A recent article from CPA Canada, summarized here, shares insights into how CPAs can make a difference to an organization’s ESG initiatives. Read the full article on the CPA Canada website, here.
Environmental, Social, Governance (ESG) is increasingly becoming top-of-mind for business leaders across all sectors. CPAs have an opportunity to play an important part in this movement, as the role of accounting is important in ESG and sustainability reporting.
As ESG momentum builds, CPAs should keep these four insights in mind:
1. Seize the opportunity
As ESG initiatives become more mainstream and integrated into organizational strategy, CPAs will play a key role in implementation.
Davinder Valeri CPA CA, Director of Strategy, Risk and Performance at CPA Canada, explains those roles “can vary from business governance to reporting and assurance, risk assessment, and analysis.”
Davinder also adds, “A lot of what is needed in ESG, or sustainability at large, is about transparency around decision-making.” This is where CPAs can provide their value and seize the opportunity.
2. Reform sustainability reporting
CEOs are beginning to place greater importance on organizations’ abilities to provide consistent and complete ESG information for investors. This information can better inform investment decisions and manage ESG-related risks.
This further highlights the need to improve sustainability reporting standards in order to build trust among investors and the public, as well as increase transparency.
CPA Canada notes accurately assessing an organization’s ESG efforts goes beyond traditional reporting and requires a broader analysis that incorporates a multi-stakeholder and long-term perspective.
3. Champion global reporting standards
A global ESG reporting standard is needed to ensure accuracy and create overall rigour to the ESG reporting process.
The International Financial Reporting Standard (IFRS) Foundation has started to create such a standard. CPA Canada reports that last fall, IFRS issued a consultation paper to gauge the demand for global standards and the support for the foundation to set up a new Sustainability Standards Board (SSB).
CPA Canada responded to the consultation paper and provided feedback on ways to improve the quality of ESG reporting. Some of the recommendations CPA Canada provided include “producing high-quality sustainable reporting standards in a timely manner; tailoring reporting requirements to alleviate the burden on smaller organizations with limited resources; and working with existing bodies, including the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI), already engaged in this area.”
4. Ensure meaningful action
Before the introduction of ESG, it was common for organizations to just report their goodwill in their CSR.
Now, tith ESG, Davinder notes, “they need to integrate sustainability with financial data and apply integrated thinking to show a picture of risks, strategy, performance, and long-term value.”
That means as ESG reporting gains momentum, CPAs are well-positioned to provide their expertise in key strategic decision-making, performance measurement, and data integrity.
Read the full article on CPA Canada’s website, here, or if you’re looking for more information on ESG, visit CPA Alberta’s Online Resource Centre, here.
CPA Alberta also offers online virtual professional development (PD) offerings on the topic of ESG:
- “ESG” another three-letter acronym or a future driver of change for the accounting profession? – On-demand Recording
