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The Future of Sustainability Accounting & ESG Reporting Standards

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June 1, 2023

The earth's natural resources are used by companies worldwide to generate energy, facilitate production and create profits. From energy cultivation procedures, conservation collectives and laws that protect environmental resources, industrial sustainability is a current focus of companies and individuals alike. 

In 2010, industrial sustainability practices came to the global spotlight with the Deepwater Horizon oil spill. The spill was caused by an explosion at an oil-drilling site operated by Transocean and BP. The explosion killed 11 employees and contaminated 134 million gallons of oil in the Gulf of Mexico.1

With devastating consequences to aquatic life and seaside communities surrounding the Gulf, the Deepwater Horizon spill created what the National Oceanic and Atmospheric Administration (NOAA) considers the largest natural resource damage assessment in United States history.1

Regarding companies like Transocean and BP, sustainability accounting and ESG reporting play significant roles in how operations impact and protect the future of natural resources. 

What Is Sustainability Accounting?

As standard accounting involves the record-keeping of a company's finances, sustainability accounting focuses on how a company's procedures and profits impact the environment. 

Companies often use sustainability accounting to showcase their profits alongside their environmental conservation efforts when attracting investors.6

What Is Environmental, Social and Governance (ESG) Reporting?

ESG reports contain information regarding a company's environmental, social and governance practices, all of which are significant considerations for investors.9

Where ESG Got Its Roots

The importance of sustainability accounting and ESG reporting didn't develop overnight. Decades of environmental and social activism resulted in what ESG reporting is today. Let's explore where the roots of ESG were planted and how these standards and sustainability accounting may change in the future. 

1980s

Environmental conservation became an essential factor of business in the 1980s as the impact of pollution became more apparent across the globe. More companies began considering the environmental impact of their practices when planning budgets, along with the safety and health of employees and those living in areas impacted by corporate pollution.

1990s

In the early 1990s, a poll by Gallup revealed that 78% of U.S. residents considered themselves environmentalists.10 

The increasing popularity of environmentalism, the new global recognition of Earth Day and the corporate environmental conservation concerns of the 1980s ultimately led to the Corporate Sustainability movement of the 1990s.9 Many companies began taking conservation more seriously and adopted ESG reporting during this decade to attract investors and consumers while also making efforts to protect natural resources. 

The early 2000s 

Many companies involved in the Corporate Sustainability movement of the 1990s began taking a stance on social issues in the early 21st century. This action is now known as corporate social responsibility (CSR) and influenced company-promoted volunteer opportunities, activism and social engagement between corporations and consumers.9

The early 2020s

Today, ESG reporting standards and sustainability accounting are essential for corporations worldwide. Current ESG reporting standards allow corporations to showcase how they handle, operate and respond to environmental, social and government impacts on the planet and its inhabitants. 

ESG Reporting Standards & Guidelines

Current guidelines for ESG are regulated by three primary organizations which identify needs for today's reporting standards. 

Sustainability Accounting Standards Board (SASB)

The Standards promoted by the SASB involve the current ESG issues that influence the financial and conservation success of businesses in 77 industries worldwide. Many investors rely on SASB standards to determine which corporations have sustainability efforts that have a greater impact on the environment.11

Global Reporting Initiative (GRI)

The GRI Standards are meant to identify and share both the positive and negative ways in which companies are impacting the environment, along with the public responses of companies to social issues.12

The GRI Standards consist of three reporting processes that help investors understand a company's sustainability efforts and ESG evolution. 

  • GRI Universal Standards, which are relevant for businesses in all industries. 
  • GRI Sector Standards are only relevant in specific sectors and do not apply to every industry.
  • GRI Topic Standards only apply to businesses involved with specific topics and help investors identify ESG trends based on particular issues. 

World Economic Forum & Stakeholder Capitalism Metrics

The goal of the World Economic Forum & Stakeholder Capitalism Metrics is to develop Standards that will promote corporate participation in the UN Sustainable Development Goals.13

These Standards support corporate executives and policymakers when making decisions that impact sustainability and ESG. In January 2023, the Forum reported that 137 companies had followed these Standards in their most recent ESG reporting efforts.13
 

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Professional Opportunities in Sustainability Accounting and ESG

According to research by the Bureau of Labor Statistics, there's a continuous need for business and finance professionals focused on sustainability efforts. These fields are expected to grow by 7% through 2031, creating more than 715,000 new jobs for professionals with skills in these areas.2

As the need for sustainability and conservation efforts in business and accounting continue to grow, sustainability accounting is more important than ever. Let's explore professional opportunities in this field and discover how you could impact sustainability in your career.

