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Carbon accounting and the construction of competence

Citation for published version:Ascui, F & Lovell, H 2012, 'Carbon accounting and the construction of competence', Journal of CleanerProduction, vol. 36, pp. 48-59. https://doi.org/10.1016/j.jclepro.2011.12.015

Digital Object Identifier (DOI):10.1016/j.jclepro.2011.12.015

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Published In:Journal of Cleaner Production

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CarbonaccountingandtheconstructionofcompetenceFranciscoAscui*UniversityofEdinburghBusinessSchool,29BuccleuchPlace,EdinburghEH89JS,UnitedKingdomHeatherLovellUniversityofEdinburghSchoolofGeosciences,EdinburghEH89XP,UnitedKingdom1AbstractCarbonaccountinghasevolvedrapidlyoverthepasttwentyyearsandnowencompassesawiderangeofactivitieswithsignificantfinancialimplications.Thispaperexamineshowcompetenceincarbonaccountingisbeingdefinedandclaimedbydifferentactorsandcommunities.Specifically,itfocusesontheroleoftheaccountancyprofessionincarbonaccounting,chartingitsengagementovertimeanditsrelationshipwithothercommunitiesinvolvedincarbonaccounting.Thepaperbuildsonrecentworkshowingthatmultipleframingsandactivitiesareassociatedwithcarbonaccounting,leadingtoconflictingviewsonwhatitmeans,howitshouldbedone,andwhoshouldbeinvolved.Itdrawsontheconceptsofepistemiccommunitiesandboundary-worktohelpexplaintheroleofprofessionsandtheemergenceofnewinstitutionsthatmediatebetweendifferentcommunitiestoachievepolicychange.Wefindthat,whileaccountantshaveundisputedauthorityinthefieldoffinancialreportingofrightsandliabilitiescreatedunderemissionstradingschemes(‘financialcarbonaccounting’),theirclaimstocompetenceinotheraspectsoforganisationalcarbonaccountingoverlapwiththosemadebyseveralothercommunities.Althoughtheaccountancyprofession’sinterestinorganisationalcarbonaccountingcanbetracedbackatleastasfaras2001,theintroductionofemissionstradinginEuropein2005coincidedwiththestartofanew,asyetlargelyun-scrutinised,initiativetoextenditsclaimsofrelevantexpertise,throughavarietyofmethodsincludingthepromotionofstandardsfordisclosureofphysicalandstrategicclimate-relatedinformation.TheClimateDisclosureStandardsBoardprovidesanexampleofaboundaryorganisationthathasbeenestablishedbydifferentcommunitieswithaninterestincarbonaccounting,withmutuallybeneficialresults,whichhasneverthelessresultedintheproductionofanewClimateChangeReportingFrameworkthatisheavilyalignedtowardstheexistingcompetenceofaccountancyprofessionals.

1 Introduction Overthepasttwentyyears,carbonaccountinghasevolvedfromafringeactivityconductedbyahandfulofspecialisteconomistsandscientists,toahighlydiversifiedsetofpractices,somemorespecialist,othersapproachingmainstream,carriedoutbynumerousactorsbelongingtoavarietyofdifferentcommunities(AscuiandLovell,2011).Ithasbecomeclearthatthefinancialstakesarehigh,withtransactionsincarbonmarketsreachingUS$142billionin2010,andtheCopenhagenAccordpromisingdevelopingcountriesassistancetothetuneofUS100billion/yearby2020(Linacreetal.,2011;UnitedNationsFrameworkConventiononClimateChange,2009).Consequently,itishardlysurprisingthatwecandiscern,withinthefieldofcarbonaccounting,emergingtensionsbetweendifferentcommunitiesoverthelimitsandboundariesofprofessionalexpertise,controloverthecontentandprocessofstandardsdevelopment,andattemptstolinknewformsofcarbonaccountingtoexistingareasofprofessionalpractice.Inmanywaysthisprocessof“discursivecompetition”echoeswaysinwhichtheaccountingprofessionsoughttoextenditsclaimstoexpertiseintothenewfieldofenvironmentalauditinginthe1990s,asdocumentedbyMichaelPower(1991;1996;1997).However,althoughsimilarpatternsmaybediscerned,thepotentialeconomicscaleandtransformativeimpactofcarbonaccountingeasilysurpassesthatofenvironmentalaudit,makingthecontemporaryprocessofprofessionalizationofcarbonaccountingallthemoreworthyofcloseexamination.

*Correspondingauthor.FranciscoAscuicanbecontactedatfrancisco.ascui@ed.ac.uk

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Theresearchonwhichthispaperisbasedwasmotivatedbytwomainquestions:first,whatarethestrategiesbeingemployedtodefineandlayclaimtocompetenceinthefieldofcarbonaccounting;and,second,whoaretheprincipalactorsandcommunitiesinvolvedinthis?Thepaperbuildsonrecentworkshowingthatcarbonaccountingmeansdifferentthingstodifferentpeople,withalonghistoryofbeingframedasamatterofprofessionalexpertisebyscientists,bureaucrats,economistsandaccountants,aswellasbynewcommunitiesofpracticeinthecarbonmarkets(AscuiandLovell,2011).Itfocusesonthedevelopmentofstandardsasamechanismfordefiningwhoshouldcarryoutanactivity,aswellaswhattheactivityisandhowitshouldbeimplemented.ThepaperalsobuildsonfoundationsestablishedbyLovellandMacKenzie(2011)inarecentanalysisoftheroleofaccountancyprofessionalorganisationsingoverningcarbonaccounting.Itextendsthisanalysis,whichfocussedprimarilyonfinancialaccountingandtheactivitiesofaccountancyprofessionalbodiesandfinancialreportingstandardsetters,bysettingcarbonaccountinginitswidercontextofdistinctyetpartiallyoverlappingfieldsorframesofreferenceclaimedbymultiple“epistemiccommunities”(Haas,1992a)whereaccountantsarerelativelyrecententrants.WeexaminetheactorsinvolvedintheestablishmentoftheClimateDisclosureStandardsBoard(CDSB)in2007andthedevelopmentofitsClimateChangeReportingFramework(releasedasanExposureDraftin2009andpublishedinSeptember2010),arguingthattheCDSBappearstobea‘boundaryorganisation’linkingtwoepistemiccommunities.Oneofthesecommunitiesconsistsofpeoplewhoaremotivatedbyenvironmentalconcerns(albeitfromaninvestorperspective),withaninterestinexpandingthescopeandqualityofcarbondisclosureasameanstowardsimprovingcarbonmanagementandthusreducinggreenhousegasemissions,whiletheotherconsistsmainlyofindividualsfromaccountancyprofessionalbodiesandthe‘BigFour’globalaccountancyfirms,who,asaprofession,haveafinancialinterestintheprovisionofservicesinsupportofcarbondisclosure.Theircooperationseemstoadvancebothsetsofinterests,butaconsequenceisthatalthoughthescopeoftheCDSB’sClimateChangeReportingFrameworkcoversonlynon-financialinformationongreenhousegasemissionsandstrategicresponsestoclimatechange,itispresentedinaformatandviatechnicalterminologythatclearlyalignsitwiththeexistingfinancialreportingcompetenceofaccountancyprofessionals.Thepaper’smainconclusionisthattheaccountancyprofessioniscurrentlyengagedinamajor,asyetlargelyun-scrutinised,initiativetoextenditsclaimsofrelevantexpertiseincarbonaccounting,throughavarietyofmethodsincludingthepromotionofstandardslinkingcarbondisclosuretoexistingcompetenceinfinancialreporting.

1.1 What is carbon accounting? Climatechangeposesnumerousmeasurement,attribution,performancemonitoringandverificationchallenges,fromtheglobaltotheorganisationalandevendowntotheindividuallevel.Forexample,thescienceofclimatechangereliesontheassimilationofvastquantitiesofdirectandindirectmeasurementsofpastandpresentgreenhousegasfluxestoandfromtheatmosphere,coupledwitheconomicmodelsofhumanactivity,inordertodeveloppredictivemodelsoffutureclimatechangeandtheassociatedimpacts.ThepoliticsofinternationalclimatechangeagreementssuchastheKyotoProtocolreliesonquantitativetargetswhichrequirethecalculationofhuman-inducedemissionsandremovalsofgreenhousegaseswithinnationalboundaries.Theveryexistenceofentirelynewmarketsincarbonrightsandcredits,estimatedtobeworthnearlyUS$142billionin2010(Linacreetal.,2011),dependsoncomplexactsofmeasurementandcommensurationtocreatefungible,tradableinstruments(MacKenzie,2009).Thousandsofcompanies,andotherorganisations,nowmonitortheirgreenhousegasemissions,abatementactionsandclimateriskexposurethroughtheirinternalmanagementaccountingandcontrolsystems,andaround3,000companiesreportedonthistoinvestorsandthegeneralpublicin2010viatheCarbonDisclosureProject(PricewaterhouseCoopers,2010).Asaconsequenceofemissionstradingschemes,carbonrightsandobligationsnowhaveafinancialvalueinmanycountries,whichisbeginningtoattracttheattentionofaccountantsintermsofhowtheseassetsandliabilitiesshouldbereportedincorporatefinancial

