Tasked with growing the Tasmanian agriculture sector to $10 billion by 2050, Tasmanian Irrigation has added carbon accounting to its BAU.
June 20, 2023
Tasmanian Irrigation is a state-owned company, tasked with growing the Tasmanian economy through the agricultural sector to $10 billion by 2050.
Sumday spoke with James Hipwood, the company’s CFO and Company Secretary, and Susanne Frolin a commercial analyst in the Commercial Team about why they see carbon accounting as an extension of what they're already doing, and that there’s a bigger picture they want to be part of.
Sumday: How did Carbon Accounting come about for the company?
JH: We've been very focused on our financial accounting and getting the transparency and understanding of the numbers across all stakeholder groups has been a key focus for the last four years, we now have very strong visibility supporting our forecasting and budgeting.
So for me, the next natural step was to add in the non-financial information to help us make better decisions. And one thing I've been thinking about for some time is that the business really needs to be carbon accounting. Carbon accounting marries up well with Susanne’s role, her background and her interest areas as well.
What we're trying to achieve with carbon accounting is really to reach the same place we’re at with financial accounting - accurate, transparent and robust data to help us make better decisions.
SF: My degree is in banking, finance and economics, but I’ve been interested in sustainability for a long time. Tas Irrigation is a customer of someone doing carbon accounting through Sumday. An email came through about it and James said “Do you want to look at this?”.
JH: I've been going into sessions with other state-owned companies and business enterprises and there's a lot of desire to do carbon accounting, but not a lot of answers around how we do it. I was waiting for them to come up with a direction and that didn’t happen, so that's why we've started doing it ourselves.
The way I see it is it's no different to a budget really. You have inputs, and are presented with an output, and to influence that maybe we need to change the inputs.
I'm hoping carbon accounting becomes an extension of the work we are already doing.
We want to make it just as simple as a budgeting process or a financial year end process.
We were having a team chat about upcoming legislation changes the other day, saying “it’s going to create more work, and we’ve got all these other initiatives we’ve got to do” and Susanne made a really good point, reminding us there's a bigger picture out there and we want be part of the bigger picture. And that's how I feel about it.
We’ve put carbon accounting into our performance planning and our team's plan.
Sumday: How do you see carbon accounting will deliver outcomes and continuous improvement through financial strategy?
JH: I think with data and information comes better decision making, so we'll be able to get visibility to make some better decisions.
The great thing in my view around carbon accounting is that we’ll be able to identify actual wastage and unnecessary costs in the business too. I think there'll be a return on investment there. But more importantly, agriculture makes up a large portion of emissions, so having that social license and being able to work with the broader supply chain to improve emissions is the reason we’re focusing on this.
Sumday: Is carbon accounting one of the biggest shifts that's happened in the industry?
JH: I certainly think so. There's been a lot of tax and compliance changes, and we’ve seen the accounting standards completely enhanced over time to encourage transparency on the numbers.
If you look at Enron, 20 years ago [The Enron scandal in 2001 was the largest bankruptcy in US history, and cited as the biggest audit failure], there wasn't enough transparency, there was fraud and that’s why that company fell over. I think carbon accounting is a natural evolution of accounting. As [financial] accounting becomes more efficient and easier to comply with tax and compliance you can move on to other things that really matter too.
[Carbon accounting] is the right thing to do as a business, but there’s going to be regulation changes forced upon companies, so by doing this now we’ll be able to get ahead of the curve.
I'm glad Susanne’s been able to start this work.
Sumday: How did you find the course?
SF: Well, I thought it was really exciting. I liked watching the videos first, so I could follow along, take notes and really understand what was going on, and then each clip was accompanied by the written information.
There are emissions in everything we do, every single dollar we spend. And so at first I didn't understand it, but just going through the course all of a sudden it made sense. It’s all wrapped up very nicely and structured so that it gives the whole picture.
We’re working with accountants at Ellis Richmond to do our assessment this year, and the plan is that I'll do it internally next year. I’ve been learning from all the workpaper templates and guides on where to get the information from. Then I can go back to the course and that gives me a deeper knowledge of the process as I go.
Sumday: What's the biggest shift been to get your head into the carbon accounting space?
SF: I'm not an accountant but I have worked with financial books in accounts payable and as an accounting assistant and so I've done a bit of work in the space.
It feels like carbon accounting is following the books nicely, but there's also differences like waste and waste water, for example. However it’s structured like our books, so we'll get all the emissions from our transactions and assets and then it'll all go in, in a very similar way to financial accounting.
JH: I see Susanne becoming the expert on this and she can hopefully teach and inform the rest of us. We've got five qualified accountants in the team, so we're not short on accountants. And some of them would like to learn and understand it too.
One thing through this process that's really impressive is that a lot of people on the team want to get involved. I think whilst Susanne might be the holder of information, hopefully we can pull together some working groups from different business units to put forward different ideas and develop a sustainability committee off the back of this.
SF: We sent out a commuting survey to our employees and people were really fast at responding. There were lots of nice comments that it is a great project and people found it interesting. Our team is saying they want to be part of it and help out in any way they can.
JH: Carbon accounting is just one piece of what we want to develop at Tas Irrigation in terms of ESG. We need to have a broader ESG plan for the business, and I'm really hoping that this work with Sumday will springboard us to have a proper strategy and plan on those on triple bottom line objectives. That’s what we’re aiming to achieve.
SF: I’m really excited to see where we are sitting, because you can't do anything before you know what impact you have on the world. It’s an exciting future.
JH: If Tas Irrigation can encourage more people to have a look at carbon accounting that’s great. My observations working with Susanne on it is that it's not scary. There's a lot to learn and it is a little bit different to the work the team does, but, with the systems from the experts, like Sumday, we will be right.