two sustainability standards, namely ESRS 1 and 2 (now embedded in the Corporate Social Responsibility Directive).
Henceforth, what King Charles had rightly argued about sixteen years ago has now materialised. Indeed, both large and medium-sized entities will have to start to provide an element of non-financial reporting complementing their financial statements. In doing so, it will become evident that there is, indeed, a price for everything including climate change!
Ivan Grixti is a senior lecturer in Financial Accounting at the University of Malta