Sustaining sustainability
BY DANIELLE LEE
Moves are afoot to integrate financial
and sustainability reporting
veyed worldwide said that sustainability
will be critical to the future success of their
companies, they saw obstacles in the very
functions necessary for integrated reporting,
including the complexity of implementing
strategy across business functions (cited by
49 percent), competing strategic priorities
(48 percent) and lack of recognition from
the financial markets ( 34 percent). Despite
these setbacks, 54 percent of CEOs envision
a tipping point — when the majority of companies worldwide will embed sustainability
into core business strategies — happening
within the next decade, while 80 percent see
this occurring within the next 15 years.
In Environmental Sustainability: Tools and
Techniques, published by the Society of Man-
agement Accountants of Canada, the AICPA
and the Institute of Management Accoun-
tants, author Helenne Doody emphasized the
importance of combining reports: “As envi-
ronmental sustainability moves from being
‘an optional extra’ to a ‘must-have,’ manage-
ment accountants must learn to fully inte-
grate environmental considerations along-
side information on financial and operational
impacts and performance.”
According to Kathy Nieland, PwC’s part-
ner of U.S. sustainability and climate change,
“You’re seeing an increasing number of cli-
ents integrating [CSR] in their annual reports
and talking about the journey to getting their
data in there. And an increasing trend around
requests for assurance of that data.”
To satisfy this rising need for external
verification of sustainability data, the GRI
framework provides three levels — A, B and
C — that correspond to degrees of disclosure
and transparency. At each level, a plus sign
signifies that the report was externally as-
sured. Starbucks, for example, achieves its
plus sign with the help of Seattle-based ac-
counting firm Moss Adams, which has been
verifying the coffee chain’s global responsi-
bility annual report since 2003.
Beyond the GRI framework, Nieland suggested that accountants continue to benchmark what other corporations are doing in
this area so they can better advise on what
potential reporting requirements will be.
the most pressure from stakeholders and
customers to meet sustainability goals, the
CSR movement is trickling down to smaller
companies as well. “One of the encouraging
trends is that companies of all sizes — particularly larger — do a good job of linking business strategies and goals and strategies with
sustainability,” said Peter Minan, KPMG’s
assurance leader of the climate change and
sustainability practice in the U.S.
Ann Brockett, Ernst & Young’s climate
change and sustainability services assurance
leader, agreed: “In terms of trends, it went
from what was really something new that you
only saw very large companies doing or in
very large industries, to now becoming a lot
broader. Even very small companies are looking at it, as strategic growth for companies to
get a competitive advantage.”
With the launch last fall of the Global
Reporting Initiative’s U.S.-based arm, Focal Points USA, comes the expectation that
American companies may finally close the
gap with the sustainability leaders in the U.K.
and Europe.
This domestic prioritization also presents
an opportunity to the accounting profession,
as more corporations seek assurance of their
environmental health, safety and corporate
social responsibility data.
The GRI built the most widely implement-
ed sustainability-reporting framework, and
compiles a list of the companies that annu-
ally report on environmental, social and gov-
ernance performance. “Many of the world’s
largest companies are listed as GRI reporters,”
said Mike Wallace, director of Focal Points
USA. “You should ask yourself if you should
be involved in that work.”
The latest version of the GRI framework,
G3, is used as a de facto sustainability-report-
ing standard for more than 70 percent of re-
porting companies globally, while more than
80 percent of Global Fortune 250 companies
issue sustainability or corporate responsi-
bility reports. The guidelines are currently
used in 65 countries, and by the U.S. Army,
Air Force and Postal Service.
INTEGRATED REPORTING
The A4S has moved in this direction by developing its Connected Reporting Framework
as a model for integrating non-financial
sustainability data, such as that presented in
the GRI’s framework, with standard financial
data. However, chief executives at the world’s
largest companies are still struggling to realize
this contextual benefit, as Thomas described
it, judging by a 2010 survey conducted by the
U. N. Global Compact and Accenture.
While 93 percent of the 766 CEOs sur-
COMPANIES BIG AND SMALL
Pressure for sustainability reporting doesn’t
just come from regulators. “Through the supply chains of large purchasers, Wal-Mart can
influence many suppliers,” said Wallace.
So while larger corporations are feeling
CLOSER TO HOME
Some accounting firms are finding client opportunities in the sustainability market by
starting internally.
Lauren Elizabeth Joyce, audit manager
and leader of Raleigh, N.C.-based Hughes
Pittman & Gupton’s clean-tech client team,
shared that the firm found its edge after being
the first accounting firm to be certified Green
Plus by the Institute for Sustainable Development last year. The institute also named HPG
a Green Plus Mover of the Year in February.
“There’s a real benefit,” Joyce said. “Inter-
nally, we are creating a better environment
for employees and also expanding our net-
work and building new client relationships.”
HPG followed a “people, planet, profits”
system in which employees set up a recy-
cling program, replaced all products with
more eco-friendly options and worked on
overcoming the Achilles’ heel of the profes-
sion: paper waste. Joyce also cites support-
ive partners and a growing clean-tech team
as instrumental to HPG’s success. “It’s a fun
group,” she added, “and more fun than just
talking about accounting.”
According to Doody’s Environmental Sus-
tainability report, accountants should seek
these benefits now. “Environmental sustain-
ability needs to become ‘business as usual,’
and it must become routine for management
accountants to incorporate environmental
sustainability into their decisions and ac-
tions,” she wrote. “Understanding this key
opportunity for the management accountant
is vital if finance professionals are to secure
themselves a place for the future.” AT
