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Sustainability Assurance: A Promising New Service Opportunity

StarbucksIt’s 7:05am and I just popped into my local Starbucks for my regular morning fuel: a venti iced chai tea latte. At this hour, the only thing “green” I am looking for is the Starbucks logo on my coffee cup. However, if I pause to take a look around the coffee shop, I notice there are actually quite a number of “green” initiatives happening all around me. Trash cans are split down the middle with half designated for landfill and half for recycling, the wall is covered with options for reusable mugs and the cup in my hand has the recycling logo on it.

Starbucks, like many other dominant players in almost every industry, has taken significant steps to make its business model more sustainable and records these steps in its Global Responsibility Report. Unlike U.S. GAAP-directed financial statements, these reports—often called “sustainability reports” have limited guidelines for form or content. They can include nonfinancial factors ranging from environmental stewardship to employee health initiatives, community involvement and ethical sourcing in supply-chain practices.

Often a companion to financial reporting, sustainability reports symbolize an ever-growing demand by consumers, regulators, employees and investors for increased transparency. So far, we have seen many different formats for sustainability reports (sometimes also referred as corporate social responsibility reports or environmental, social, governance  reports), although we are beginning to see some sense of reporting uniformity around what is called the 3Ps—people, planet and profit—or “triple bottom line reporting.” In very simple terms, they represent the following:

  • People = Fair and beneficial business practices toward labor, the community and region in which a corporation conducts its business
  • Planet = Sustainable environmental practices
  • Profit= Economic value, created by the organization, after deducting the cost of all inputs, including the cost of the capital tied up

Historically, when you break down business strategies, the focus has been on profits. While this still holds true today, the strategies surrounding a business’ impact on people and the planet are becoming just as important as those surrounding profits. Most executives see the value of having business strategies and resulting business practices that come with a focus on people and planet. For some businesses, reporting these practices and related financial metrics that evaluate the results of these practices is a symbol of sustainable stewardship; for others, it is a business imperative.

So why are more organizations not meeting this reporting challenge? Well, there’s a big difference between looking environmentally responsible and being environmentally responsible. Some of the barriers and challenges include: 

  • Lack of a single standard for measurement and benchmarking in sustainability reporting
  • An overabundance of green product certifications that sometimes have questionable standards or verification
  • Incentives within companies to report the positives and ignore the negatives in their environmental and social performance
  • Informal or inadequate systems for collecting data and ensuring quality control over reported data
  • Inconsistent use of key performance indicators or benchmarks
  • Lack of an external attestation requirement to promote integrity and accuracy in reporting

All of this uncertainty and a lack of uniformity creates opportunity. Sustainability brings a new dimension to our role as trusted business advisers to our clients. Our extensive education, experience requirements and adherence to strict accountancy laws position us as premier providers of sustainability services, specifically sustainability assurance. By offering this service you can validate the value of a company’s sustainability report, as well as its effectiveness and purpose. This will provide readers with confidence in the credibility of the reported information.  

For resources on Sustainability Reporting and Assurance, visit the AICPA’s webpage where you can find relevant whitepapers, articles, FAQs and podcasts. You may be interested in participating in a webcast discussing the market for sustainability assurance and related advisory services, taking place on June 15 at 2p.m. If you have clients interested in assuring their sustainability reports you may wish to share this sustainability assurance brochure to help explain the value of the CPA assurance.

What opportunities do you see in stepping into assurance of sustainability reports?

 

Gerardo Godinez, CPA, Moss Adams. Gerardo has more than eleven years of experience working in public accounting serving clients with assurance needs, consulting on complex technical and accounting matters, and assisting with internal control assessments. He is currently a member of Moss Adams’ CSR Working Group, which is responsible for the firm’s annual CSR reporting. Gerardo is also a subject matter specialist on the SEC’s Conflict Minerals Rule. He earned a B.S. in Business Administration, Accounting at San Diego State University. Additionally, he is a 2011 graduate of the AICPA’s Leadership Academy.

 

 

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