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reports(BebbingtonandLarrinaga-Gonzalez,2008;Cook,2009;KPMG,2008;Lovelletal.,2010;McGready,2008;PricewaterhouseCoopersandIETA,2007).Tocharacteriseallofthesevariedactivitiesas‘carbonaccounting’isalreadytoacceptandreinforce,tosomedegree,arhetoricalclaimbyaccountantstorelevantjurisdictionalexpertiseintheseareas.However,itisclearthatmanydifferentcommunitiesofpracticeareinvolved,andconceptionsofwhateachcommunitydoesandwhatthatpracticeshouldbecalleddiffer.Inthispaper,therefore,thegenericterm‘carbonaccounting’isusedasaprovisionalmarkerforsomethingratheramorphousandcontested;withtheobjectivebeingtoinvestigatethewaysinwhichjurisdictionalcompetenceisbeingframedandnegotiatedbydifferentcommunities.Wethereforeaccept,atleastprovisionally,the‘pickandmix’definitionproposedbyAscuiandLovell(2011)inTable1below,wherecarbonaccountingcanbeunderstoodasanycombination(readinglefttoright)ofoneormoretermsfromeachcellinthetable:Table1:DefinitionofcarbonaccountingfromAscuiandLovell(2011:980)

Bycombiningtermsinthisway,morespecificdefinitionscanbederivedandrelatedtodifferentformsofcarbonaccounting:forexample,physicalcarbonaccountingisprimarilyconcernedwithestimationordirectmeasurementofgreenhousegasemissionsandremovals,primarilyatthegloballevel,forresearchpurposes,whereascarbondisclosuremainlyinvolvesreportingofgreenhousegasemissionsandimpactsfromclimatechangeattheorganisational/corporatelevel,forvoluntarydisclosurepurposes(AscuiandLovell,2011:980).Evensuchanexpandeddefinitionisinevitablyincomplete:forexample,althoughmonetaryfactorsareimpliedinthereferencestofinancialinstruments,tradesandtransactions,therearefurtherwaysinwhichmonetaryvaluesmightbeconsideredinorganisationalcarbonmanagementaccounting,forexampleintermsofintroducingacostofcarbonintocapitalbudgetingoroperationalcostaccounting(Burrittetal.,2011).Likewise,beyondestimatingandreportingontheimpactsfromclimatechangeonanorganisation,carbonaccountingcouldalsobeunderstoodtoencompassmonitoringanddisclosureofthestrategicmanagementactionstakentoaddressthoseimpacts.Equivalentissuesattheglobalornationallevelmightincludethecurrentthornychallengesassociatedwithmonitoringclimatefinanceflows(Buchneretal.,2011;Huhtalaetal.,2010)ornationalimplementationofclimatepolicies.Finally,economicactivityclassificationscouldbeaddedtothelistof‘levels’orsystemboundariesappliedtocarbonaccounting,asperformedforexamplebyEurostatortheOECD.2Wewillreturntoelementsofthisexpandeddefinitioninourdiscussionofthedifferentcommunitiesinvolvedincarbonaccountinginsection3.1below.2 Research method and theory Thispaperexploresnewphenomenainanemergingandrapidlyevolvingfieldofresearch(carbonaccounting)whichisasyetunder-theorised(AscuiandLovell,2011;Hopwood,2009;Lovelletal.,

2Seeforexamplehttp://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Air_emissions_accounts_statistics(accessed3November2011).Wearegratefultoananonymousreviewerforpointingthisout.

estimation calculation measurement monitoring reporting validation verification auditing

of

carbon carbon

dioxide greenhouse

gas

emissions to the atmosphere removals from the atmosphere emission rights emission obligations emission reductions legal or financial instruments

linked to the above trades/transactions of any of

the above impacts on climate change impacts from climate change

at

global national sub-national regional civic organisational corporate project installation event product supply chain

level, for

mandatory voluntary

research compliance reporting disclosure benchmarking auditing information marketing or other

purposes

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2010;LovellandMacKenzie,2011;MacKenzie,2009).Ourapproachisthereforebasedongroundedtheory(StraussandCorbin,1998).Ratherthantestingapre-definedtheoreticalframework,wefirstexploredthedata,thensearchedfortheorieswhichcouldhelpusunderstandourobservations,andfinally,incomparingthefitbetweenpotentiallyapplicabletheoriesandourobservations,wehavearrivedatanumberofconclusionsregardingfurtherdevelopmentofthesetheorieswithrespecttocarbonaccounting.Ourprimaryempiricalmaterialincludesalargecorpusof‘grey’literatureoncarbonaccounting(aswellasasmaller,butrapidlyexpanding,volumeofacademicliteraturecommentingonthesubject),transcribedinterviews(12)andnotesfromparticipantobservation.Theliteraturewascompiledthroughacombinationofstandardelectronicsearchtechniquesandinformalcollectionarisingfromoneoftheauthors’experienceasapractitionerinvolvedinawidevarietyofnational,corporate,projectandproduct-levelcarbonaccountingoverthelasttwelveyears.TwelveinterviewswereconductedsinceNovember2008withkeyindustryplayersactiveincarbonaccountingfromthe‘BigFour’globalaccountancyfirms(PwC,KPMG,DeloitteandErnst&Young),carbonaccountingbodiessuchastheCarbonDisclosureProject(CDP)andClimateDisclosureStandardsBoard(CDSB),accountingstandardsettersincludingtheInternationalAccountingStandardsBoard(IASB)andFinancialAccountingStandardsBoard(FASB)andaccountancyprofessionalbodiessuchastheInstituteofCharteredAccountantsinEnglandandWales(ICAEW)andtheAssociationofCharteredCertifiedAccountants(ACCA).Theseinterviewsweretranscribedandcodedusingthequalitativedatasoftware,‘ATLAS’.ThepaperalsodrawsonfindingsfromresearchconductedbyoneoftheauthorsonfinancialaccountingintheEUEmissionsTradingSystem(EUETS),involvingareviewofthefinancialstatementsof26largecompaniesandfollow-upinterviewswithaccountantsatfiveofthesecompanies.Inaddition,ourcasestudyontheCDSBisinformedbyparticipantobservationofoneoftheauthorsasamemberoftheCDSBTechnicalWorkingGroupsinceearly2009,andemailcorrespondencewithWorkingGroupmembers.Havingreviewedthisempiricalmaterial,focussingspecificallyonclaimstocompetenceincarbonaccounting,wethenconsideredanumberoftheoreticalframeworkswhichappearedtoberelevant.Twoframeworkswhichwedecidednottouseafterinitialconsiderationwerestakeholdertheoryandframing.Inthecaseofstakeholdertheory(Freeman,1984;Frooman,1999;Mitchelletal.,1997),thiswasbecauseoftherathernarrowfocusonstakeholderinfluenceonorganisations,andmanagerialresponsestothis,ratherthanontherelationshipbetweendifferentcommunitiesofstakeholderswithrespecttoafieldordomainsuchascarbonaccounting.Theconceptofframingwasfoundusefultohelpexplainhowdifferentgroupsofpeopledefineanissueinwaysthatmakeitunderstandableandsolvabletothem(andthereforeexcludeothers,whetherintentionallyorotherwise),butasithasalreadybeenappliedtocarbonaccountingelsewhere(AscuiandLovell,2011),inthispaperweusetheconceptofframingasastepping-stonetowardsotherpotentiallyusefultheoreticalframeworks.Wedonotclaimtohaveconsideredallpotentiallyapplicabletheories,nordowewishtoimplythatanyrejectedtheorymightnotstillyieldusefulinsightsoncertainaspectsoftheobservedphenomena.Rather,throughaniterativeinductiveprocess,wehavearrivedattwotheoreticalconcepts–epistemiccommunitiesandboundary-work–whichwebelievecanbecombinedtoprovideabetterunderstandingofsomerecentdevelopmentsincarbonaccounting–inparticular,theemergenceoftheCDSBanditsClimateChangeReportingFramework(ClimateDisclosureStandardsBoard,2010).Thesedistinctyetrelatedtheoreticalconceptshavebeendrawnfromthefieldsofinternationalrelationsandthesociologyofscience.Each,intheirownway,contributestoanunderstandingofthewayinwhichdifferentcommunitiesinvolvedincarbonaccountingaremakingclaimstoexpertiseandcompetenceinthisarea.Wefirstprovideabriefexplanationofeachconceptbelow,beforediscussinghowitcanbeappliedtotheempiricalevidenceinsection3.

