Sustainability | Environment | Ecotrope

On Tax Day, Advice From A Green CPA

Ecotrope | April 14, 2013 10:41 a.m. | Updated: April 15, 2013 8:57 a.m.

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For certified public accountant Brian Setzler there isn’t just one bottom line; there are three: One for profits, one for people and one for the planet.

Setzler has an MBA in sustainable business and cofounded the Portland accounting firm TriLibrium, a registered “benefit corporation” that aims for social and environmental goals as well as financial ones.

He sold his car and bikes to work every day. He worries about climate change and thinks his company could do a better job making sure the computer monitors in the office are turned off every night – not just in sleep mode, but using zero electricity. He says the new generation of employees won’t stand by a company that wastes paper and ignores its own water consumption. So he teaches his clients to account for financial and environmental sustainability.

I was curious about Setzler’s approach to tax day; what makes a green CPA different from any other accountant on April 15? Does he find extra tax breaks for people who live green? Does he push people to donate their refunds to environmental nonprofits or invest them in renewable energy?

A Green Tax Return?

Not exactly. Setzler says he does get a lot of calls from people who want tax credits for their solar systems or energy efficiency upgrades, and he can help people get them. But he says he wouldn’t use tax breaks to lure people into greener lifestyles.

“My advice on that is you should never let the tax situation drive your activity,” he said. “If it makes sense to weatherize your home, taxes are one of the factors in there, but you never want to let tax savings drive decision-making.”

As far as investment decisions, Setzler says his wealth management advisors will ask people about their financial goals and offer insights, but they don’t push eco-friendly investments.

“We get a lot of people who want to do socially responsible investing, and we do that and we’re glad to do it,” he said. “But if somebody comes in and says, ‘I just want to make as much money for retirement as possible,’ we say, ‘Great. We’re going to help you do that.’”

Investments always have tradeoffs, Setzler said, and his company will explain those tradeoffs – even if it makes oil companies look like a promising investment.

“We have clients who come in and say, ‘I don’t want to own any stocks in the hydrocarbon industry or any company that makes things for the hydrocarbon industry,’” he said. “If you’re excluding certain stocks or industries in your portfolio and that industry is rocking – like petrochemical has been in the last several years with gas prices being so high – your portfolio isn’t going to do as well. But if they tank because they run out of oil or all of a sudden carbon is priced, then you wouldn’t be exposed to that risk.”

Setzler says he would advise against investing all your retirement funds in one wind farm or one green building “because you’re not diversified. You don’t want to put all your eggs in one basket.”

And his advice to people on tax day isn’t green at all: If you haven’t yet, he says, you can still make a tax deductible retirement contribution on April 15.

“What I see as an advisor is most people are not adequately saving for retirement,” he said.

What Is Green Accounting?

So, a lot of Setzler’s financial advice sounds like advice you’d hear from non-green CPAs. But his company boasts that it minimizes paper consumption, offsets its carbon footprint, recycles and sources locally. It donates 1 percent of its revenue to peace groups, gives employees time off to volunteer, and does pro bono work for community organizations.

And it does offer some uniquely green services such as helping companies do their own sustainability reporting. Setzler says more and more companies are having to account for things like electricity use and gasoline consumption as corporate giants start reporting their environmental impacts.

“Walmart has a questionnaire that all 65,000 of its suppliers have to fill out on what they’re doing for the environment,” he said. “Those suppliers are then pushing that out to their suppliers, so you’ve got hundreds and hundreds of thousands of companies that are starting to have to report on this information.”

Traditional accounting systems are set up to collect financial information, said Setzler. Social and environmental sustainability have to be measured differently, and that calls for a new accounting system.

“In our firm, for example, we want to know how people get to work,” he said. “So on our employee time sheets there’s a place where every day they report how they get to work. Did they drive? Take the bus? Did they ride a bike? That way at the end of the year when we go to do (corporate social responsibility) reporting or greenhouse gas inventories, we’ve already got the data. But if you haven’t thought about it on the front end it makes it difficult.”

Setzler says this new system of accounting can be good for all three bottom lines – including the one that tallies profits.

“What I try to help our customers understand is how these issues affect their bottom line, the future value of their company, their ability to attract and retain employees, reduce risk, and separate and differentiate themselves from competitors,” he said. “At TriLibrium, we clearly have differentiated ourselves by being green. We get a lot of business because of that. And that would be true if you’re the green Jiffy Lube of oil changes or the green cab company, you’re going to get business in this town.”

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