Adrian JohnsonTLDR:
- ESG reporting is gaining momentum among business leaders, investors, consumers, and regulators.
- Global initiatives and regulations are driving the push for consistent and accurate ESG reporting standards.
The accounting profession’s role in ESG reporting
As concerns over climate change and other sustainability issues grow, ESG reporting has become a key focus for companies worldwide. A global study found that almost all companies disclose some level of ESG information, and many are seeking assurance on this data. Consolidation and standardization of ESG reporting frameworks and regulations are underway, driven by the need for reliable data for stakeholder decision-making.
Investor-driven initiatives like the International Sustainability Standards Board and the European Sustainability Reporting Standards are shaping the future of ESG reporting. The SEC’s climate disclosure rule and state-level regulations in the U.S. are also impacting companies and signaling a shift towards mandatory ESG reporting.
The importance of assurance in ESG reporting is growing, with more companies seeking third-party assurance on their data. The accounting profession, with its expertise in audit quality, independence, and professional development, is well-positioned to meet the increasing demand for assurance services in this space.
As ESG reporting becomes more standardized and regulated, CPAs and accountants have an opportunity to add value to businesses by providing advisory and assurance services. Cross-functional capacity building and training around ESG reporting standards will be essential for firms to meet stakeholder demands in the future.