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2.1 Epistemic communities Theconceptof‘epistemiccommunities’derivesfromthestudyofpolicychangewithinthefieldofinternationalrelations,whereitscontemporaryusewasdefinedbyHaasinaspecialissueofInternationalOrganizationonepistemiccommunitiesin1992(AdlerandHaas,1992;Haas,1992a;Haas,1992b).TheterminfactappearstohavebeencoinedbyRuggiein1975andhasrootsinFoucault’suseofthewordepistemetoreferto“adominantwayoflookingatsocialreality,asetofsharedsymbolsandreferences,mutualexpectationsandamutualpredictabilityofintention.Epistemiccommunitiesmaybesaidtoconsistofinterrelatedroleswhichgrowuparoundanepisteme;theydelimit,fortheirmembers,theproperconstructionofsocialreality”(Ruggie,1975:569-570;italicsintheoriginal).OtherinfluencesincludeKuhn’sbroaderconceptofaparadigm,or“anentireconstellationofbeliefs,values,techniques,andsoonsharedbymembersofagivencommunity”whichgoverns“notasubjectmatterbutagroupofpractitioners”(quotedinHaas,1992b:3).Haas’definitionisnarrowerandmorespecific:forhim,anepistemiccommunityis:“...anetworkofprofessionalswithrecognizedexpertiseandcompetenceinaparticulardomainandanauthoritativeclaimtopolicy-relevantknowledgewithinthatdomainorissue-area.”ForHaas,anepistemiccommunitymusthavethefollowingfourkeyfeatures:sharednormativeorprincipledbeliefs,sharedcausalbeliefs,sharednotionsofvalidityofknowledgeinthedomainoftheirexpertise,andacommonpolicyenterprise,definedas“asetofcommonpracticesassociatedwithasetofproblemstowhichtheirprofessionalcompetenceisdirected...”(Haas,1992b:3).

ThecombinationofthesecriteriadistinguishesHaas’definitionfromearliervariants,andisusedtoexplaintheinfluenceinpoliticaldecision-makingofnetworksof‘experts’,particularly(butnotonly)atthetransnationallevel.Essentially,theargumentisthatwhenformalactors(i.e.thepoliticalrepresentativesofnation-states)havetodealcollectivelywithuncertainandtechnicallycomplexpolicychallengessuchasdepletionoftheozonelayerorhuman-inducedclimatechange,theytendtorelyontechnicalexpertswithrecognisedexpertiseandcompetenceinthatparticulardomain.Iftheseexpertsarepartofanepistemiccommunityaccordingtotheabovedefinition,theirsharedbeliefsandcommonpolicyenterprisearelikelytoleadthem–withorwithoutcoordination–togivesimilaradvicetotheirrespectivenationalformalactors.Inthiswaypowercanbetransferredfromtheformal(government)actorstoexternalknowledge-basedelites.However,itisworthnotingthattheabilityofanepistemiccommunitytoinfluencepolicyisconstrainedbyvariousotherfactors:forexample,AdlerandHaaspointoutthatanepistemiccommunityismorelikelytobeinfluentialatthetransnationallevelifitisalreadyinfluentialatthenationallevel(AdlerandHaas,1992),andtheextenttowhichstatebehaviourendsupreflectinganepistemiccommunity’spreferences“remainsstronglyconditionedbythedistributionofpowerinternationally”(Haas,1992b:7).Haasandothersstressthatmembersofaprofessionordisciplinedonotnecessarilyformanepistemiccommunityunlesstheysharebothprincipledandcausalbeliefs.Theexampleisgivenofeconomists,whoformaprofessionbutnotnecessarilyanepistemiccommunity,whereasthesub-setofKeynesianeconomistsmayqualifyassuch(Haas,1992b:19).Acommunitydoesnotnecessarilyrequirearticulatedorevenconsciouspolicyintentionsinordertoproposeconvergentpolicysolutions:rather,“Acommunity’sadvice...isinformedbyitsownbroaderworldview”(Haas,1992b:4).Thissuggeststhatanepistemiccommunity’scommonpolicyenterprisemayarisefromsharedframingofproblemsand,therefore,perceiving(andthereforeadvocating)alimitedrangeofpossiblesolutions,basedontheirsharedcausalbeliefsandcommonpractices.AdlerandHaas(1992:375)explicitlynotethatepistemiccommunitiesexertinfluenceonpolicyinnovationby“(1)framingtherangeofpoliticalcontroversysurroundinganissue,(2)definingstateinterests,and(3)settingstandards.”Likewiseatthepolicyselectionstage,anepistemiccommunitycan“frametheissueandhelpdefinethedecisionmakers’interests”(AdlerandHaas,1992:381).

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Whiletheconceptofepistemiccommunitieswasoriginallyformulatedinthecontextofscientistsinfluencingpolicy,ithasbeenextendedtoothercommunitiessuchasmonetaryexperts(Verdun,1999)andaccountants(Burritt,1995).Afinalpointthatisworthnotingfromthisliteratureistheimportanceofwhatwemightdescribeastechniquesofdemonstratinganddefiningauthorityinordertoprovideaccesstothepolicyarena:

“Theepistemiccommunitymembers'professionaltraining,prestige,andreputationforexpertiseinanareahighlyvaluedbysocietyorelitedecisionmakersaccordthemaccesstothepoliticalsystemandlegitimizeorauthorizetheiractivities.Similarly,theirclaimstoknowledge,supportedbytestsofvalidity,accordtheminfluenceoverpolicydebatesandserveastheirprimarysocialpowerresource.Atthesametime,theprofessionalpedigreesandvaliditytestssetthecommunitymembersapartfromothersocialactorsorgroupsandnotonlyserveasabarriertotheirentryintothecommunitybutalsolimittheinfluencethattheseotheractorsorgroupsmighthaveinthepolicydebate.”(Haas,1992b:17).

Thelatteractivity,settingacommunityapartfromotheractorsorgroupsandenhancingthecommunity’sinfluenceattheexpenseofothers,isconsideredmorecloselyinthecontextofboundary-workinthenextsection.

2.2 Boundary-work Theconceptof‘boundary-work’originatesinthesociologyofscience,whereitwasfirstformulatedtodescribestrategicbehaviouror“rhetoricalstyle”employedbyscientistswiththeaimofcreatingdistinctionsbetweenscienceandnon-science(Gieryn,1983:782).Bydrawingattentiontothediscursiveactivitiesbywhichboundariesareestablished,maintainedandadaptedovertime,difficultiesinidentifyingessentialcharacteristicsofsciencearecircumvented,andthesocialconstructionofsuchcharacteristicsisexplicitlyacknowledged.Itwasrecognisedatanearlystagethattheconceptofboundary-workcouldbeappliedtootherdemarcations,forexamplebetweendisciplinesorprofessions.Gierynidentifiesthreegenericrhetoricaldevicesrelevanttotheactivityof“professionalization”:

“(a)whenthegoalisexpansionofauthorityorexpertiseintodomainsclaimedbyotherprofessionsoroccupations,boundary-workheightensthecontrastbetweenrivalsinwaysflatteringtotheideologists'side;(b)whenthegoalismonopolizationofprofessionalauthorityandresources,boundary-workexcludesrivalsfromwithinbydefiningthemasoutsiders...(c)whenthegoalisprotectionofautonomyoverprofessionalactivities,boundary-workexemptsmembersfromresponsibilityforconsequencesoftheirworkbyputtingtheblameonscapegoatsfromoutside.”(1983:791-2).

Reactingtothepotentialinstabilitycreatedbyboundary-work(blurringofboundaries,preciselyduetotheiruncertainandambiguoussocialconstruction),Guston(2001)turnshisattentionto“boundaryorganizations”aslinkingandstabilisinginstitutions.Aboundaryorganisationdrawsitsmembershipfromactorsfrombothsidesoftheboundary(traditionally,betweenscienceandpolitics),butimportantlyalsoincludes“professionalswhoserveamediatingrole”(Guston,2001:401).Beingthusconstitutedenablesboundaryorganisationstoperformauniquerolethatwouldbedifficultorimpossiblefororganisationsbasedoneithersideoftheboundary.IncontrasttotheoppositionalrhetoricidentifiedbyGierynabove,Guston(2001)andothers(e.g.Jasanoff,1990;Miller,2001;ShackleyandWynne,1996)findthatboundaryorganisations,andotherassociateddevices,canservetoreconciletensionsandleadtomoreproductivepolicy-making.Inthisnecessarilybriefsummaryoftheconceptsofepistemiccommunitiesandboundary-work,wehopetohaveshownthateachisusefultohelpunderstandthewaysinwhichthebeliefs,practices

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anddiscourseofprofessionalcommunitiesshapetheirperceptionsoftheworldaroundthemandinturninfluencetheirproposedsolutionstonewproblems;howthispropagatesintopolicy-making;andhowsuchcommunitiesnegotiatetheirinteractionswithothercommunities.Inthenextsectionweusetheseideastoexaminethedifferentcommunitiesinvolvedinthefieldofcarbonaccounting.Wethenfocusinmoredetailontheroleplayedbyaccountantsinextendingclaimsofownershipandexpertiseinthisfield,andfinallyexaminetheemergenceofstandardsandspecificallytheroleandnatureoftheClimateDisclosureStandardsBoardasaboundaryorganisationlinkingtwocarbonaccountingcommunities.3 Results and discussion

