As stakeholder and regulatory expectations for standardized environmental, social and governance information and metrics increase, accounting firms have a tremendous opportunity to assist clients through ESG compliance, assurance, strategy and implementation engagements.
As CPAs, our professional integrity, skepticism and commitment to quality, as well as our understanding of the companies we serve, position us as an ideal supplier. ESG and Sustainability Services.
Even small ESG activities can disrupt the business you’ve been targeting for a long time and open up opportunities for tax and audit work. ESG frameworks can help you dig deeper into your client’s operations. To help you discover additional service opportunities, including specialized services such as a SOC report, or research and development tax credits.
Global Benchmarking Study by the International Federation of Accountants, “The situation in the field of sustainable provision“Identified an excellent sustainability assurance opportunity for accounting firms. The report examines which companies make sustainability disclosures and obtain assurance on them. In addition, it identifies the assurance standards that firms use and which ones provide assurance.
The report notes that “as investors increasingly incorporate sustainability considerations into their asset allocation decisions, ensuring low-quality sustainability is an important global investor protection issue.” Of the 91% of organizations that promote sustainability, only 51% receive external assurance. In many cases, this assurance is provided by consultants or others rather than independent professional accountants.
A critical takeaway from the report is that while the regularity of reporting ESG information is high, the current prevalence of certainty is not. Our profession has a unique combination of skills, qualifications, experience and professional ethical commitments to bring investor confidence.
starting at home
The best way to enter this practice area is to take your firm’s own ESG journey. Measuring your firm through multiple frameworks provides several benefits. It helps you to:
- Identify your firm’s ESG risks and opportunities.
- See the impact of each framework on how your business functions.
- Educate your firm’s stakeholders (owners and employees) on the relevance of ESG frameworks within a familiar business model.
- Provide an authentic story to clients that will help you sell these services.
Evaluating a firm’s performance through an ESG framework will allow you to look at processes and procedures from a new perspective. Engaging in this work will increase employee attraction and retention. It can also reduce attrition and increase productivity for existing employees through greater social credibility.
Neglecting to do this work at your firm can turn off prospects looking for a true ESG-minded service provider and leave your firm exposed to its own ESG risk. Both factors can hurt your bottom line, stunt growth, or derail your recruiting efforts.
Industries and businesses that embrace ESG initiatives are more likely to engage with a firm that has a strong ESG ethos. in 2021,PwC published a surveyMore than 75% of consumers say they are more likely to buy from a company that supports environmental (80%), social (76%) and governance (80%) issues.
Another consideration of starting an ESG practice without doing your own ESG reporting is the potential to create a reputational risk of making false or misleading claims. The best way to mitigate this risk is to publish an ESG impact report that shows where you stand on your journey.
Building your ESG practice
If you’re struggling to find enough accountants to complete your compliance work, you may be worried about how you’ll staff your new practice area. Here’s some good news: If you hire talent with a sustainability background, you’ll add credibility to your ESG practices at the same time. These professionals can help fill in the gaps in accountants’ knowledge. Look for individuals with degrees in environmental science or corporate sustainability.
We have hired a Sustainable Management MBA, a Sustainable Innovation MBA and a Marine Biogeochemist to our team. We’ve also had employees further their credentials with a Sustainability Accounting Fundamentals Certificate from SASB or a Sustainability Excellence Certificate from the International Society of Sustainability Professionals.
There is opportunity in ESG, no matter the size of your firm. Don’t think you have to take all the services in-house. Look into partnering with other service providers after due diligence to expand your offerings, especially outside of the accounting industry.
In addition to service offerings, consider leveraging these partnerships for co-developed webinars, white papers, face-to-face engagements, and similar opportunities. Use their reputation and brand to strengthen your identity in the sustainability space.
Seize the ESG opportunity
As with building any new practice, establishing excellence within the space can take time. You can move forward faster by thinking beyond talent acquisition and starting the process first. Ultimately, firms must do this work for the same reasons our clients do—to mitigate risk, prepare for new federal and state disclosures, meet customer demand, improve talent acquisition, and strengthen brand reputation.
In recent years, supply chain issues and talent shortages have been the main challenges to capture and attract the most attention. However, sustainability is now emerging as one of the biggest disruptors in the business world. This is one of the most important opportunities in accounting in a very long time. There is no better time than now to focus your ESG efforts.