At Sustainable Finance Live 2025, moderator Andrew Watson, co-founder of Rethinking Capital opened the panel on sustainable accounting by highlighting the transition towards an economy fuelled by intangibles, and that 1997 was the last year in which technical accountants featured in conversations taking place at COP.
The ‘Accounting for Sustainable Data Centres’ session explored how new accounting rules will be ’Accounting for Reality’, and be able to accurately reflect sustainable investments. Panellists Diba Salam, founder and principal of StudioDS, Hanna Fiegenbaum, sustainable integration lead of WoodenValley, and Rachael Steller, resilient infrastructure lead of Climate Change Committee spoke during the session.
Salam kicked off the conversation on what values she is seeing emerge as an architect. She noted that there has been a large amount of shifting regulation, and as a response, there have been new barriers responding to regulatory requirements on planning.
“People and nature have value. How do we mobilise that value? What initiatives do we put in place?” Salam asked. She continued with optimism, saying “It's very much about how we raise that value and make it a possibility going forward. Seeing that value throughout whole life building analysis or city analysis, and not just about this requirement for planning.”
Fiegenbaum, who works on nature-based, green infrastructure, and climate resilient projects, spoke on how these projects are approached from a landscape perspective – asking if the land can be used for climate resilience and if they have control over the assets.
“The rules of accounting basically determine how you can define your budgets and financial planning. There are many different pillars to the financing of infrastructure, such as if you can capitalise or not.” She continued that accounting has control not only over the asset but over economic resilience.
Steller outlined the key barriers to investing in resilience and infrastructure that she sees in her work:
- The lack of agreed measurable targets in climate mitigation and adaptation.
- Lack of clarity around roles and responsibilities where multiple actors are needed.
- Thinking of adaptation and resilience as costs rather than a benefit.
- Looking too much in the short-term and not the long-term.
Watson explained the premise of a pilot project where a company flipped the incentives in sustainable accounting by using existing standards. The company (anonymised for the sake of this ongoing case study) pledged to aggregate 1.2 million tonnes of scope one and two carbon emissions and reach carbon neutrality by 2025, looking at 1.2 million tonnes over a five-year period. He described this as “recognising intangible asset obligations that reflect existing reality, which accounting doesn't recognise”, using existing standards to inform forward-looking decision making and to provide supplemental TCFD non-cap information.
“We received an interpretation decision from the IASB on a standard called IS37, which stated that these sort of commitments could be recognised as what are known as constructive obligations, and therefore we constructed an obligation; the company, emitting 1.2 million tonnes, uses a shadow carbon price as an estimate of business friction cost, 1.2 million tonnes times 105 its own shadow carbon price gives you an estimate of the obligation of 125 million over a five-year period. That's entry one. The beauty of that entry is it gives you accountability. You cannot walk back without there being an accounting consequence. It also allows you to capitalise your investment.”
Watson outlined primary activities to meet IS37 obligations:
- Switch to renewables across production facilities.
- Retrofit a production facility to reduce heat in the production process.
- Invest into nature.
Stellar stated: “The weakest link is our legacy data centres. Data centres being built today involve a lot more work on making them more resilient. The technology is advancing incredibly and there's much more awareness of the fact that we are currently in a changing climate, whereas more of your legacy are houses with critical national infrastructure data. That's a huge risk that's not being considered. But there's very little kind of incentive to retrofit those. This helps bring that in, recognise the value of it, and bring that onto the agenda. Again, going to that roles and responsibilities point. I think when you're being seen as adding value, as opposed to being a cost, that's what everyone wants to get involved. Everyone wants to be involved in a part that adds value, not seen as a cost.”
Salam said that the regulatory landscape needs to be aligned with the financial landscape. She furthered that bringing citizens and government into conversation together can solve a lot of the issues facing resilient infrastructure, adding that nature and people cannot be separated, and we need to thrive together.
In his closing statement, Watson reiterated that accountants need to be included in COP discussions and climate financing discussions, and that at Sustainable Finance Live “we are building a community of investment of companies and projects. What we're trying to do over the next few months is to demonstrate that this will change decisions. This will open capital channels. This will change how people receive their investments into transition, if you have the right conditions.”