3.1 Communities involved in carbon accounting Anumberofeffortshaverecentlybeenmadetotheorisecarbonaccountingatasufficientlyhighleveltoencompassdifferentkindsofcarbonaccountingcarriedoutbydifferentcommunities.GuentherandStechemesser(2011),onthebasisofasystematicliteraturereview,dividetheliteratureintofourcategories:physicalcarbonaccountingwithafocusontheglobalandnationallevel;physicalcarbonaccountingwithafocusoncarbonfootprinting;monetarycarbonaccountingwithafocusonmanagementaccounting;andmonetarycarbonaccountingwithafocusonfinancialaccounting.BowenandWittneben(2011:1024)dividecarbonaccountingintothreearenasororganisationalfields“whereorganisationsvieforpowerdevisingcarbonaccountingmethodologiesandsystems”anddenotethese“countingcarbon”(involvingscientistsandscientificorganisations);“carbonaccounting”(involvingspecialisedcarbonaccountingorganisationsandaccountingfirms);and“accountabilityforcarbon”(involvingtransnationalandnational,governmentalandnon-governmentalorganisationscontestingtheallocationofemissionreductionresponsibilities).AscuiandLovell(2011)distinguishfivemajorframingsofcarbonaccounting:physical,political,market-enabling,financialandsocial/environmental.InTable2wesummarisehowthecategoriesusedinthesethreepapersrelatetooneanother(notingthatinpracticethereissomeblurringofboundaries:theverticaldelineationsarenotquiteasclear-cutasTable2implies).Table2:CategorisationsofcarbonaccountingTypicalscope Global National National,

installationorproject

Organisation Organisation,product,eventorsupplychain

AscuiandLovell(2011)

Physical Political Market-enabling

Financial Social/environmental

GuentherandStechemesser(2011)

Physicalwithafocusonglobalandnationallevel

Monetarywithafocusonfinancialaccounting

Physicalwithafocusoncarbonfootprinting

Monetarywithafocusonmanagementaccounting

BowenandWittneben(2011)

“Carboncounting”

“Carbonaccountability”

“Carbonaccounting”

Therearenotablesimilaritiesaswellassomeimportantdifferencesbetweentheseinterpretations.Firstly,thereisgeneralagreementthatphysicalcarbonaccounting,conductedprimarilybyscientistsandscientificorganisations,isadistinctfield.However,GuentherandStechemesser(2011)includebothglobalandnationallevelphysicalcarbonaccountingwithinthesamecategory,whichwefeeldoesnotdistinguishbetweentheessentiallypoliticalnatureofnational-levelcarbonaccounting(whicharisesmainlyasaresponsetothe1992UnitedNationsFrameworkConventiononClimateChange(UNFCCC)(UnitedNations,1992))andglobal,scientificcarbonaccounting,whichstrivestobeapolitical(despitetheobviouschallengesassociatedwithsuchanobjective).Thisistheclassic

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science-policyinterface,straddledbyboundaryorganisationssuchastheIntergovernmentalPanelonClimateChange(IPCC),whichinadditiontomediatingbetweenclimatescienceandpolitics(Fogel,2005;Miller,2001)hasaspecificroleinprovidingthe“comparablemethodologies”whichcountriesmustfollowfornationalcarbonaccountingundertheUNFCCC(Article4.1(a)).WhatAscuiandLovell(2011)term‘political’carbonaccountingundertheUNFCCCdiffersfromscientificmeasurementsinbeingbottom-up,usuallybasedonexistingnationalstatisticsforfactorssuchasfuelconsumption,deforestationratesandnumbersoflivestock,combinedwithassumedemissionfactorsperunitofeachactivity,asopposedtotop-downdirectmonitoringoftheatmosphere.Inaddition,varioussourcesofphysicalemissionsareexcludedfromnationalcarbonaccountsforpurelypoliticalreasons:naturalsourcesofgreenhousegases,emissionsassociatedwithinternationalairandmaritimetransport,andgreenhousegaseswhicharecontrolledseparatelyundertheMontrealProtocol.Theactorsinvolvedin‘political’carbonaccountingincludebothphysicalcarbonaccountingspecialistsandgovernmentofficials,althoughinpracticemuchofthegovernmentroleisoftencontractedouttotechnicalconsultants:forexample,intheUK,thenationalgreenhousegasinventoryiscompiledbysustainabilityconsultantsAEA,withinputsfromtwoscientificresearchcentres.3Nationalpoliticalrepresentativesactas‘gate-keepers’controllingparticipationin‘political’carbonaccounting:forexample,acandidatefortheUNFCCCRosterofExpertsintheareaofgreenhousegasinventoriesmustbenominatedbyaNationalFocalPoint(officialgovernmentrepresentative)accordingtospecifiedcriteriawhichincluderelevantscientificandtechnicalexpertise,academicorprofessionalqualificationsandatleastfiveyearsofexperience.4Todate,accountantsfromthe‘BigFour’globalaccountancypracticeshavenotgenerallybeenheavilyinvolvedin‘political’carbonaccounting.BowenandWittneben(2011)likewiseputthescientific(“countingcarbon”)intoaseparatecategorytothepolitical(“accountabilityforcarbon”).However,theyalsoincludewhatAscuiandLovell(2011)term‘market-enabling’carbonaccountingwithinthelatter.Whilecarbonmarketsareundoubtedlylargelydrivenbygovernmentdecisionstoacceptandallocateresponsibilitiesforclimatechange,wewouldarguethattheuseandacceptanceofmarketmechanismshasopenedthedoortoconsiderableinfluencebynon-stateactorsandtheemergenceofentirelynewformsofclimatechangegovernance(Hoffmann,2011;Okerekeetal.,2009),leadingtodistinctnewformsofcarbonaccounting.Thisismostclearlyvisibleinthevoluntarycarbonmarket,whichbydefinitionexistsoutsidethescopeofdirectgovernmentpolicyandregulation,butsimilartrendscanalsobediscernedwithinpolicy-drivenmarketssuchastheCleanDevelopmentMechanism(CDM)(Lovelletal.,2009).Althoughcarbonmarketswereoriginallyconceivedatthenationallevel(viatheKyotoProtocol)mostoftheaccountinginvolvesmonitoring,reportingandverificationattheprojectorinstallationlevel(generally,project-levelaccountingisassociatedwithbaseline-and-creditschemessuchastheCDM,whereasinstallation-levelaccountingisassociatedwithcap-and-tradeschemessuchastheEUETS).Theprojectlevelisparticularlyinteresting,becausewhatisbeingaccountedisnolongerjustemissionsandrightstoemit,itisemissionreductionsandtheassociatedcarboncreditsoroffsets(whichhaveavaluetotheextentthattheycanbetranslatedintorightstoemitsomewhereelse).Theneedtoensurethatsuchemissionreductionsarerealandadditionaltoanythatwouldhavehappenedintheabsenceoftheprojectactivityhasspawnedavastbodyofcomplexrulesandproject-levelcarbonaccountingprocedures,includingauniqueapparatusforcarbonvalidationandverification(audit)functions.5While‘market-enabling’(i.e.KyotoProtocol)accountingatthenationallevelisessentiallyavariantof‘political’carbonaccounting,involvingsimilaractors,the

3Seehttp://ghgi.decc.gov.uk/compilation.html(accessed10December2010).4Seehttp://unfccc.int/parties_and_observers/roster_of_experts/items/534.php(accessed10December2010).5Seeforexampletheonlinerulebookavailableathttp://cdmrulebook.org/(accessed18December2009).

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actorsinvolvedinmarket-enablingcarbonaccountingattheprojectlevelarenewanddiverse,representedbyorganisationssuchastheInternationalEmissionsTradingAssociation(IETA),CDMProjectDeveloperForumandCarbonMarketsandInvestorsAssociation(CMIA).6Allofthe‘BigFour’globalaccountancyfirmsaremembersofIETA,andKPMGandPwCarealsomembersofCMIA.However,theirengagementhasnotbeenuniform:forexample,onlyPwChashadsignificantdirectinvolvementinthepreparationofnewproject-levelcarbonaccountingmethodologies,proposing14outof339newmethodologiesforlarge-scaleemissionreductionprojectsconsideredbytheCDMExecutiveBoarduptotheendofMarch2011(KPMGwasperipherallyinvolvedinafurthertwoproposals).7Thisworkisalsonotevenlydistributed:althoughPwChasactedasconsultantforthedevelopmentofprojectdesigndocumentsfor117emissionreductionprojects,makingitthesixthmostexperiencedconsultantbynumberofprojects8,thisworkisconcentratedalmostexclusivelyinthePwCIndiaoffice.Ingeneral,itisprobablyfairtosaythattheinvolvementoftheaccountancyprofessioninmarket-enablingcarbonaccountinghasmainlybeenonaratherad-hocconsultancybasis,reflectingtheirbroadtransactionalexperienceratherthanaclaimforspecificexpertiseinthistypeofcarbonaccounting.Theimpositionofapriceoncarbonattheprojectorinstallationlevelthroughemissionstradingschemescreatesaneedfornewcarbonassets,liabilitiesandfinancialflowstobeaccountedforinaffectedcompanies’financialstatements(Cook,2009;Lovelletal.,2010;MacKenzie,2009).ThisformoffinancialcarbonaccountingisputinacategoryofitsownbyGuentherandStechemesser(2011),andbyAscuiandLovell(2011),butisincludedtogetherwithotherformsoforganisationalcarbonaccounting(includingcarbonfootprinting)byBowenandWittneben(2011).Ourprimaryinterestindifferentcategoriesofcarbonaccountingistoidentifythedifferentcommunitiesinvolved,particularlyintermsoftheprofessionalidentityofthepeoplewhocarryoutand/ordefinethescopeoftherelevantaccountingactivity.Wethereforefindthedistinctionbetweenfinancialcarbonaccountingandotherformsoforganisationalcarbonaccountinguseful,becausetheformerisindisputablyassociatedwithandcarriedoutbythe(financial)accountancyprofession(weexpandonthisinsection3.2below).Withinthescopeoforganisationalcarbonaccounting,GuentherandStechemesser(2011)distinguishbetweenphysicalcarbonfootprintingandmonetarycarbonaccounting,withthelatterfurthersub-dividedintomanagementaccountingandfinancialaccounting.Thisfollowsthewellestablishedapproachtodistinguishingbetweenphysicalandmonetaryenvironmentalmanagementaccounting(EMA);andbetweenaccountinginformationproducedforinternal(management)versusexternalaccountingandreportingpurposes(Burrittetal.,2002;Schalteggeretal.,2006;SchalteggerandBurritt,2010).Wesummarisewhatwebelievearethekeyformsoforganisationalcarbonaccounting(allofwhichfallwithinthebroadscopeofwhatAscuiandLovell(2011)term‘social/environmental’carbonaccounting)inFigure1insection3.3below.ForreasonswhichwillbecomeclearerduringourdiscussionoftheClimateDisclosureStandardsBoardinsection3.3,wesuggestthatthecollection,processingandreportingofstrategiccarbonmanagementinformationshouldbeconsideredanintermediateoroverlappingcategory,asittypicallyinvolvesacombinationofbothphysicalandmonetarymeasures.Wehavetermedthis‘strategiccarbonmanagementaccounting’whenthefocusisinternal,and‘climaterisk,opportunityandgovernancedisclosure’whenthefocusisexternal.TosomeextenttheformercategoryalsorecognisesacallmadebyRatnatungaandBalachandran(2009)todistinguishbetweencarbon-relatedcostmanagementandstrategicmanagementaccountingactivities.

