Sustainability is a concern for businesses of all sizes, and not just those in environmental sectors. Business owners are calling on accountants to help them prove they’re meeting environmental sustainability goals, and to suggest methods for improving sustainability to attract customers and investors. You may not be specifically trained in sustainability accounting, but you may get requests to do this kind of work. But how should you proceed? First, it helps to understand what exactly is involved in a sustainability attestation.
What Does a Sustainability Attestation Involve?
It’s a good idea to have a working understanding of sustainability accounting before you do any formal work in the field. If you haven’t already, find resources that deal with sustainability reporting to help you and your employees or partners get up to speed.
When it comes to a sustainability attestation, your duties as an accountant can vary widely depending on what the company wants, and how closely you’re involved with the company. In many cases, a company coming to you for a sustainability attestation has already gathered data about the sustainability of its practices, and is looking for someone who can assess that data and attest to its accuracy. The company may call on you as a kind of impartial judge to determine if the information can be used to make sustainability claims.
If you opt to go through with a sustainability attestation, the first step is to meet with your client and understand its goals for sustainability and the information it has gathered. Sustainability can be difficult to measure, so the company needs to be able to show it has used a logical measurement system for items like energy and water consumption, emissions, and the safety of manufacturing materials.
How Do You Measure a Business’ Sustainability?
As sustainability becomes more and more of a talking point for investors and business owners, the triple bottom line has become a major buzzword. You probably already know about the triple bottom line. It’s a combination of a business’ financial, social, and environmental performance.
In a sustainability attestation, you’re probably going to focus on two out of three of those bottom lines: environmental and social. Some measurements related to these ideals are pretty easy to determine. For example, a company’s greenhouse gas emissions can be accurately measured and reported with well-known and understood units, like grams or kilograms.
Other metrics, like a company’s hiring and labour practices, may be more difficult to quantify. If your company’s sustainability report includes a lot of subjective items like labour and hiring practices, workplace safety, and anti-corruption measures, you may need to spend more time immersed in the daily workings of that company to get an accurate picture. This is a bigger time commitment on your part, and might mean the difference between you accepting the engagement or opting out.
Common Misstatements in Sustainability Reporting
A misstatement in a sustainability report doesn’t necessarily mean a company isn’t operating sustainably, or that you can’t offer an attestation. Part of your job as an accountant is to look for these possible errors, and see if you can offer solutions for how to deal with uncertainty in measurements and reporting.
Consider the level of uncertainty in a sustainability report when you’re deciding whether to take the job. If your client has a lot of quantifiable and verifiable data, the job might be an easy one. On the other hand, a high degree of uncertainty means more work for you, and for the client.
Common misstatements include:
- A company understating numeric figures for things like emissions or energy consumption
- Reports that leave out the unit of measurement
- A report that leaves out key information about events and activities within a time period. For instance, a report indicates that December had very low carbon emissions but leaves out the fact this was due to the company being closed for a week for the holidays.
- A report that fails to mention the level of uncertainty for the given metrics
How Is a Sustainability Report Presented?
If you’re going through with a sustainability assessment, you need to evaluate the data as a whole. Take into account not just the facts and figures, but how they’re being presented, and any possible misstatements that could affect the interpretation of the data.
Not every measure of sustainability is quantifiable, and sometimes there’s a bit of room for interpretation when you’re looking at data. The energy needs of different businesses vary greatly. Your own level of familiarity with a client’s industry can be the deciding factor in whether you’re able to offer a meaningful sustainability attestation.
Pay special attention to comparative figures. For example, say a client in the metal fabrication industry is comparing its water usage during the last six months to its water usage over a six-month period two years ago. While the first figure may represent a drop in that company’s water usage, the overall figure may still look high to consumers who don’t know the industry very well. In this case, you might encourage your client to find an industry average figure for the same time period, something that demonstrates its business compares favourably to the competition. In the event you can’t sign off on a sustainability report, encourage your clients to look for ways to green their business.
The next time you receive a request for a sustainability attestation, take a look at the company’s sustainability reports, and determine the level of work involved for you and your firm. Performing sustainability attestations can benefit your firm by showing you care not only about finances, but about a business’ environmental and social consciousness as well.