Applying accounting to carbon emissions

The role accounting plays in bringing about a lower-carbon future is the subject of research by Dr Binh Bui from the School of Accounting and Commercial Law.

Dr Binh Bui
Dr Binh Bui, researcher and lecturer in the School of Accounting and Commercial Law

Dr Bui is investigating whether organisations from different industries modify their accounting systems to accommodate carbon issues, how they do that, and whether such changes reduce an organisation’s carbon emissions.

She says carbon emissions have only recently become the primary issue of environmental management accounting, so she wanted to find out how both private and public sector organisations were responding to regulations around climate change in general, and whether accounting can play a role in that.

"There are signs coming from this research that accounting does have an important place – in response to stricter environmental regulations, organisations need to change their accounting systems to measure, report and manage their carbon emissions levels," she says.

"However, there's a certain amount of suspicion that organisations can use accounting as 'greenwashing' – reporting on emissions without actually doing anything about it.

An accounting framework to move towards a lower-carbon future

"So there are two sides, but underlying both is the belief that we need a fundamental accounting framework to move corporations towards a lower-carbon future."

So far in her research, Dr Bui has looked at what organisations have been doing in terms of reducing carbon emissions and how they account for it.

She has also investigated what stakeholders make of such efforts (both quantitatively and qualitatively), how far New Zealand has come in this space, and what changes have been made to respond to it.

"I've found that carbon accounting is not just being used for greenwashing. But it's also clear that whether an organisation is actively trying to reduce emissions depends on the certainty of policies and regulations being set at a Government level.

"That's true not just in New Zealand but around the world as well; they don't want to invest in something only for the rules to change and they end up wasting money."

Dr Bui has had support from the University Research Fund for her work, and wants to also look into the prevalence of carbon auditing, and whether organisations see any benefits from that process.

"It's a complex field and very little research has been done on it. It's certainly not as straightforward as a financial audit that deals with financial statements – this area is traditionally an environmental science, which you physically have to measure. I’m keen to see how accounting expertise can be applied."