Accounting collides with botany

A unique collaboration between scientists and accountants will help business go green.

Little did Associate Professor Brad Potter realise when he helped to establish the Melbourne Business Practicum (MBP) subject in 2010 that it would set in motion his most exciting and perhaps unusual research project yet. The research will have significant sustainability implications for individuals, organisations and, in particular, councils and governments committed to being carbon neutral by 2020.

Through the MBP, students are placed with industry partners to apply their knowledge to a real-world consulting task. One of the first pilot projects saw Masters students partner with the Royal Botanic Gardens Victoria to begin a carbon audit for the gardens’ entire operations. A complex urban ecosystem, the gardens stretch the limits of existing approaches to carbon accounting, which have primarily focused on carbon emissions from energy use and transport.

Much of the research into tree carbon – the major driver of carbon accumulation in the gardens – is currently based on American data, with Australian research mainly focused on plantations. The MBP was addressing this significant knowledge gap but it became clear that approaching it from narrow, single-discipline based perspectives was not going to provide a complete enough exploration of the issues. A unique collaboration between scientists and accountants was born. In partnership with Chartered Accountants Australia and New Zealand (CA ANZ), the researchers were awarded an Australian Research Council (ARC) Linkage Project grant to develop a process-based model of the carbon cycle of the Royal Botanic Gardens Victoria and explore the best way to report this information to decision makers.

Black and white line drawing

The numbers behind corporate decision making

Accounting is all about information. Business stakeholders – managers, lenders, shareholders, consumers and regulators – rely on accounting information to make the decisions that drive their business, from managing operations to informing strategy.

As the business environment evolves, stakeholders are increasingly looking beyond financial information in making decisions and seeking to understand the broader social and environmental dimensions of organisational activities. Carbon capture is an important element of greenhouse gas impact, and capturing carbon is one way to combat increasing carbon in the atmosphere. Because of the diversity of plant life and environments, the Royal Botanic Gardens Victoria provides a rich setting to help understand and model carbon uptake.

The investigators seek to understand carbon accumulation of different components of the gardens, including the trees, turf and ponds. Insights gleaned from the model can be applied to other settings and all kinds of organisations to provide a more complete understanding of their greenhouse gas-related activities and inform strategic decisions.

But the accountants couldn’t do it alone.

The science behind the numbers

Stakeholders like hard numbers and reliable information, but turning trees and carbon sinks into dollar values is difficult. That’s where the botanists come in. Professor Ian Woodrow from the School of Biosciences at the University of Melbourne brings a wealth of expertise about the differences in growth rates of various tree species in different environments and, as Potter refers to them, “some very expensive toys”.

According to Professor Woodrow this study will be one of the world’s largest measurements of urban tree growth, and a first for Australia.

“You could pull numbers out of the air on Melbourne’s trees but it would be drawing on data from elsewhere or data that’s roughly estimated; it’s not well established by actual measurements.”

Like butter and vegemite or bacon and eggs, botany and accounting are a winning combination.

“Scientists have it in their DNA to be able to measure some of this stuff, but the reporting isn’t something they’re as comfortable with,” says Potter. “The reporting is more comfortable for us but we don’t do science.”

And it’s not only their skills that complement each other; they actually have a lot in common.

Plants are intrinsically like an economy. We both use ‘relative growth rate’ as our unit of measurement and in both disciplines it is denominated in percentage terms. Professor Ian Woodrow

“The fastest-growing plants, of course, are better than the fastest-growing economies,” he says with a smile. “We can have plants with a 50 per cent growth rate, but you think China is great with 7 to 8 per cent growth.”

So how does it work?


For decades the gardens’ weather station has recorded weather and climate data, and the almost 6000 trees and plants have been mapped using high-resolution GPS. Most recently, dendrometers that measure tree trunk expansion in real time have been installed on selected trees. The growth is an indicator of carbon being taken out of the air, giving a comprehensive overview of how different species behave.