6Seehttp://www.ieta.org/,http://www.pd-forum.net/andhttp://www.cmia.net/respectively(accessed10December2010).7BasedondatafromUNEPRisoeCentreCDMPipelinespreadsheet,availableathttp://cdmpipeline.org/publications/CDMPipeline.xlsx(accessed1April2011).8Ibid.

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Burrittetal.(2011)applytheEMAmodeltointernalcarbonmanagementaccounting,allowingfurtherdistinctionstobedrawnnotonlyonthebasisofphysicalandmonetarydimensions,butalsoaccordingtothetime-frameofdecision-making,thelengthoftime-frame,andtheroutinenessoftheinformationsupplied(wehaveselectedtwokeytermswithinthisframework–‘carbonflowaccounting’and‘carboncostaccounting’withinourFigure1).Oneoftheirempiricalobservations(basedoninterviewswithasetof10largeGermancompanies)isthatmanydifferentfunctionalmanagerswithinanorganisationmaybeinvolvedincollecting,processingandactingonbothphysicalandmonetarycarbon-relatedinformation.Althoughsuchfunctionalmanagers(typicallyenergy,environment/sustainabilityorcarbonmanagers)areineffectcarryingoutaccountingfunctions,theywouldgenerallynotidentifythemselvesasaccountants,andinfactaunifying,coordinatingrole(whichmightbeplayedbyaccountants)istypicallyabsent(Burrittetal.,2011).Thisobservationsupportsearlierworkwhichhasfoundlittleornostandardisationofapproacheswithinorganisationalcarbonmanagement(Kolketal.,2008;KolkandPinkse,2005).Turningtoexternal,physicalcarbonaccounting(orfootprinting),weobservethatalthoughaccountantshavehadsomeinvolvementinthedevelopmentofstandardsinthisarea,awiderangeofotheractorshavealsobeenactive.Forexample,ofnearly350acknowledgedcontributorstothe2001editionofthemainindustrystandardforcorporatecarbonfootprints,theGHGProtocol,only21canbeclearlyidentified(bytheirorganisationalaffiliation)asprofessionalaccountants(WorldBusinessCouncilforSustainableDevelopmentandWorldResourcesInstitute,2001).Amongstthebroaderfieldofcontributors,accountantsareoutnumberedbyspecialistcarbonfootprintingcompanies(usuallysmalltomediumsize)andsharetheplatformwithgeneralmanagementconsultanciesandengineeringconsultancies,aswellasahostofnon-governmentalorganisations(NGOs),governmentagencies,intergovernmentalbodies,tradeassociations,researchinstitutionsand(mainlycarbonintensive)businesses.Anecdotalevidenceaswellaspersonalexperienceinthecarbonfootprintingmarketsuggeststhatthisisalsoareasonablereflectionoftherangeofactorswhohavesubsequentlycarriedoutcarbonfootprinting.Overtime,therehasbeensomedegreeofevolutionfromdominancebysmallspecialistconsultancies,NGOsorresearchinstitutions(commonlybroughtintohelpundertakethefirstfootprintofanorganisationorproduct)throughtothisbecomingincorporatedwithintheorganisation’sroutinelygeneratedinternalmanagementaccounting.Atthesametime,carbonfootprintinghasalsobecomeastandardcomponentoftheservicesprovidedbytheadvisoryarmsoftheglobalaccountancyfirms(whichhaveincertaincasesacquiredsmallcarbonfootprintingspecialistsforthispurpose9),andbyvariousgeneralmanagementandengineeringorenvironmentalconsultancies.Similarly,thefast-growingfieldofproductcarbonfootprintingandlabellingwasinitiallydominatedbytechnicalspecialistsandsupportedbyquasi-governmentbodiessuchastheUK’sCarbonTrust(Sinden,2009),butnowcanbefoundasastandardserviceofferedbyaccountancyfirmssuchasDeloitte.10AscuiandLovell(2011)pointoutthatproductcarbonfootprintinghasaslightlydifferentpedigreetoorganisationalcarbonfootprinting,asithasevolvedmainlyfromthepracticeofLifeCycleAnalysis(LCA),whichisassociatedwithamorespecialisedtechnicalcompetencethanorganisationalcarbonfootprinting.Thusproductandsupplychaincarbonfootprintstendtobecarriedoutbyspecialistconsultancies,workingwithtechnicalstaffwithinorganisationsresponsibleforbuyingormanufacturingtheproductsinquestion.Inconclusion,wehopetohaveshownfromthisbriefreviewthatcarbonaccountingclearlyinvolvesanumberofquitedifferentactivities,carriedoutbydifferentcommunities.Thisleadstouncertaintyandflexibilityintermsofwhatcarbonaccountingisunderstoodtomean,howitshouldbedoneand

9Forexample,oneofthestatedpurposesoftheacquisitionofdcarbon8byDeloitteinMarch2010wasto“provideDeloittearouteintothemarketforcarbonfootprintingservices”(Datamonitor,4March2010).10Seehttp://www.deloitte.com/view/en_GB/uk/market-insights/sustainability-services/climate-change-and-carbon-management/carbon-footprinting-and-reduction-services/index.htm(accessed24October2011)

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whoshouldbeinvolved.Lookingmorespecificallyatorganisationalcarbonaccounting,weseeacleardistinctionbetweenfinancialreportingofcarbonassetsandliabilitiescreatedunderemissionstradingschemes,whichisindisputablythedomainofaccountants,andotherformsoforganisationalcarbonaccounting,whereaccountantssharethefieldwitharangeofspecialistandgeneralistconsultanciesaswellasinternalfunctionalmanagers.Afterfinancialcarbonaccounting,thevariousformsofinternalcarbonmanagementaccountingmightbeassumedtobethelogicalplacefordeploymentoftraditionalaccountancyexpertise,butasBurrittetal.(2011)note,thereislittleevidenceofthis,asyet.Ontheotherhand,accountantshavebeencompetingmoreactivelywithotherspecialistsinphysical,externalcarbonaccounting,andaswewillshowinsection3.3,particularlyintheemergingfieldofclimatedisclosure.Apossibleexplanationmaybethatexternalpressuretodisclose,drivenbydemandsfromregulators,investorsorotherstakeholders,isthemostimportantdriverofcarbonaccountingactivityatpresent,whileroutineinternalmanagementcontrolshaveyettocatchupwithandincorporatethesenewdevelopments.Inthenextsectionweexplorethediscursivepositioningoftheaccountancyprofessionwithrespecttocarbonaccounting,andtherhetoricaldevices(boundary-work)beingemployedtoextendtheboundariesoftheirexpertiseandtoinfluencepolicy.Finally,insection3.3,weexaminehowpressurefrominvestorsandotherstakeholdersonorganisationstodisclosebothphysicalcarbonemissionsandcarbonmanagementactivitieshasledtoconvergenceandtheemergenceofanewstandardforclimatedisclosure,whichhasopenedupanewopportunityfortheaccountancyprofession.

