RENEWABLE ENERGY: RISK, REPORTING, AND THE ROLE OF ACCOUNTANTS

Аннотация

Unpredictable fossil fuel prices and rising climate risk make renewable energy an environmental imperative but increasingly a smart business strategy. This paper addresses the economic case for renewable energy from the risk management, reporting, and evolving role of the accountancy profession perspective. We conducted a systematic literature review of peer-reviewed articles, industry reports, and regulatory policies. It is illustrated that volatility of fossil fuel prices (most significantly oil price volatility) greatly minimizes profit margins as well as contributes to operational costs. In contrast, renewable technology (wind, solar, etc.) has witnessed dramatic drops in costs (solar PV LCOE declined 88% since 2009) and is predicted to double the generation output within five years. Renewables flatten input expenses (no fuel price risk) and cap "stranded asset" losses, valued by analysts at more than US$1 trillion of upstream oil and gas under plausible climate policies. Moreover, the empirical literature is extensive and repeatedly discovers a positive or zero relationship between strong ESG performance (e.g., use of clean energy) and returns. To all of these trends, regulatory frameworks (IFRS S1/S2) are responding by stepping up sustainability reporting, and increasingly, firms are seeking third-party assurance of ESG disclosures. Accountants, with their expertise in financial control and assurance, are well positioned to drive forward the measurement of climate-related risks (e.g., emissions accounting) and the integration of sustainability into financial decision-making. Lastly, the transition to renewable energy can strengthen firm finances by mitigating cost volatility and long-term climate risk, and accountants will play a key role in quantifying and reporting these financial benefits. Keywords: Renewable energy, financial risk, sustainability reporting, ESG, stranded assets, accountants,climate policy.