The Role of CPAs in ESG Initiatives
Do you know that the role of CPAs isn’t restricted to helping businesses with their finance? They can also play a vital role in environmental, social, andgovernance (ESG) initiatives. This blog post will explain how many CPA professionals leverage their corporate and financial knowledge to help with ESG initiatives.
What Are ESG Initiatives?
ESG stands for Environmental, Social, and Governance. This is a set of guidelines and principles that companies use to measure their performance in the social environment, which includes environmental concerns.
The term was first coined back in 2008 by the United Nations’ Global Compact initiative. There are many benefits to using these guidelines, such as attracting stakeholders and improving long-term profitability. Many countries have adopted these guidelines as part of their corporate policy or even placed them as part of law like France, which requires large corporations to report on sustainability practices annually.
Importance of ESG Initiatives
The business community has been aware of the benefits of incorporating ESG issues into their strategies for some time now. The research suggests that there are clear financial incentives for engaging in ESG analysis, and it also provides businesses with general guidelines on how to engage in this work effectively. For instance, in 2011, the UN Global Compact began tracking publicly traded companies that had adopted corporate sustainability initiatives.
Over the years, the UN Global Compact has become the international standard for measuring companies’ social and environmental impact. In 2016, it launched a new version of its flagship report called “Achieving Sustainability: The Role of ESG Reporting,” which rated the performance of 1,000 corporations in three areas: corporate governance, financial management, and reporting.
How Can CPAs Help?
CPA professionals have been an integral part of large-scale ESG initiatives for a long time, particularly because ESG analysis has traditionally been used to mitigate risk management within the financial sector.
However, many businesses still struggle to identify opportunities for risk mitigation and cost savings related to ESG issues despite these initiatives. The United Nations Environment Program has estimated that about $1 trillion is spent each year to manage the environmental impacts of economic activities worldwide, and this number is expected to increase by 300% by the year 2030.
As CPAs are increasingly integrating ESG considerations into their client work, we may see significant changes in how businesses approach ESG analysis and how they leverage these insights for competitive advantage.
Is your business looking to minimize risk and maximize output value when it comes to ESG initiatives? All you need is some effective financial management advice from Faber LLP. Other than staying on top of your obligations, we will also help provide adequate advice not just for ESG initiatives but your overall finances.
We provide a wide range of financial management and accounting services in Edmonton. To ensure the accuracy and integrity of your ESG initiatives and other financial statements, our team of assurance agents and CPAs in Edmonton would be glad to help you evaluate them. Learn more about our assurance services here.