3.2 Accountants and carbon accounting LovellandMacKenzie(2011)characterisetheperiodfromthelate1990sto2005asoneof‘reluctantengagement’ of accountantswith climate change.During this period, detailed technical debateonfinancialcarbonaccountingtookplacelargelybehindcloseddoorsandwithoutdrawinglinkstothewider issue of responding effectively to climate change. For example, in November 2003 theEmergingIssuesTaskForce(whichadvisesFASB,theUS-basedFinancialAccountingStandardsBoard)mettodiscuss Issueno.03-14,Participants’AccountingforEmissionsAllowancesundera“CapandTrade”Program,andconsidered it relativelynon-contentious, removing it fromtheagendaafterasingle meeting. In fact, some members indicated that “they did not perceive a practice issue ordiversityintheaccountingforemissionstradingprograms”(FASBEmergingIssuesTaskForce,2003:76).At the same time, a number of accountancy professional bodies were working to raise theirmembers’ awareness of climate change and other sustainability accounting issuesmore generally.ICAEW’s2004reportSustainability:Theroleofaccountants includedanentirechapterontradablepermits, with sections on recognition,measurement and reporting (both in physical and financialterms),concludingthat:

“Atpresent,very fewprofessionalaccountantsare familiarwith the [these]schemes…andthere isachallengingopportunity fortheprofessiontocontributetothedevelopmentandimplementation of policy at all levels, aswell as standards for accounting and reporting…Whilst the initialmeasurement is amatter forother specialists, therewill be a substantialroleforaccountantsinreviewinginformation,assessingtheimplicationsandcontributingtotheoperationofrelatedmarkets.”(ICAEW,2004:66-67)

TherewasbynomeansanimmediateresponsebytheaccountingprofessiontotheICAEWreport,asillustrated in this October 2009 interview with the manager with responsibility for sustainabilityissuesatICAEW:

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“Isupposewhatweweredoingwith[theICAEW(2004)report]wascarvingoutarolefortheprofession,tryingtoidentifyit...andsayingtomembers“Look,hereisaroleforyou,andtelluswhatskillsweneedtobuildforyousoyoucanoccupyit.”Interviewer:Andwhatsortofareactiondidyouget?Well, I’d say four and a half years ago the reaction was puzzled bemusement! I thinkmembersstruggled—andstilldotoanextent—toseewhattheirroleis...”(quotedinLovellandMacKenzie,2011:715)

Insummary,duringthisfirstphase,effortscanbediscerned,ledbyaccountancyprofessionalbodies,to re-frame the issue (i.e. “policy innovation,” in the language of epistemic communities), butwithoutmanagingtoachievethenextstepof“policydiffusion”(AdlerandHaas,1992).Since 2005, however, the pace of policy diffusion activities such as the publication of reports,development of standards and growth in disclosure initiatives has quickened, in what Lovell andMacKenzietermthe‘strategicengagement’phase.Akeyfactorinthistransitionwasthecontroversygenerated by the publication by the International Accounting Standards Board (IASB) of IFRICInterpretation3:EmissionRights (IFRIC-3) in late2004,whichelevated financial carbonaccountingfromatechnical issuediscussedinmeetingsofaccountingstandardsbodiestoaveryreal issueforthousands of practicing accountants in European companies,with significant financial implications(forafullexplanation,includinghowIFRIC-3waswithdrawnsixmonthslater,seeCook(2009)).Thisin turndrewtheattentionof the ‘BigFour’accountancy firms,whichpublished reportspromotingtheir advisory competence in this area (Deloitte, 2007; KPMG, 2008; PricewaterhouseCoopers andIETA,2007).Althoughthesefirmshadbeeninvolvedincarbonmanagementconsultancyservicesforsometime(seeforexamplePricewaterhouseCoopers,2007),theIFRIC-3controversybroughtcarbonto theattentionofmoremainstream financialaccountantswithin these firms.Thiswas inkeepingwith a broader strategic drive on the part of the ‘Big Four’ to engage in organisational carbonaccounting,particularlyinrelationtocarbondisclosure(where,forexample,PwCtookovertheroleofcompilingannualCDPreportsfromasmallspecialistinvestmentresearchfirm,InnovestStrategicValueAdvisors,in2008).Increasingly since 2005, there is evidence of accountants discursively representing themselves asqualifiedmanagers of carbon, and accountancy as ‘the natural home’ for governing the new low-carboneconomy.ForexampletheAssociationofCharteredCertifiedAccountants(ACCA)boldlystateintheir‘CarbonJigsaw’reportthat:

“Atsomestageinthenext12months…everymajorbusinesscanexpecttobeaskedaboutitsgreenhousegasemissionsanditsmitigationstrategy….Torespondtosuchquestionsandtodemonstrateaction,businesseswillneedto involveaccountants. In the future, itwillbethe roleofaccountants to representcarbon-relatedactions in financialaccountingterms intheannualreportingprocess.”(ACCA,2009:8,emphasisadded).

Here we can discern three devices at work: first, a broad rhetorical assertion of relevance(“businesseswillneedto involveaccountants”);second,are-statementoftheproblemintermsofanexistingareaofrelativelyuncontestedexpertise(financialaccountingandannualreporting);andthird,a re-affirmationofcompetence in the redefinedarena (“itwillbe the roleofaccountants torepresent carbon-related actions”). More generally, in this way the problem of climate change isframed primarily as a corporate one, with accountants as central in providing both strategic andpractical responses.TheChartered InstituteofManagementAccountants (CIMA) recentlymadeanevenstrongerclaiminitsreportAccountingforclimatechange:Howmanagementaccountantscanhelporganisationsmitigateandadapttoclimatechange:

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“Management accountants have a key role to play in driving sustainable strategic andoperationaldecisions...Failureformanagementaccountantstogetinvolvednow,whenkeydecisions are being taken in areas like carbon trading and compliance with new climatechange related regulations, could result in far higher costs, lost opportunities or reducedcompetitiveness.”(CharteredInstituteofManagementAccountants,2010:2)

Framingclimatechangeasacorporateproblemthatcanbemanagedbyaccountantshasacertainallure. It emphasises uncertainty and complexity, and promises a resolution of these difficultiesthroughtheapplicationofcoreaccountancyskills.Therearecertainlyechoeshereoftheapplicationof that characteristic “set of common practices associated with a set of problems to which theirprofessionalcompetenceisdirected”ofanepistemiccommunity(Haas,1992b:3).We turn now to a specific case study that illustrates the interactions between a community ofaccountancy professionals and a group of NGOs with a common interest in social/environmentaldisclosure, leading to the creation of a newboundary organisation linking these communities andsettinganewstandardforcombinedphysicalandnon-physicalorganisationalcarbonaccounting:theClimateDisclosureStandardsBoard.

3.3 Climate Disclosure Standards Board (CDSB) case study The CDSB was formed at the World Economic Forum in 2007 by a group of influential non-governmentalorganisations:theCarbonDisclosureProject,Ceres,WorldResourcesInstitute,WorldEconomic Forum Global Greenhouse Gas Register, California Climate Action Registry, The ClimateGroupandtheInternationalEmissionsTradingAssociation(WorldEconomicForum,2007).It is worth examining these stakeholders in further detail. The Carbon Disclosure Project (CDP),which acts as Secretariat to the CDSB, is one of the great success stories of social/environmentalcarbon accounting. Founded in 2000 by Paul Dickinson, an actuary and entrepreneur, and TessaTennant, a pioneering green investment fund manager, the CDP is essentially an environmentalpressuregroupthatseekstoinfluencecorporatebehaviourbyrequestingdisclosureofcarbon(and,more recently)watermanagement accounting information, on the assumption thatmeasurementwill lead to better management. It exerts influence by building and then acting on behalf of acoalitionof investors, startingwithagroupof35 investors representingUS$4.5 trillion inassets in2002,whichhadgrownto534investorsrepresentingUS$64trillionin2010(InnovestStrategicValueAdvisors,2002;PricewaterhouseCoopers,2010). In recentyears, theCDPhasalsoallied itselfwithmajorpurchasingorganisationssuchasWalmart,thusexertingsupplychainpressureinadditiontoinvestorpressure.CeresisasimilarUS-basedcounterpart,foundedin1989andoneofthefounders(in 1997) of the Global Reporting Initiative (GRI), now the de facto standard for sustainabilityreporting. Ceres had previously collaboratedwith CDP, GRI, and other organisations to produce aGlobal Framework for Climate Risk Disclosure: A statement of investor expectations forcomprehensivecorporatedisclosure(Ceres,2006).TheWorldResourcesInstitutedescribesitselfasa“globalenvironmentalthinktank”andisoneofthetwofoundersoftheGHGProtocol,nowthedefacto standard for physical carbon accounting for organisations, recommended as the basis forcarbonaccountingunderboththeGRIandCDP(WorldBusinessCouncilforSustainableDevelopmentandWorldResourcesInstitute,2004).Thenow-defunctWorldEconomicForumGlobalGreenhouseGasRegisterwasasimilarinitiativetotheCDP,launchedin2003inpartnershipwithseveralofthesamestakeholdersastheCDSB(WRI,IETAandCaliforniaClimateActionRegistryastheoperatoroftheregistry)aswellasothersimilarorganisationssuchastheWorldBusinessCouncilonSustainableDevelopment (WBCSD, theother founderof theGHGProtocol), thePewCentre forGlobalClimateChange (another influential environmental think tank), the World Wildlife Fund and – making asolitary appearance in this inter-related set of environmentally-oriented organisations, one of the

