By Jessica Salerno, OSCPA senior content manager
As more companies make strides toward bettering their environmental, social and governance strategy, accountants have a valuable role to play in guiding their success.“ESG starts stands for environmental, social, and governance,” said Mary Adams, founder of Smarter Companies. In Boston “It’s shorthand for a lot of the externalities that companies often haven't considered in the past but need to consider going forward.”
Adams will present on this topic with Marcy Twete, founder & CEO of Marcy Twete Consulting at on Oct. 27 at OSCPA’s Virtual Accounting Show. Adams said there are many frameworks and guidelines on how to report these issues, something accountants will have to navigate.
The three drivers of ESG growing in popularity are values, value and innovation. The first, values, comes from more societal pressure to consider issues like environmental and social equity, and thinking about how companies treat staff and others in the supply chain.
“The second one, value, is the part that gets really interesting,” Adams said. “Because now we're seeing companies pay more attention to the ecosystem that they're part of, whether it's from an environmental or social or human perspective. And those companies have higher trust and better engagement with the marketplace.”
Innovation as the third driver speaks to the opportunities involved with the risks coming from climate change and other societal issues, Adams said.
“If you look at it through a different lens, companies that are focusing on these types of issues are driving a lot of innovation,” she said. “In many ways, ESG is enlightened self-interest on the part of a company. People that believe in the purely value space get a little nervous with that perspective.”
The big question for accountants, Adams said, will be how you mix the perspective of working to drive business performance and value in the long-term while also considering the long-term interests of the environment and stakeholders.
Adams said the future for sustainability reporting for companies will most likely be increased standardization.
“This isn't a fad,” she said. “It's something all accountants are going to need to know about. And it opens all kinds of new avenues for thinking and performance for value and from an accounting perspective, for adding value to the conversation and strategic conversation with your company.”