Putting Climate Change on the Books
At TransLink, finance is responsible for sustainability. Sustainability efforts such as climate change adaptation are embedded throughout the organization.
How TransLink Accountants Prepare for Climate Change
When Donna Chao, CPA, CA, trained as an accountant, she didn’t realize that her future role as Corporate Controller at TransLink would involve learning about and speaking on behalf of the finance team on climate change adaptation.
TransLink began considering climate change impacts in 2010, at the same time that it published its first Sustainability Report. “Now, sustainability, including assessing climate change risks, is part and parcel of everything we do each and every day,” says Cathy McLay, CPA, CMA, Chief Financial Officer and Executive VP of Finance and Corporate Services.
TransLink, Metro Vancouver’s transportation authority, has over $5.4 billion in assets, covers an area of approximately 3000 square kilometers and provides about 1.2 million trips daily. Its service covers many forms of transportation, including buses, commuter rail and ferry.
But impacts from climate change are a threat to TransLink’s operations and service delivery. Rising sea levels could flood infrastructure, reduce bridge clearance, and impair operation of the SeaBus (ferry) terminal.
Sea levels aren’t the only threat. As events in Calgary have shown, extreme weather conditions, such as heavy rainfall, are related to climate change and can also result in flooding. Such precipitation could temporarily flood TransLink’s bus loops, tunnels, transit stations and trolley electricity conversion (or “rectifier”) stations.
“You can’t prevent flooding, so you’ve got to figure out: how are you going to adapt?” explains Chao.
Climate Change Adaptation at TransLink
At TransLink, the finance department has responsibility for sustainability. And as a result, sustainability elements such as climate change are embedded throughout the organization. “It’s linked to risk management, strategic sourcing and capital planning, which all go through finance,” explains McLay.
McLay is responsible for seeing that climate change risks are part of TransLink’s decision-making process. She is Chair of the Capital Review Committee and ensures that climate change risks are included in the capital review process. Considering such risks is particularly important given that TransLink builds its infrastructure to 100 years, says Chao.
In its climate adaptation efforts, TransLink has focused particularly on infrastructure and flooding. In 2012, TransLink conducted a climate change vulnerability assessment of its assets. The project was completed to support the organization’s Asset Management Plan, which is currently in development.
“Where we build our infrastructure, how we move people through the city, determines how well Metro Vancouver can recover from extreme weather events,” says McLay. “We need to make sure we are aware of the climate change risks and have mitigation plans in place, so our customers can continue to use the system with minimal disruption.”
An Accountant’s Role in Adaptation
TransLink accountants are involved in adaptation through risk management, capital planning and resource allocation, reporting and strategy development in the following ways:
Accountants help to identify risks through the risk register and ensure an appropriate strategy to address them is in place.
Capital Planning/Resource Allocation
Accountants provide the financial analysis necessary to ensure that infrastructure projects are assessed systematically across a broad base of organizational priorities. “The numbers help explain the story,” says McLay. “We want to build a sustainable city but we also have to balance this with our revenue projections. What are we capable of handling? How much debt can we take on? What are our reserves? Because there is no sense building something that cannot be maintained over time.”
Accountants are trained to take a consistent and disciplined approach on reporting. They have assisted with the development of the integrated annual report and sustainability key performance indicators.
“[Accountants] are skilled at focusing on results and knowing how to cull information,” says Chao. This skill is important for strategic decision-making, so that senior executives are not inundated with ambiguous information.
Educating and Enabling Accountants
Accountants are vital to helping organizations account and prepare for climate change. Yet many are new to the topic of climate change. Staff at TransLink offer advice:
Education on climate change adaptation would help accountants in their work.
Accountants need to know how organizations can adapt effectively, what metrics are useful, and what benefits adaptation provides.
Enabling or “soft” skills would also be helpful.
Accountants are strong analysts — but analysis only takes them so far. “When dealing with multidisciplinary groups, accountants have to build consensus,” Chao says. Generally speaking, accountants would benefit from greater training in skills such as change management, communication and teamwork, to enable better collaboration with non-accountants. TransLink is a pioneer in recognizing how finance can push sustainability forward. Companies in any industry can learn from these efforts.
This resource is part of the Chartered Professional Accountants of Canada's climate change adaptation initiative, which is partly funded by Natural Resources Canada and managed by NBS. Download the full case study (PDF) here.
This accompanying video explains how the TransLink finance team helped the organization prepare for and adapt to climate change.
Check out other videos from CPA Canada’s climate change adaptation initiative.