Can Quickbooks Address Climate Change? Part One

(And Why This Matters to a Producer Like Me)

I make stories, that’s why I’m focused on accounting.

I spend a good chunk of my time as a producer communicating complex, challenging ideas that often become politically divisive and climate change is one example. I’m also a partner in a small company with CFO obligations. It is this tension between understanding the polarizing power of story, and studying and acting upon balance sheets and P&L statements that has led me towards some ideas about how we can both address climate change and have a healthier conversation about it. It comes down to systems of accounting.

Here’s my thesis: often we are failing to address climate change because we are not accounting for it, and this is specifically the case at the level of individuals and small businesses.

In order to operate a business, or our own lives, more sustainably, we need to learn new behaviors and habits, and the current systems we use for learning and behavior change around climate aren’t very good: they do not present us with an accurate picture of the problem, they lack a connection between the problem and actionable goals, and they do not present us with clear and immediate feedback once goals and outcomes are achieved. So what ends up happening? Rather than focusing on progress and performance, (which feels great, is productive, and individuals can rally around), we get caught up in stories that seem to make us feel either righteous (about things that don’t make much difference), or hopeless (because we feel trapped in a poor political or economic system).

Climate change is emotional, but at the end of the day it’s an accounting problem.

My company and colleagues care very much about creating a more sustainable future. But if you were to ask us the easiest way to reduce our carbon footprint by 30% over the next 6 months, we’d struggle to answer. Is our carbon mostly a product of transportation: flights, trucking and cars? Do we need to be more cognizant of the electricity and HVAC costs related to our office? Is the biggest carbon footprint embedded in the manufacturing of materials that we  use on set and then discard after shoots? What about the food we provide to crews? Are there major impacts we are not even aware of? Can we apply the pareto principle – where one activity is responsible for a disproportionate impact, or do we need to simultaneously address many different activities in order to have an impact? For a small company, with limited resources, this suddenly feels like a very difficult problem to address. And this is compounded by the nature of the production work we do, where most projects are custom and likely have very different carbon footprints.

Now compare this problem to the more standard business problem of reducing our office expenses by 30% over the next 6 months. We’d run a report on those expenses in Quickbooks, where we’d easily be able to see where our resources are going, and quickly eliminate or reduce anything that wasn’t really providing value. We’d likely discover a couple of things that made no sense, and gleefully cancel those subscriptions or activities. There’d be disagreements and conversations about some expenses, but ideally these would be productive and lead to either compromise or new solutions.

As far as I can see, this is not what is happening in the conversation around climate – neither at the level of individual firms nor among larger groups of people. But, if we saw the carbon impacts of our activities directly in our accounting systems, then imagine how different the conversations would be.

Beyond a carbon footprint, I want a carbon transaction statement.

Imagine running a quarterly or yearly P&L statement that also generated the carbon footprint of each transaction by expense category, vendor, and employee. Imagine if those footprints could be benchmarked against other companies-- either to see average performance or to establish top performers you might want to emulate. Imagine if it were easy to run a report showing the overall trendline of your carbon footprint? Is it going up or down? What is driving that change? And what activity or new system could most reduce your footprint? What if you could see cost/carbon ratios for different activities? Over time, you will improve. Dramatically. This is essentially the story of technological advancement. Small improvements over time make a big difference, and can ultimately change how we live for the better…

Now, there are plenty of software systems out there and consultants who will measure your carbon footprint – either as an individual or as a business. And this is great. But what I REALLY want to see is these measurements becoming automated, embedded within the existing accounting systems that we already use. As a small business with limited resources operating in a custom, complex industry, I know that it is extremely hard to accomplish initiatives which lie outside of the normal course of business. For this reason, I don’t think we’ll see a significant change in sustainability without embedding carbon impact into existing systems. For us, this would mean carbon measurements directly integrated into the dashboards of Quickbooks (and Mint), Expensify, Bill.com, and JP Morgan Chase. All of these companies have carbon policies and have committed to reducing their footprint, but all of them could have a far greater impact by helping individuals and small businesses understand the complex story of climate change in a more concrete and therefore actionable way, showing us the impact of our buying decisions at the transaction level.  

In the next part of this blog, I’ll explore why I think this could happen and some products that are beginning to emerge to do it.

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