Why sustainability accounting and reporting matters for your business
Posted on 8th May 2023
Sustainability accounting and reporting is becoming more important as customers prioritise environmentally friendly purchasing choices.
Many businesses now use their financial reports to deliver information about environmental expenditure, savings and the impact of their policies. Here are just a few of the ways in which your bookkeeper or accountant can help you explain your sustainability goals.
Reporting key sustainability issues
Transparency through sustainability reporting gives customers, shareholders and investors a clearer understanding of how your business meets its environmental responsibilities. This might range from waste minimisation or sustainable packaging to the miles your products and materials travel.
Your sustainability report can explain how non-financial issues such as customer service or climate change affect your business. This is becoming increasingly important when you’re building your business reputation. However, innovation and sustainability also have to make good business sense.
There’s no doubt that combining sustainability reports with more traditional financial accounts and statements will become a necessity. Reporting systems must change significantly along with the information collected and its presentation. More concise and frequent reports will emphasise disclosure rather than basic reporting. Expectations are increasing, so information tailored to meet the needs of different audiences in multiple formats is now needed.
Sustainability reporting requirements
The number of sustainability measures to be reported is expanding. These are increasingly likely to include environmental, social and governance (ESG) issues like managing carbon emissions and waste. Customers are also becoming much more interested in voluntary reporting about sustainability. Recognised tools are now available to help you show how you are meeting a wide range of environmental standards.
For example, the International Federation of Accountants (IFAC) has provided advisory papers and created a Sustainability Experts Advisory Panel.
Understanding sustainability reporting in financial accounting
Bookkeepers and accountants can help business owners improve awareness of their sustainability commitment. Our skills and training mean we can recommend the best ways to add sustainability indicators to established financial reports. We can also help show clear links between sustainability, financial and other performance measures. Specifically, we can help with:
• Reporting – qualified and experienced bookkeepers and accountants understand the importance of useful reporting. Reflecting regulatory, voluntary, and legal reporting requirements in meaningful reports is an essential skill. Keeping track of the latest business and legal requirements and any changes is part of this process.
• Risk – risk management is an essential part of your sustainability obligation as a business owner. Financial professionals can advise you about the implications and benefits of voluntary reporting and reliable compliance measures.
• Reporting frameworks – to report effectively you need to measure the right things. Trained and qualified bookkeepers and accountants can collect, measure, and analyse relevant information effectively.
They can help you develop frameworks that include sustainability information. This will help you meet the needs of your business, market sector, and relevant regulators. There’s a lack of statutory guidance on measuring and reporting ESG data, so this can significantly streamline and simplify your task.
• Policy – the first step is to have a clear understanding of the information you want and need to report. Your bookkeeper or accountant can then advise on meaningful and useful reporting policies and effective data collection.
• Quality information – professionally qualified bookkeepers and accountants are skilled in providing clear and reliable information. They will have thorough assurance processes, giving you confidence that your reports are accurate. They can advise you on the information you will need to support the sustainability business case. They will help you establish supporting processes and procedures. Identifying and rectifying any ‘out of line’ performance is then fast and effective. Since financial reporting is typically made at senior management levels you will also benefit from an established format to deliver your information.
Please get in touch if you would like help and advice concerning sustainability accounting and reporting for your business.
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