By Jessica Salerno-Shumaker, OSCPA senior content manager
Accountants who understand environmental, social and governance (ESG) factors can grow their advisory skills and become a stronger asset for their business.“That may not sound like something that's part of an accountant's job, or even completely relevant to a hard-nosed businessperson, because the environmental and the social part are clearly external to the business,” said Mary Adams, founder of Smarter Companies. “But there are a number of things happening now that make it critical to not only the perception and brand of a company but also to its financial results.”
Adams joined The State of Business podcast this week to talk about the impact of ESG on business, how the accounting profession can get involved and more.
While many consumers hold companies responsible for upholding certain ethical values, such as not dumping chemicals in a river, a shift has happened where more companies are considering the business impact of ongoing social changes. Ignoring issues such as climate change, Adams said, is a systemic risk that investors are starting to consider.
“It started with a values perspective, but now it's become a value issue,” she said. “It's about risk, opportunity and innovation. In every risk, there's opportunity. And this is about corporate valuation, and it's also about profitability.”
The rise in ESG is an opportunity for the accounting profession, Adams said, because it offers the chance to learn and become a skilled advisor in a growing area. She said that it could become standard for clients to ask accounting firms to perform an audit on their sustainability data in the future.
“In many ways, this gives accountants permission to think more long-term about a business,” she said. “And if you only focus on the income statement and today's KPIs, you're missing something. And sustainability gives you permission and the means to bring longer-term thinking into the conversation.”
Adams said she sees this eventually becoming a core function of what businesses report on, just like finance and data areas.
“We all thrive when we're thinking beyond making $1 today,” Adams said. “If you can think in a broader context, you can see more opportunities. And that helps make a better world, more stable economies and a place where employees want to come to work, and people want to do business with each other.”
And to hear more from Mary Adams on ESG, register now for one of the Ohio Accounting Shows.