We all know that sustainability accounting is a hot-button topic right now due to the increasing awareness of what we can collectively do to reduce the environmental impacts of climate change, even the accountancy profession.
With this in mind, in this article, we look at movements in sustainability, what sustainability accounting is, and how accounting practices in Australia can redefine their business success by aligning with the highest verified standards of corporate social responsibility through ESG reporting offering public transparency, legal accountability, and also the opportunity to use accounting practice management software as a vital "go paperless" initiative to future-proof your practice.
What is sustainability?
Sustainability doesn’t have a universal definition, but many experts look to the United Nations' 1987 Brundtland Report, which called for development that meets our needs today without compromising our needs in the future. It focuses on a healthy planet that can meet essential needs, such as clean air, food, shelter and water.
As consumers, we are all responsible for achieving social sustainable development and changes to our lifestyles to use cleaner energy sources and reduce our waste.
Measuring sustainability through corporate social responsibility is tricky, as much of the information we use to gauge an organisation's sustainability is usually provided by the company itself and is not constantly audited.
Sustainable accounting has a significant potential to play a vital role in shaping the future, mainly through an ESG strategy where responsible accounting firms define their social impact.
Sustainability accounting trends in the finance industry
Sustainability accounting plays a vital role in how we collectively support and move towards a low-carbon economy.
There is a key driver of sustainability initiatives in financial accounting across the Asia Pacific region because, as Nancy Wang, director of sustainable finance at ANZ in Hong Kong, says, "Climate risk is now globally recognised as financial risk, and it's driving investor decisions."
The New Zealand Government recently passed legislation making climate-related ESG disclosures for some organisations.
Even further afield, it has now been mandatory for Britain's larger businesses to disclose any climate-related risks or opportunities.
The impact of sustainability finance disclosures across the accounting industry has made it essential for accounting firms to reshape their corporate reporting with a commitment to social impact and integration of ESG reporting standards.
What should be the role of accountants in ESG reporting?
Environmental, Social and Governance (ESG) projects are key for most businesses in all industries, and the accounting profession is no different, especially in the last decade.
ESG accounting initiatives allow accounting firms to understand and reduce their impact on the environment and promote a better way of working.
ESG reporting is a form of corporate sustainability for accountants that provides a framework to account for their environmental, social, and governance policies so they don't negatively affect the world.
What is the role of accountants in ESG reporting?
ESG criteria are now considered for many accounting firms' services and activities, including how they interact with clients. There are some obvious ways accounting firms can make their operations greener and leaner such as utilising technology to reduce the number of printed documents or moving to cloud-hosted accounting practice management software, which is much more energy efficient. However, ESG accounting and reporting means much more than that.
The rise of ESG accounting also helps a global reporting initiative motivated by conscious decision-making on energy usage, environmental footprint reductions, human rights considerations, ethical standards adherence, regulatory compliance and more. ESG incentivises accounting firms to consider the full effects of their actions on society as a whole.
Accounting firms also look at their suppliers and partners more closely to ensure that they also have ESG policies and initiatives that align with their values and views. This means accounting firms can be confident that their supply chain and themselves can also better operate sustainably and morally correctly.
Firms that embrace ESG principles are also better able to build trust with clients by demonstrating ESG awareness and incorporating ESG considerations into the scope of their accounting services.
The rise of ESG issues can help accounting firms to identify opportunities for new business and areas where clients may need additional assistance or advice.
What is ESG in accounting?
There are several things that accounting firms can do to support ESG for accountants. Below are just a few:
-
Become a Certified B Corporation: B Corp Certification states that a business meets high standards of performance, accountability, and transparency based on a myriad of factors, from employee benefits and charitable giving, to supply chain practices and input materials. There are already some B-Corp-certified accounting firms in Australia and New Zealand.
-
Use ESG tools and technology to digitise processes: client portals, cloud-hosted accounting practice management software, and workflow automation are just a few examples of functionality accounting firms can use to streamline operations, reduce paper and postage and decrease energy consumption.
-
Assess any climate-related data and information: ensure that any missing data and ESG information are covered, so you can make informed decisions to accurately calculate potential climate-related risks.
-
Charitable events and initiatives: sponsor and get involved with local charitable causes. Not only is this the right thing to do, but it helps to build employee engagement through sustainability and relationships with the local community.
-
Identify your ESG risks and opportunities and set ESG goals: auditing where your accounting firm can positively or negatively impact ESG and setting objectives around these will give your firm, clear actions and KPIs to track.
Please read our guide for more information on key performance indicators for your accounting firm.
Why partnering with the Access Group will support your ESG initiatives
At Access, we have a reputation for making things happen. We work together to create innovative, world-class technology that improves millions of lives through our software and services.
As well as providing solutions that make a positive impact, charity is at the core of our values, and we offer a variety of initiatives that allow our team to give something back and make a difference. Each year, our employee community nominates a cause close to their hearts to become our local charity of the year. These charities receive fundraising in addition to other support from the business. For example, with every pound raised by our staff, Access doubles it. A true partnership in every sense.
Our people are also able to dedicate their time to giving back to their local community or chosen cause with an extra day's leave to make this possible. The Access Foundation makes a real impact on our communities. Through this philanthropy, we support causes nominated by our team and work to bridge the digital divide.
Learn more about the Access Group's ESG initiatives in our People Report 2022.
The future of sustainability accounting
Now that we have discussed the value of sustainability reporting for accounting firms, it's essential to consider how software for accountants can complement your ESG initiatives.
In addition to the undeniable ESG benefits, there is an indisputable audit trail when everything is paperless and digital. Gone are the days of running after people to sign and initial hard-copy documents. In a paperless office, utilising accounting practice management software, layers of processes can be simplified to increase efficiency and effectiveness! The time saved on administration and bookkeeping can go towards more productive endeavours.
Why waste time and money on printing something that was received electronically? By going paperless with accounting practice management software, you can cut the cost of printing by purchasing fewer reams of paper and toner cartridges. Moreover, the opportunity cost of administration, including filing, can be channelled into an accounting practice's more productive and efficient running.
Read more benefits of a digital-first workplace in our guide: digital transformation in accounting.
Book a demo with no obligation of Access Accountants and see how we can help transition from a paper-mountain to a paperless accounting practice with all the right ESG reporting tools!