The Rise of ESG and the Accountant 

By Gena Wilson 

Environmental, social, and governance (ESG) metrics and reporting are now considered business imperatives and increased scrutiny from investors, shifts in stakeholder expectations, as well as policy changes mean companies are facing new pressure to disclose certain ESG-related information publicly. 

ESG criteria are a set of standards for a company’s operations that investors use to screen potential investments. Examples of ESG criteria include workforce demographics such as diversity, health and safety, carbon emissions and more. 

To make informed decisions, investors should be provided with an integrated and holistic report that include both financial and non-financial information. External auditors – specifically CPA firms – possess the independence, requisite skills, knowledge and experience to provide assurance. This assurance helps build trust with regulators, investors and other stakeholders, and is a critical component of efficient capital markets. CPA firms are obligated to act in a way that will serve the public interest, which is why third-party assurance of all ESG disclosures can create greater public confidence in the data quality and usefulness when CPA firms manage ESG reporting opposed to non-CPA firms. 

Additionally, they can help companies understand the controls, data definitions, reporting and systems used for data collection and consolidation. The most important thing an accountant in this space should be doing, is understanding what is currently happening and where ESG is going. 

Getting started on your ESG journey 

The ESG field is fast-moving, and with all the new information it can be difficult to stay up to date. Key things you can do to understand the bevy of information, includes: 

• Focusing on what the standard/framework setters are doing: There are a number of standard-setters, such as Global Reporting Initiatives (GRI), International Integrated Reporting Council (IIRC), Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosure (TCFD) that help to advise companies on standards, trends, material topics and more. Understanding what these resources are communicating to stakeholders will give you a pulse on key topics of discussion today and in the future. 
• Stay up to date with thought leadership: Find reliable sources for sustainable information and get in the habit of spending time every day to understand how this field is changing. 
• Understand what your company is doing: Understanding where your own company is from an ESG standpoint will help your understanding of how organizations are thinking about the topic, and if possible, get involved. 
• Understand what your clients are doing in this space: While some of your clients may not be using the term “ESG,” many clients have been focused on related issues, such as training, health and safety and climate. Knowing where your client is focused will also help you assess where they could use your help. 

How we are helping clients 

The ESG journey is a challenging topic for any company to tackle as it spans all areas of an organization. We bring purpose, vision and practicality to companies' unique set of challenges, and we understand where companies are coming from as we are on our own ESG Journey. Some of the ways our teams are helping clients include: 

• ESG strategy, in areas such as climate risk, diversity, equity and inclusion, that can enhance growth and reputation 
• Understanding and leveraging ESG standards and frameworks such as SASB and TCFD to develop a compelling story for investors, boards and other stakeholders 
• Developing investment-grade ESG metrics that your shareholders can trust 
• Utilizing a tech enabled ESG reporting journey to make data useful to a company’s business throughout the year 
• Educating stakeholders on key ESG topics, including the board of directors 
• Developing tools such as ESG Pulse and Pro-Edge that help clients access their ESG metrics and upskill their workforce 

Developing trust 

Accountants have been critical to the trust developed in financial reporting, and as companies take a more active role in impacting their communities and the environment, accountants can also lend their skills to help on this exciting journey by acting as a trusted resource for this non-financial data. 

Gena Wilson is a director at PwC LLP. 

Reprinted with permission from Massachusetts.