Development of the Royal Botanic Gardens Victoria carbon model requires the measurement of all of the major carbon pools and fluxes. The researchers have completed growth and mass estimates for more than 1000 trees and have used this data, together with mass estimates made 25 years ago, to estimate total carbon uptake and content for the gardens’ entire tree population. They have also completed sampling of all of the lawns for soil carbon estimates, enabling them to anticipate variance in soil carbon due to slope, aspect, and proximity to trees. Similar samples have been taken for garden bed carbon, above and below ground. The final major carbon pool under investigation is the system of lakes and ponds. Researchers have just installed a series of sediment traps to estimate carbon influx, and are about to core the lake beds to estimate the amount of carbon in the presumably deep sediments.

“The gardens had the foresight to document the plant sizes, location and health 25 years ago, providing us with a solid baseline,” says Professor Woodrow. “This historic data coupled with the scope of the sampling regimes will enable fluxes to be estimated with considerable accuracy.”

The Royal Botanic Gardens houses just about every urban tree planted elsewhere in Australia, so the data is transferrable.

“You can predict, with great certainty, that the pine tree you plant in, for example, suburban Brunswick will grow at a certain rate and lock a certain amount of carbon,” says Woodrow.

Turning information into action

Professor Naomi Soderstrom, from the Faculty of Business and Economics at the University of Melbourne, specialises in environmental archival managerial accounting and corporate social responsibility. Together with Potter, she has played a significant role in designing the reporting methods that will enable the findings of this project to support environmental sustainability at an organisational level.

A unique feature of this project is the opportunity to understand the nature and extent to which such enhanced information affects decisions made by users. Professor Naomi Soderstrom

Decades of accounting research has provided evidence that if information is to be useful in decision making, then it must be ‘material’ (or important) to that decision. When information is expressed in financial terms such as revenue or cost, accounting standards tell us that the materiality of a piece of information is determined by its relative importance to the base figure (for example, an expense that is 10 per cent or more of total expenses would be deemed ‘material’). However, when information such as carbon emissions is reported in non-financial (qualitative or volumetric) terms, determining what is and is not material is more problematic.

“Adding to this complexity is the different ways that different stakeholders determine materiality,” adds Potter. “For example, donors to an organisation prioritise social and environmental performance ahead of financial performance; however, institutional investors tend to prioritise financial factors and therein we find discrepancies in perceived materiality.”

Factors such as company size or industry may also impact perceived materiality and should be considered when reporting non-financial information. For example, some stakeholders may judge the materiality of carbon emissions across organisations based on total emissions, while others may take the organisation’s size into account.

Once information is deemed to be material, accounting standards dictate that it must also be reliable. There are ongoing issues associated with the reliability of corporate carbon emissions disclosures, with some scepticism around organisational intentions in sustainability reporting. Research in the field tells us that stakeholders generally favour information expressed in quantitative terms, particularly when that information is closely aligned to the strategy of the organisation.

Advancing our understanding of how non-financial information such as carbon emissions can be used in an organisational context will be vital in achieving real impact and environmental change.

Group talking

Urban forest strategies will play a significant role in achieving carbon neutrality and Professor David Cantrill, Chief Botanist at the Royal Botanic Gardens Victoria, who has been instrumental in the project since its conception, wants to see all parklands adopt the model.

“They [councils, governments and organisations] need to understand their ‘carbon cash flow’; understand how their carbon balance sheet is working. Generally they’ve had no idea because they’ve never needed to,” says Professor Cantrill.

Chartered Accountants Australia and New Zealand (CA ANZ) agree that these tools will be invaluable in the corporate world.

“Our members aren’t just in practice; they work in or provide advice to all aspects of the business sector, including planning and the built environment,” says Karen McWilliams, Leader of Policy and Thought Leadership, CA ANZ.

“Progressive organisations genuinely want to be better able to measure their carbon reduction activities,” she continues. “If tools and information become available that help people make better decisions about which trees they can plant that will have greater net carbon benefit, people will want to know about it. It will make a difference.”

We know little of the factors that shape the usefulness of non-financial information such as carbon emissions, and less still about the usefulness of carbon sequestration for stakeholder decision making. As our knowledge about carbon emissions, plant species and their environments grow, so too must our understanding of how carbon reporting can be designed to best deliver information that will help businesses and regulators achieve environmental sustainability.

With this unique collaboration between accountants and botanists, and the development of a process-based model of the carbon footprint of a complex urban environment, we have the opportunity to determine the best way to measure carbon capture and report the results in more meaningful ways to decision makers. We have the opportunity to contribute significantly to a sustainable future.