beyond balance sheet — the accounting ESG needs right now
At qb., we know that creating effective ESG policies, protocols and oversight requires hard work and behavioral change, which is why we're shining a spotlight on the individuals who are leading the charge. In our new series: “ESG Leaders + Governance”, we highlight the people behind the transformational actions and programs that are shaping the future of business. We’ll talk to ESG leaders from different industries and backgrounds; we'll delve into the challenges they've faced, the strategies they've employed and the lessons they've learned along the way.
Tiffany Huey co-leads the ESG Advisory group at BPM, a global accounting and advisory firm. Within the organization, she works cross-functionally to meet clients’ ESG-related needs within finance, reporting, accounting, tax, and risk management. Learn how she builds cohesive ESG strategies, manages the firm’s B-Corp certification, meets ESG-related reporting requirements and more at a people-first accounting firm.
published 8.15.24
Here’s what we learned:
A formula for trust = Accounting + ESG
While many of us have relished being at the forefront of corporate social responsibility and innovation, we are now witnessing the integration of ESG into internal audit, risk management, regulatory compliance, financial reporting and legal considerations within companies.
Accounting firms bring unique expertise that ensures ESG-related data and reporting are as accurate and reliable as financial reporting. A significant amount of work has been dedicated to establishing processes for creating and auditing controls that maintain the public’s trust in financial data, and I hope we will soon achieve the same level of confidence in ESG-related data.
BPM stands out in its approach to ESG by leveraging our deep expertise in data integrity and reliable reporting. We understand the intricacies of internal audit, risk management and regulatory compliance, which positions us uniquely to integrate ESG seamlessly into these areas.
Holding ourselves to a higher standard with B-Corp
Our firm experienced significant growth during and after the COVID-19 pandemic. Throughout this period of expansion, we worked diligently to stay true to the values we were founded on nearly 40 years ago. Our tagline, “Because People Matter,” reflects our commitment to our colleagues, clients and communities. While it may sound cliché, our leaders genuinely believe that prioritizing people and the planet is both good for business and the right thing to do. Achieving B-Corp certification was a logical next step, allowing us to gain recognition and continuously hold ourselves to a higher standard.
BPM’s B-Corp certification directly supports our ESG efforts by ensuring we practice what we preach. Prospective clients often ask us if we implement ESG practices within our own firm. If you’re potentially going to add a vendor for your carbon accounting work, you’ll want to consider how that vendor may impact your scope 3 emissions and whether they have data in this area in the first place.
At BPM, data is central to our ESG efforts, particularly as we are undergoing our B -Corp recertification process, which occurs every three years. We engage with leaders across the firm to gather data, evidence and insights on areas such as pay equity, employee benefits, DEIB, stakeholder governance and climate impact. This comprehensive data collection helps us identify potential improvements, track our progress over time and raise awareness of our ESG efforts.
Additionally, our colleagues engage in ESG-related work through our B-Corp certification efforts. There is a significant overlap between B-Corp standards and ESG topics and KPIs. Leveraging our B-Corp certification, our entire firm engages in broader conversations about ESG, reinforcing our commitment and leading by example.
Shaping an ESG strategy in an evolving landscape — from inception to implementation to innovation
When I joined BPM, my role was to help establish our ESG Advisory practice, specifically focusing on materiality assessments. However, as the landscape has changed, my conversations have shifted significantly toward carbon accounting. This pivot has allowed us to leverage our expertise in financial data and reporting. Conversations with our primary clientele often revolve around compliance. We work with private companies, as well as firms that are either preparing to go public or have recently gone public and need to measure and report their emissions. Many seek verification for their emissions data to meet customer demands for third-party assurance.
Looking ahead, I see a strong trend toward integrating ESG more deeply across our various practice areas. BPM has a robust array of services, including risk advisory, outsourced accounting, technical accounting, outsourced CFO, specialty tax and audit practices. We are already starting to include ESG-related components in our proposals for these areas.
For example: If we’re your outsourced accountant, would you also like us to handle your carbon accounting? If we manage your corporate taxes, can we assist you in understanding tax incentives for your decarbonization initiatives and how these will impact your project costs and payback period? If we conduct your financial audits, should we incorporate your company’s emissions data into those audits? The real potential for shifting business as usual sits in these intersections.
From checking the box to impact — materiality’s role
Materiality assessments play a pivotal role in shaping ESG strategy, similar to their importance in financial reporting and audits. These assessments help identify the most significant topics for a company, ensuring that efforts are focused where they will have the most impact. For example, many companies request their vendors’ scope 1 and 2 emissions data. While this helps with their own calculations, it might mislead vendors into thinking their primary carbon footprint comes from purchased electricity. In reality, focusing on emissions from business travel or purchased goods and services might be more beneficial.
As ESG regulations evolve, I already see materiality assessments becoming more critical. Without a focus on materiality, activities like carbon accounting could devolve into mere box-checking exercises. The goal should be to ensure that ESG efforts genuinely reflect a company’s most significant impacts and opportunities, specific to its unique business model and operations.
Here’s a practical example re: clean energy tax incentives — Many companies might rush to buy solar panels simply because it’s a common practice. However, do they have the data on their company’s emissions? Do they understand their largest sources of emissions? Is this truly where their efforts and financial resources would be most effective?
Using emissions data and the insights from a materiality assessment, companies can invest in projects that truly make a difference for their specific circumstances. This targeted approach not only aligns with regulatory requirements but also drives meaningful progress in sustainability. Bonus: it’s also much easier to convince key stakeholders, such as the finance leaders, to drive these changes!
Get ready — reporting and regulation changes are here
With all the changing reporting requirements and new regulations, you have to be ahead of the curve and ready to adapt.
Externally: We are actively socializing the role of accounting firms in ESG data collection and reporting. Many clients are surprised to learn that their financial auditor can also flag upcoming ESG-related reporting regulations. This education is crucial as auditing becomes a more common part of ESG reporting.
Internally: We are upskilling our risk, internal audit, outsourced accounting, technical accounting and assurance teams to prepare for evolving ESG reporting regulations. By equipping our teams with the necessary knowledge and skills, we ensure that we can navigate the changing ESG reporting landscape and regulations.
A dream collaboration? Legal + Accounting + ESG
There's a lot of collaboration between accounting and law firms in the ESG space. I was invited to join the American Bar Association’s (ABA) ESG & Sustainability Committee to complement their team of attorneys from my perspective of accounting and financial reporting. Most attorneys I’ve encountered work with clients who are advanced in their ESG efforts, tackling issues like greenwashing and sustainable supply chains. My role balances this by offering insights for those at earlier stages of their ESG journey.
During a recent webinar on greenwashing, an attendee asked, “Who does the actual carbon accounting work?” I reached out to answer their questions and had the opportunity to calculate their carbon emissions. This illustrates the practical support and education we aim to provide in collaboration with legal teams.
Our work at the ABA is heavily focused on education. We strive to make information practical and clear for those navigating the ESG landscape within their companies.
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