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Companies will look to tax professionals to help them achieve greater sustainability levels required by increasing regulation and stakeholders’ desires.
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‘Accountants key’ to meeting tighter ESG rules
05 April 2023
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According to a report by CPA Australia, accountants are vital for businesses striving to meet greater environmental, social and governance (ESG) obligations, though they lack formal training for it.
Senior manager of business and investment at CPA Australia Gavan Ord said accountants would need help meeting the ESG challenge or the skills shortage would simply get worse.
“In Australia, almost a third (31 per cent) of businesses said their finance and accounting team was the business unit responsible for ESG adoption and only a quarter had a dedicated sustainability team,” said Mr Ord.
“We’re already facing a skills shortage in Australia and the demand from businesses for accountants to help them with ESG reporting and measuring is only adding to this challenge.”
“ESG is becoming an integral part of accountants’ roles in Australia and across the world. We must ensure accountants are upskilling to meet the growing needs of businesses in ESG.”
Mr Ord said Australian firms stood out as they were primarily motivated to attend to ESG by the potential for brand damage.
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“Reputational risk is a big driver of ESG adoption in Australia, at 42 per cent, with leadership from the board or senior management the second most significant influence at 36 per cent,” he said.
A recent survey by HLB Mann Judd found many businesses adopting ESG believed it could offer a competitive advantage.
The firm’s Adelaide corporate advisory partner, Katelyn Adams, said businesses were looking to meet greater ESG expectations of stakeholders as a way to attract additional funding and strengthen their organisation.
“They know it is the right thing to do but they also know it can potentially put them ahead of their competitors,” said Ms Adams.
“If they are looking to attract more funding those key investors really are looking at companies to have a strong ESG piece.”
“Many investors are finding companies that have strong ESG practices in place more attractive. A company that can clearly communicate its ESG objectives demonstrates commitment to acting as a good corporate citizen.”
The CPA Australia report found the greatest challenge to ESG adoption was difficulty measuring and tracking performance, at 38 per cent, the lack of standardised reporting standards and frameworks, 35 per cent, and the cost, 34 per cent.
“We want the federal government to give businesses more direction in the upcoming budget,” said Mr Ord.
“We want the Australian Accounting Standards Board to be given additional and extended funding to develop climate reporting standards in the first instance, and broader sustainability-related standards in the future. Businesses too often struggle with measuring ESG performance.”
“The federal government should consider incentives to encourage smaller businesses to seek advice on how ESG impacts on their business strategy and how seeking energy efficiency can aid the transition to a lower carbon state.”
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