With so many questions and so much uncertainty surrounding ESG, we thought we’d spend some time on this week’s episode of “Future-Proof” trying to track down some answers.
ESG — that’s environmental, social, and governance for the uninitiated. Investors are increasingly applying these non-financial factors as they investigate which public companies they will invest in — and regulators are increasingly requiring that companies include these factors in their financial statements.
And despite arguments from the politically minded, ESG appears to be here to stay. That means there are plenty of opportunities for accounting and finance professionals … if you know where to look.
For those who work for public companies, the opportunities for establishing your ESG cred in your financials seem obvious. The SEC itself has proposed standardized regulations for how public companies report on climate-related risks and their own carbon emissions — and you’d better believe auditors are paying attention to all of that.
So are CPA firms. The SEC’s proposal very well could kick-start a new rush for ESG-related accounting services, and firms are scrambling to establish that niche.
In a recent Journal of Accountancy article titled “How firms are seizing the ESG opportunity,” Andrew Kenney writes:
“Until recently, climate disclosures and other ESG issues were the domain of the biggest companies and accounting firms. But the proposed new climate regulations already are cascading from large public companies to their suppliers and contractors throughout the United States and global economies — creating significant opportunities for new business for accounting firms in the ESG space. To meet the demand, though, firms will need to develop talent and expertise in an emerging field.
“Research from the Association of International Certified Professional Accountants and the International Federation of Accountants underlines the opportunity for firms to provide assurance engagements for ESG information. The 2021 State of Play report found that U.S. companies seek assurance on ESG information at higher rates than the global average but that relatively few have been seeking assurance from CPAs so far. Officials with the AICPA expect that to change as companies are driven toward more standardized reporting.”
And when you factor in all the folks who are attached to this issue outside of our profession — building owners, for example, who must report emissions data on their facilities up the chain, sometimes on a floor-by-floor basis — you start to realize that ESG impacts almost everyone. This isn’t just a public company issue. This impacts private companies, their CPAs and auditors, investors, regulators — everyone.
So I’m happy to welcome as my guest this week Alyssa Rade. Alyssa is chief sustainability officer at SustainLife, which offers solutions that are uniquely designed to make taking climate action easier and more affordable for companies of all kinds. I heard Alyssa speak at a conference recently, and she blew my mind by explaining how wide-ranging the implications of ESG really are. We sat down recently and talked about what ESG is, what it isn’t, and what all of this means for CPAs in public practice and business and industry, for public companies and private, for investors and auditors. There is so much to consider here.
Listen to our conversation in its entirety here:
Resources
- SustainLife
- Follow SustainLife on Twitter | LinkedIn | Facebook | Instagram
- Read: Climate change: What the SEC proposal means for companies, auditors
- Read: How firms are seizing the ESG opportunity
- Read: Benchmarking global practice: The state of play in sustainability assurance
- Read: ESG drivers and evolving strategies
- Read: ESG and cybersecurity compliance are every employee’s concern
- Listen: Auditing for ESG, with Ami Beers (“Future-Proof” podcast)