As stakeholder and regulator expectations grow for standardized environmental, social, and governance disclosures and metrics, accounting firms have a tremendous opportunity to help clients through ESG compliance, assurance, strategy, and implementation engagements.
As CPAs, our professional integrity, skepticism, and responsibility for quality, as well as our understanding of the companies we serve, positions us as the ideal provider of
Even small ESG engagements can get your foot in the door with a business you have been courting for a while and open the opportunity for tax and audit work. ESG frameworks will have you digging into the corners of your client's operations. in a way that will help you unearth additional service opportunities, including specialized services such as SOC reporting, or research and development tax credits.
Assurance opportunities
A global benchmarking study by the International Federation of Accountants, "
The report notes, "With investors increasingly incorporating sustainability matters into their asset allocation decisions, low-quality sustainability assurance is presenting a significant global investor protection issue." Of the 91% of organizations making sustainability disclosures, only 51% gain outside assurance. In many cases, that assurance is provided by consultants or others, rather than by independent professional accountants.
The critical takeaway from the report is that while the regularity of reporting ESG information is high, the current prevalence of assurance is not. Our profession has the unique combination of skills, qualifications, experience, and professional ethical obligations to bring the confidence investors expect.
Starting at home
The best way to enter this practice area is to take your firm through its own ESG journey. Measuring your firm through a few frameworks provides several benefits. Doing so helps you:
- Identify your firm's ESG risks and opportunities.
- See each framework's impact firsthand on your business's operation.
- Educate your firm's stakeholders (owners and employees) on the relevance of ESG frameworks within a familiar business model.
- Provide an authentic story to tell clients that can help you sell these services.
Assessing firm performance through an ESG framework will allow you to look at processes and procedures from a new perspective. Engaging in this work will boost employee attraction and retention. It can also lower attrition and increase productivity for existing employees through greater social credibility.
Neglecting to perform this work on your firm can turn away prospects looking for a genuine ESG-minded service provider, and leave your firm exposed to its own ESG risk. Both factors can harm your bottom line, hinder growth, or detract from your recruiting efforts.
Industries and businesses taking on ESG initiatives are more likely to engage with a firm with a strong ESG ethos. In 2021,
Another consideration to beginning an ESG practice without doing your own ESG reporting is the potential of creating the reputational risk of making false or misleading claims. The best way to mitigate this risk is to publish an ESG impact report showing where you stand in your journey.
Building your ESG practice
If you are struggling to find enough accountants to complete your compliance work, you might worry how you'd staff a new practice area. Here is some good news: if you hire talent with a background in sustainability, you'll add credibility to your ESG practice at the same time. These professionals can help fill the knowledge gaps for accountants. Look for individuals with environmental science or corporate sustainability degrees.
We've hired a sustainable management MBA, a sustainable innovation MBA, and a marine biogeochemist for our team. We have also had staff bolster their credentials with a Fundamentals of Sustainability Accounting credential from SASB or a Sustainability Excellence Credential from the International Society of Sustainability Professionals.
There is opportunity in ESG, no matter the size of your firm. Do not feel like you must shoulder all the services in-house. Look to partner with other service providers, after appropriate due diligence, to expand your offerings, particularly outside the accounting industry.
In addition to service offerings, look to utilize those partnerships for co-developed webinars, white papers, in-person speaking engagements, and similar opportunities. Leverage their reputation and brand to bolster your identity within the sustainability space.
Embracing the ESG opportunity
As with building any new practice, forging eminence within a space can take time. You can advance more swiftly by thinking outside the box for talent acquisition and undertaking the process first. In the end, firms need to undertake this work for the same reasons our clients do — to mitigate risk, prepare for new federal and state disclosures, meet consumer demand, improve talent acquisition, and bolster brand reputation.
In recent years, supply chain issues and talent shortages have been the main challenges to conquer, capturing most of the attention. However, sustainability is now emerging as one of the biggest disruptors in the business world. It is one of the most significant opportunities in accounting in a very long time. There's no better time than now to focus on your ESG efforts.