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‘BigFour’accountancyfirms–Deloitte.TheCaliforniaClimateActionRegistry(nowtransitionedtotheClimateRegistry)wasasimilarvoluntarycarbonaccountinganddisclosureinitiativebasedinthestate of California. The Climate Group is another very influential coalition-based environmentalpressuregroup,foundedin2004,andinturnafounder(withIETA,theWorldEconomicForumand,shortly afterwards,WBCSD) of the Voluntary (now Verified) Carbon Standard, currently the mostpopularproject-levelcarbonaccountingstandardinthevoluntarycarbonoffsetmarket(Hamiltonetal.,2010).Finally IETA,established in2000, representskey industryplayers in themarket-enablingcarbonaccountingworld,asmentionedinsection3.1above.11Thesestakeholdersclearlyhavethecharacteristicsofasmall,closely-knitepistemiccommunity.Theyshare values or principled beliefs (which perhaps we can best characterise as business-savvyenvironmentalism);causalbeliefs(forexample,investorpressurefordisclosure→measurement→better management of environmental issues); shared notions of validity (for example, mutualrecognition of standards) and a common policy enterprise, seen not least in their support fordevelopment of standards and promulgation of these into government policy. To take just oneexample of the latter, The Climate Group’s website proudly lists among its achievements that it“...helpedpushthroughCalifornia’s landmarkAssemblyBill32,making itmandatoryforbusinessestoreportandcutgreenhousegasemissions...”12So what was this epistemic community aiming to achieve with the founding of the CDSB? Thefoundingpressreleasestatesanaim“toestablishagenerallyacceptedframeworkforclimaterisk-related reporting by corporations. ... CDSBmember organizations have agreed to align their corerequestsforinformationfromcompaniesinordertoensurethattheyreportclimatechange-relatedinformationinastandardizedwaythatfacilitateseasiercomparativeanalysisbyinvestors,managersandthepublic.”(WorldEconomicForum,2007).The members of this social/environmental carbon disclosure community are not, in general,accountancy professionals. Yet they share a common financially informed, business-savvybackground, and clearly from the outset saw the involvement of accountancy professionals asinstrumental in creating a corporate carbon accounting framework that would be global andmainstream in nature. According to theCDSB Secretariat, close engagementwith accountants hasbeenan“absolutelydeliberatestrategy”.13This is reflected in how the CDSB has presented itself and its mission. It is no coincidence that“generally accepted” in the press release quoted above echoes Generally Accepted AccountingPrinciplesorGAAP.Likewise,theCDSB’smainoutputtodatehasbeenitsClimateChangeReportingFramework, published in September 2010, which has been set out in a format similar to otherfinancialreportingframeworks(ClimateDisclosureStandardsBoard,2010).Itsearlydraftcirculatedfor comments by the CDSB inMay 2009was termed an ‘Exposure Draft’, again echoing standardpractice fromaccountancy standard setters, andnoted that itwas deliberately adopting “relevantprinciplesandobjectivesoffinancialreporting”inordertoprovidea“workablefilter”throughwhichtoviewclimatechangeissues(ClimateDisclosureStandardsBoard,2009:7).Itisevidentthatinvolvementinthisstandard-settinginitiativewaswelcomedbycertainaccountancyprofessionals,asthefoundingpressreleaserelates:

11Formoreinformationontheseorganisationsseehttp://www.cdproject.net;http://www.ceres.org/;http://www.globalreporting.org/;http://www.wri.org/;http://www.greenbiz.com/news/2003/12/09/world-economic-forum-creates-global-greenhouse-gas-register;http://www.climateregistry.org/;http://www.theclimategroup.org/;http://www.v-c-s.org/;http://www.ieta.org/(accessed10Dec2010).12http://www.theclimategroup.org/about-us/achievements/(accessed10Dec2010).13InterviewwithCDSBcoremember,July2009.

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““Climate change and the implications on business process and disclosure are finallybecoming the topic of discussion that they deserve to be. Ernst & Young andPricewaterhouseCooopersareenthusiasticandsupportiveparticipantsinthisdialogue,”saidPaul Ostling, Ernst & Young Global Chief Operating Officer, and Willem Brocker,PricewaterhouseCoopersGlobalManagingPartner.”(WorldEconomicForum,2007).

Thisenthusiasmhaslasted:accountantshavebeenheavilyinvolvedinthesubsequentdevelopmentoftheCDSBanditsClimateChangeReportingFramework.Structurally,theCDSBcomprisesaBoard,an Advisory Committee and a Technical Working Group. While the Board (which represents theseven original founding partners) and Advisory Committee can be characterised as being largelydrawnfromthesocial/environmentalcarbondisclosureepistemiccommunity(withrepresentativesfrom business, legal firms, other investor pressure groups, and hybrid governmental-businessorganisations suchas theCarbonTrust andUNEPFinance Initiative), theTechnicalWorkingGroupcomprisesmostlyaccountants (at least14outof the21coreTWGmembers), including individualsfrom all the ‘Big Four’ accountancy firms and five accountancy professional bodies (all ostensiblyacting inapersonal, rather than representative, capacity). Significantly, it is theTechnicalWorkingGroup that actually produced the Climate Change Reporting Framework document (ClimateDisclosureStandardsBoard,2010:1-2).Whyhaveaccountantsbeensoeagertobepartofthisinitiative?Partoftheanswerseemstobethatthere has been a perceived ‘gap in themarket’ in terms of a professional ‘home’ for this formofcarbonaccounting:

“...withclimatechangerelateddisclosurebeingsuchanewdiscipline,thathasn’treallyyetestablished its own body of professionals, there’s a rather fragmented approach withinorganisations. Does it belong to the procurement department, the premises department,CSR[CorporateSocialResponsibility]?Youknow,itdoesn’tbelonganywhere.”14

Asdiscussed in section3.1above,physical carbon footprinting fororganisationswasuntil recentlymainlydominatedbyrelativelysmall,specialisedconsultancies,lackingalmostanycommonsenseofprofessional identitywithwhich theymight counter an extension of claims of competence by theaccountancyprofessioninthisarea.15AsthenumberoffirmsreportingtoCDPhasgrown,from235in 2002 to 3050 in 2010, providing services in this area has undoubtedly become increasinglyfinancially attractive (carbon measurement, management and reduction was identified as thenumberoneopportunityareaforUKconsultantsinarecentsurvey(ENDS,2010)andin2011theUKDepartment for Environment Food and Rural Affairs (2011) consulted on the possibility ofmakinggreenhouse gas measurement and reporting mandatory for UK companies). Additionally,accountantshavebeguntoseeatleastthedisclosureaspectasanaturalextensionoftheirexistingcompetence:

“all four [major] accounting firms [Deloitte, PwC, KPMG, Ernst and Young] endorseCDSB’sphilosophy…andtheyhaveallbeenveryactiveintheirparticipationbecauseitdovetailsinwithsomuchworkthattheyarealreadydoinganyway.”16

14InterviewwithCDSBcoremember,July2009.15Veryrecently,anumberofprofessionalcertificationschemeshaveemergedinthekeyareasofcarbonfootprinting(alsoknownasgreenhousegasinventoryquantification)andverification,alongwithanumberofnewprofessionalbodies,oneofwhich(theGHGManagementInstitute)isrepresentedontheCDSBAdvisoryCommittee,butnottheTechnicalWorkingGroup.However,clearlythisprofessionisstillinitsinfancywithrespecttotheaccountancyprofession.Seeforexample:http://www.csa-america.org/personnel_certification/ghgquantifier_certification/;http://epghg.org/;http://ghginstitute.org/;http://www.carbonprofessional.org/andhttp://www.carbonanalyst.org/(accessed22July2011).16InterviewwithCDSBcoremember,July2009.

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Thereisalsosomeevidencethat,aswasobservedinthecaseofenvironmentalaudit(Power,1991;1997) accountants are capitalising on their privileged access tomanagement in order to positionthemselvesbetweenmanagementandother‘technical’specialists:

“Iseequiteabigdistinctionbetweencarbonaccounting–actuallymonitoringandreportingandassessingyourgreenhousegasemissionsanduncertaintylevelsandallthattypeofthing...[and]whatyoumakeofthat[data].Ithinkthemanagementhastolookatthatinformationinthesamewaythattheywouldfinancialinformationanddecidewhattomakeofitandreflecttheirthinkingintheirmanagementdiscussions.Andwearefocusingonthelatterratherthantheformer.”17

Interestingly,althoughconsciouslybasedonfinancialreportingprinciples(andthereforebuildingonacceptedaccountancycompetenceandexpertise),theReportingFrameworkonlyrequiresdisclosureof physical greenhouse gas emissions and strategic analysis of climate change risks, opportunitiesandgovernance(seeFigure1below).Itdoesnotprovideguidanceonfinancialreportingofemissionrights and liabilities, and in fact the CDSB has only recently become interested in addressing thisissue, perhaps through development of a separate voluntary reporting standard.18 It seems,therefore, that even while the accountancy profession is engaged in a strategic expansion of itsdomain, its internal divisions between financial and management accounting remain difficult toovercome.Figure1:Examplesofkeytypesofcarbonaccountingattheorganisationallevel(adaptedfromBartolomeoetal.(2000);Burrittetal.(2002,2011))

Although the accountancyprofession is now engaging strategicallywith carbon accounting,we donotbelievethatthisengagementhasyetreachedthemainstreamofrank-and-fileaccountants.Theindividuals involved intheCDSBTechnicalWorkingGroupareasmall,close-knitgroupoftechnical17InterviewwithCDSBcoremember,July2009.18CDSBTechnicalWorkingGroupdiscussions,November2011.

