Throughout GreenBiz 23 final month, one speaker opined, “If you happen to make sustainability professionals grow to be accountants, they’ll stop.”

That sentiment was relating to the wave of necessary ESG or company sustainability disclosures which were proposed by governments world wide, a few of which have already gone into impact. 

Obligatory disclosure, particularly audited disclosures, definitely have captured the eye of company leaders world wide and shifted some sustainability technique conversations from aim setting and evaluation to measuring, assuring and reporting. 

The local weather disclosure rule proposed by the U.S. Securities and Trade Fee has garnered a lot consideration, however it’s removed from the one regulatory physique driving the ESG reporting tidal wave. California is holding hearings by itself Company Local weather Accountability Disclosure package deal of payments beginning right this moment. Throughout the Atlantic Ocean from the place I sit, the European Union’s Sustainable Finance Disclosure Regulation has funding companies upgrading their ESG administration and oversight. 

Buyers need disclosure 

Regulators aren’t the one ones pushing for elevated transparency, buyers are demanding it too.

When requested if company sustainability is changing into all about finance and accounting, Jeff Dangremond, affiliate director of sustainable finance with sustainability consulting agency Anthesis Group, mentioned: “I feel that it’s changing into extra essential to finance and accounting, due to the elements related to threat. It’s not that it wasn’t essential earlier than, it’s simply that nothing clarifies one’s focus greater than a possible threat to their entry to capital.”

Sustainability professionals don’t have to grow to be accountants. Accountants have to grow to be sustainability professionals, they usually’re beginning to.

With U.S. sustainable funding property underneath administration reaching $8.4 trillion at first of 2022, Dangremond highlighted how if these organizations don’t tackle ESG considerations, it may injury their relationships with buyers and restrict their entry to funding. In consequence, finance and accounting professionals are more and more being introduced in to include ESG concerns into decision-making processes and reviews. 

Sustainability or accounting? 

Has all of this deal with disclosure made sustainability all about accounting? And does this imply that sustainability professionals should grow to be accountants? 

I’ll be concise: No and no. 

Disclosure is a pure evolution in company sustainability transformations. First, corporations wanted to be made conscious of sustainability ideas. Then they needed to be educated concerning the elementary significance of these ideas to their operations. Alongside that engagement got here buy-in and aim setting. However now that many corporations have determined to extra intently handle their environmental, social and governance efficiency, information is required. 

We’ve all heard the saying, “You may’t handle what you don’t measure.” If we would like corporations to handle their ESG threat and efficiency, then they want them to measure it. 

I spoke with Rob Fisher, a accomplice with KPMG’s World Trusted Options enterprise, who’s chargeable for world ESG transformation and reporting. He informed me: “There’s additionally a ton of worth in bringing the disciplines we already should the subject material. Take one thing like Sarbanes Oxley, which actually codified how we do inside controls over monetary reporting. Now we’ll want inside controls over nonfinancial reporting. And it is bringing that self-discipline and making use of it to a brand new subject material, as a result of the identical problems with, ‘Hey, is that this information full? Correct? Well timed?’ All these issues should be completed, and inside controls are a important component of that.” 

Accounting for sustainability

Sustainability professionals don’t have to grow to be accountants. Accountants have to grow to be sustainability professionals, they usually’re beginning to. As one instance, Fisher highlighted KPMG’s perspective as “our technique in our audit apply is that each single particular person in our audit apply goes to should be succesful at various ranges, to have the ability to audit sustainability issues, along with monetary reporting issues.” 

KPMG and its friends are serving to accountants grow to be sustainability professionals in order that sustainability professionals don’t should grow to be accountants. As somebody who was required to take three accounting lessons as a part of my finance diploma in school, I thank KPMG for its service.