Preparing yourself and your accounting firm for ESG

Accounting firms looking to provide ESG reporting and audit services may wonder about the skill sets and investments required in an evolving ESG environment. For Debbie Biddle-Castillo, risk advisory principal and ESG advisory leader at Top 10 Firm Baker Tilly, carbon accounting and climate risk are key.

“On the reporting side of things, the really key skill sets that are being driven right by the state regulations are carbon accounting and climate risk. Those are both key components of the California Climate Act. They are key components of other state-level acts that we see coming down the pike. So that would be No. 1 in terms of technical skill is carbon accounting and climate risk,” said Biddle-Castillo. “A regulatory reporting background from an ESG side of things, so an ability to keep on top of those frameworks, and a knowledge and education into the regulatory landscape is also important.”

That said, Biddle-Castillo also stressed the importance of functional skill sets. “I want people on my ESG reporting team who are excellent consultants, who are excellent accountants. Those things that we look for elsewhere, plus I’m deep in carbon accounting; I’m deep in climate risk; I really know the landscape that we’re talking about and bring those insights to our clients.”

Dan Harris, an audit principal and sustainability assurance leader at BDO USA, and sustainability services market leader Srinand Yalamanchili said that, on the assurance side, a combination of assurance experience and a technical understanding of the area being assured (e.g., Greenhouse Gas Protocol for climate) is a must. On the advisory side, technical skills are also important, where an understanding of how sustainability levers intersect with a company’s operations is highly dependent on its industry.

(Read more: “Accountants and ESG: The next frontier.“)

Both assurance and advisory emphasize the importance of combining technical skills, industry knowledge, and excellent client service skills, especially since the space is new and rapidly changing.

Professionals should have experience with financial audits and sustainability matters, and be adaptable and proactive when clients are preparing for the first time, Harris and Yalamanchili explained.

When asked about the investments that firms should consider to stay competitive, Harris and Yalamanchili outlined the following:

• Partnerships: Identify gaps and look for mutually complementary services with other firms.
• Training: Climate-related training should be a priority.
• Technology: Partner with software providers in this active space. They noted that there are numerous carbon accounting platforms and sustainability accounting platforms available that can help streamline a company’s ESG data management and reporting.