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Accountants diversify advisory services to achieve ESG objectives

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EY’s latest Global Climate Risk Disclosure Barometer indicates that despite the growing number of companies reporting on climate-related risks, many can do it as a ‘checkbox’ exercise, with only three in favor. percent of organizations surveyed receiving a perfect score in terms of quality.

Good ESG reporting requires consistent accounting, with accountants playing a critical role in helping companies integrate non-financial information disclosure into their organizational strategy, says Yen-pei Chen, corporate reporting and tax expert at the company. ‘Association of Chartered Certified Accountants (ACCA).

“Accountants can collaborate, communicate and provide expert leadership,” she says. “They can put climate and ESG risks and their disclosures on the board of directors’ agenda by broadening their advisory services to these areas or by asking questions as part of the audit and assurance mission. . “

Accountants can take meaningful action by helping boards and management understand the link between sustainability and financial performance, as well as helping to integrate ESG into a company’s decision-making. strategic and operational perspective, adds Chen.

Mark Taylor, Regional Managing Partner at RSM UK, notes the increasingly ambitious ESG targets set by business leaders and the role of accountants in translating them into measurable and reportable targets.

“The range of frameworks available for ESG disclosures creates confusion when companies translate these goals into measurable and reportable goals,” he says. “With companies lacking in-house specialists, accounting consulting teams are well positioned to help organizations navigate the regulatory landscape. “

ESG factors are also a growing concern for socially responsible investors. William Hughes, Head of Sustainability Services at Mazars, offers advice on fine-tuning advisory services to help companies meet investors’ ESG expectations.

“First, make sure the services are relevant to organizations of all sizes, because ESG isn’t just for large, listed companies. Second, it is important to demonstrate the strategic value of ESG and how engaging in ESG is not only good for the planet and society, but also for the organization.

Stephen Farrell, ESG Assurance Partner at Deloitte, also highlighted the importance of ESG disclosures in insurance projects.

“To borrow an oft-used quote – ‘if you can’t measure it, you can’t handle it,’ says Farrell. “Whether it’s reducing carbon emissions or improving diversity, assessing social impact or addressing health and safety performance, every corporate ESG action begins with ability to measure accurately. “

With the increase in demand for non-financial reporting consulting services, the mandate of accountants is broadening dramatically, Chen explains.

“Many accountants work internally, within companies. For them, we believe that nothing should be outside the competence of accountants. They need to get leadership buy-in for climate action. If they are advisers in a company, it is the organization that ultimately makes the decisions.

However, there are limits, according to Hughes, noting that accountants shouldn’t take responsibility for management – their role being to help management embrace the cultural change needed to embed ESG into their organization.

“Insurance providers should not make management decisions, or act on behalf of management, in defining, monitoring and managing ESG strategies,” says Farrell. “This includes reporting and disclosing these. “

For accountants working in audit and assurance, there must be clear standards and frameworks against which information can be measured reliably. Recent work by the International Auditing and Assurance Standards Board (IAASB) on extended external reporting, the ongoing efforts of the IFRS Foundation on sustainability reporting standards, as well as initiatives proposed by the EU through its directive on corporate sustainable development reporting, will all help achieve this objective.

Guidance from regulators will also define the role of advisory services in non-financial reporting.

“The Financial Reporting Council’s (FRC) statement of intent on ESG challenges shows the regulator’s commitment to providing ESG information in annual reports,” says Taylor. “This is a move away from sustainability reporting focused on public relations to provide quantifiable, reliable and consistent information that demonstrates the company’s environmental and social impact as well as financial performance. “


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