External(accountingand

reporting)

Internal(managementaccounting)

Carbonflowaccounting

Carboncostaccounting

Carbonfootprinting andreporting(organisations)

Financialcarbonaccountingandreporting

Strategiccarbonmanagementaccounting

Climaterisk,opportunityandgovernancedisclosure

Physical

Monetary

ScopeofCDSBClimateChange

ReportingFramework

Carbonfootprinting andlabelling(products)

17

experts drawnmainly from the four elite global firms, and from accountancy professional bodieswhich had already established a climate change leadership role (see section 3.2 above). Like thestakeholdersontheCDSBBoardandAdvisoryCommittee,theytoohavethesharedcharacteristicsofanepistemiccommunity,withtheaddeddimensionofallbelongingtoaclearlydefinedprofession.Our research is ongoing in this area, but preliminary evidence suggests that this accountancycommunitysharessomeprincipledbeliefs,suchasagenuineconcernaboutclimatechange,withthesocial/environmental carbon disclosure community; but their organisation and interests as aprofession, aswell as their financial interest in the outcome, sets them apart. Nevertheless, bothcommunities have incentives to work together, with the social/environmental carbon disclosurecommunitybeingapparently verywilling to invite theaccountants into theirdomain, in return forthebenefitsofmainstreamingcarbondisclosureintocorporatefinancialreporting.Insummary,theCDSB appears to be a classic boundary organisation, drawing its membership from two separateepistemic communities and enabling each to extend their influence on organisational carbonaccounting.4 Conclusions Inthispaperwehavedrawnattentiontothepoliticsofcarbonaccounting:whodefinesit,whoclaimstohavecompetenceinit,andhowsuchclaimsarejustifiedandreinforced.Wehaveshownthatmultiplecommunitiesareinvolvedincarbonaccounting,eachframingitintheirowndiscourse,withtheirownstandards,techniquesandpractices.Wethenfocusonorganisationalcarbonaccounting,whichcanbefurthersub-dividedintophysical(carbonfootprinting)andnon-physical(monetaryandstrategic)dimensions,aswellasaccordingtowhetheritisproducedforinternalorexternalaccountingandreportingpurposes,assummarisedinFigure1above.Accountantshavebeeninvolvedinsettingstandardsforphysicalcarbonfootprintingsinceatleast2001,butasonlyoneofseveraldifferentcommunitiesactiveinthisfield,andagainstabackdropofinitialreluctanceandlackofawarenessfromrank-and-filemembersoftheprofession.Financialreportingofemissionrightssurfacedasasignificantissueforlargecompaniesintherun-uptothe2005startoftheEUETS,andhighlightedanareaofcarbonaccountingwhereaccountantscouldindisputablyclaimcompetence.Thisoccurredatroughlythesametimeasabroaderstrategicpushbytheaccountancyprofessionintootherformsoforganisationalcarbonaccounting,particularlytheexternaldisclosureandmanagementinterpretationofphysicalandstrategiccarbon-relatedinformation.Competenceisalsobeingclaimedinvirtuallyallaspectsofinternalcarbonmanagementaccounting(CharteredInstituteofManagementAccountants,2010)althoughtheevidencetodatesuggeststhataccountantsarenotyetactivelyinvolved(Burrittetal.,2011).Thebroaderparticipationofaccountantsincarbonaccountinghasmanypositiveaspects,andwehopetohaveshownthattheinteractionbetweentheaccountancyprofessionandthesocial/environmentaldisclosurecommunityinformingtheCarbonDisclosureStandardsBoardandproducingthefirstClimateChangeReportingFrameworkhasbeenproductive,andbeneficialforbothsides.However,webelievethatthisinitiativeshouldnotgoun-scrutinised.TheinvolvementofaccountantsandeffortstoaligntheClimateChangeReportingFrameworkwithfinancialreportingstandardshasledtotheuseoftechnicalterminologyandcross-referencingtootherfinancialaccountingconceptsanddocumentswhichmayserveasabarriertonon-accountants,bothintermsofthosewhowouldprovidecarbonaccountingservicesandintermsofthe‘lay’userofsuchinformation.Itisworthrememberingthatincorporatingcarbonaccountinginformationincompanyfinancialreportsisnottheonlywaysuchinformationmightbecollatedorpresented:therearemanyotheroptions,includingradicalalternativessuchasthe‘open-access’modelpioneeredbytheenvironmentalpressuregroupSandbag,whichpresentssite-specificemissions,allocationsandoffsetsdataderivedfromtheEUETSregistryinanonlinemap-basedformat.1919Seehttp://www.sandbag.org.uk/(accessed10December2010).

18

Theimplicationsofourfindingsforthetheorieswehaveusedhere–epistemiccommunitiesandboundary-work–aretentative;carbonaccountingisanewfieldofenquiryandmuchchangehastakenplaceoverthepastfewyears,whichwilltaketimetoevolvetowardsclearlydominantstandardsandpractices.Professionaltraining,expertise,sharedlanguageandpracticeshavebeencriticaltotheconceptionandsubsequentdevelopmentofdifferentframesofcarbonaccounting.Ideasaboutboundary-workthereforecomplementthebroadscopeofframingtheory,byfocussinginmoredetailontheinteractionsbetweenframesandtheimportanceofinterdisciplinaryandinter-organisationalactivityindrivingpolicychange.Thetheoryofepistemiccommunities,withitsfocusonsmallnetworksofelitetechnicalexperts(albeitoriginallydevelopedfromresearchwithscientists)hassignificantscopetobeextendedtoothertransnationalgroupsofnon-scientists,aswehaveshowninourcasestudyontheCDSB,allowingustoexaminemorepreciselywhoisinvolvedinboundary-work.However,theoriesofepistemiccommunitiesandboundary-workbothlargelyignorefinancialinterests:expertsarepresumedtohaveothermotivesforengagingonanissueandworkingtobringaboutchange.Giventhatthepotentialfinancialgaintolargeaccountancyfirmsinsettingcarbonaccountingstandards–definingthespacetheywishtooccupy–isconsiderable,thisisanareathatcallsforgreaterpracticalscrutinyandrelatedtheorydevelopment.Thepapermakesacontributiontocarbonaccountingtheory,policyandpracticebyprovidinganexplanationofhowandwhythereislikelytobecontroversyindefiningandoperationalisingcarbonaccountingstandards.Carbonaccountingencompassesawiderangeofactivities,eachwithoneormoredifferentprofessional‘homes’andoftenoverlappingclaimstoexpertise.Byclearlydefiningthesedistinctframesofcarbonaccountingandwhoisinvolvedinthem,wehopetohaveprovidedaconceptualandpracticalbasisforthesedifferentcommunitiestoworkmorecloselytogether.BoundaryorganisationssuchastheCDSBcanplayavitalroleinbringingtogetherexpertsfromdifferentcommunitiestofacilitativecooperativeaction,butthisfirstrequiresamutualrecognitionofthebasisfor,andvalueof,respectivecompetences.Forexample,theperspectiveofa‘physical’carbonaccountingexpertcouldpotentiallyhighlightandcontributetothedevelopmentofpracticalmethodsforaccountingandreportingonanorganisation’scarbonstocksorpotentialemissions(moststandards,includingtheGHGProtocolandCDSB’sReportingFrameworkcurrentlyonlycovercarbonflowsorcurrentemissions).Arecentreporthashighlightedtheimportancethatsuchinformationcouldhaveforvaluationsintheoilandgassector(Leaton,2011)andsimilarprinciplescouldpotentiallybeappliedtocompanieswithsubstantialholdingsofforest,peatlandsor,infuture,biocharorgeologicallysequesteredcarbondioxide.Theperspectiveofproductcarbonfootprintpractitionerscouldbedrawnontohelpprovidemoreinvestor-relevantinformationonproductstewardshipandrelatedliabilities.Carbonmarketpractitionerscouldworkcollaborativelywithaccountantstodevelopguidanceonhowtovalueandreportoncarbonoffsetscreatedunderdifferentstandardswithvaryingdegreesoffungibility.Conversely,organisationalaccountancypracticesandskillscouldbeinvaluableto‘political’carbonaccountingactorscurrentlycontemplatingnewrulesformonitoring,reportingandverificationofnationalemissionspost-2012(seediscussioninPragetal.,2011).WearenotsuggestingthattheseshouldallbetasksfortheCDSB(whichisinfactawareofandconsideringsomeoftheseissues);butratherthatanyorganisationwithaninterestinprogressingcarbonaccountingmayfinditusefultoconsidersuchperspectivesandrecognisethecontributionthatexpertsfromdifferentcommunitiescanbringtothedebate.Acknowledgements TheauthorswouldliketothanktheCDSB,anonymousreviewersandeditorsfortheircommentsonthepaper,andallinterviewees.DrLovellexpressesgratitudetotheNuffieldFoundation–someoftheresearchunderpinningthispaperisfundedbyaNuffieldNewCareerDevelopmentFellowshipcalled‘FungibleCarbon’,heldjointlywithProfessorDonaldMacKenzieattheUniversityofEdinburgh.

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