Sustainability Accountant 

What They Do

Sustainability accountants consider a company's impact on natural resources, waste and sustainability in relation to its finances and make decisions based on the best possible outcomes for the planet and profits.3

Industries that Require Them

Sustainability accountants are essential to companies within production industries that regularly use natural resources and produce waste that impacts the environment. According to economist James Hamilton, companies that cannot thrive without sustainability accountants include states with laws designed to regulate greenhouse gas and carbon emissions.3

Industry Growth Projections

The field of accounting is expected to grow 6% by 2031, resulting in the creation of about 81,000 new positions across the United States.4

Cost Estimators

What They Do

Cost estimators work with companies to determine production and new projects' overall costs and financial risks. These professionals that work in sustainability consider a company's costs and financial risks, along with the environmental impact of a project, and often make cost estimations for new sustainability projects.3,5 

Industries that Require Them

As energy prices surge with inflation, cost estimators are becoming more essential to companies that utilize natural resources for energy and plan and execute sustainability projects.

Industry Growth Projections

In 2022, the Bureau of Labor Statistics reported an industry decline in cost estimation, with an expected 2% decrease through 2031.5 However, the financial industry is expected to grow throughout the decade, lending promise to opportunities for financial experts with cost estimation skills. 

Budget Analyst

What They Do

Budget analysts oversee a company's financial planning procedures. Professionals in this role ensure a company stays within budget while maintaining sustainability within its practices. 

Industries that Require Them

The healthcare and manufacturing industries are two in particular that benefit from budget analysts, especially as corporate sustainability becomes more important. These industries utilize natural resources at a high rate, which results in waste and a higher demand for renewed resources and efficient sustainability practices. 

Industry Growth Projections

The need for budget analysts is expected to grow steadily at a pace of 3% through 2031, creating hundreds of new positions for experts in this field.7

Auditor 

What They Do

Auditors who work in sustainability develop plans of action to reduce a company's financial, resource and environmental risks. They play a role in ESG reporting regarding their company's records and providing proof of compliance regarding sustainability efforts.4

Industries that Require Them

All industries that use natural resources produce environmental waste and impact sustainability require auditors to follow guidelines established by the United States Environmental Protection Agency (EPA).8 Failure to abide by these guidelines, laws and regulations could result in costly fines, which auditors work diligently to avoid. 

Industry Growth Projections

Like the growing need for accountants, auditors are also experiencing a rise in demand. The auditing field is expected to grow 6% by 2031.4

What Role Will You Play in Sustainability Accounting and ESG Reporting Standards? 

Whether you're interested in creating ESG Standards and sustainability policies or want to make your mark in the in-demand field of sustainability accounting, you'll need the right education to succeed.

Ohio University offers Master of Accountancy and Analytics programs designed to fit your schedule and support your professional goals. Learn online anywhere in a virtual classroom or complete your MACC on OHIO's beautiful campus. 

Learn more about sustainability accounting and ESG reporting in the online Master of Accountancy and Analytics and the full-time Master of Accountancy and Analytics programs from Ohio University. 

Sources

  1. National Oceanic and Atmospheric Administration. "Deepwater Horizon." April 2010. Retrieved Nov. 8, 2023 from https://darrp.noaa.gov/oil-spills/deepwater-horizon
  2. U.S. Bureau of Labor Statistics. "Business and Financial Occupations." Sept. 6, 2023. Retrieved Nov. 8, 2022 from https://www.bls.gov/ooh/business-and-financial/home.htm
  3. Hamilton, James. "Is a Sustainability Career on Your Green Horizon?" U.S. Bureau of Labor Statistics. Aug. 31, 2012. Retrieved Nov. 8, 2023 from https://www.bls.gov/green/sustainability/sustainability.htm#other
  4. U.S. Bureau of Labor Statistics. "Accountants and Auditors." Sept. 6, 2023. Retrieved Nov. 8, 2023 from https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#tab-1
  5. U.S. Bureau of Labor Statistics. "Cost Estimators." Sept. 6, 2023. Retrieved Nov. 8, 2023 from https://www.bls.gov/ooh/business-and-financial/cost-estimators.htm#tab-1
  6. The Conversation. "What is sustainability accounting? What does ESG mean? We have answers." Feb. 2, 2021. Retrieved Nov. 8, 2023 from https://theconversation.com/what-is-sustainability-accounting-what-does-esg-mean-we-have-answers-150996
  7. U.S. Bureau of Labor Statistics. "Budget Analysts." Sept. 6, 2023. Retrieved Nov. 8, 2023 from https://www.bls.gov/ooh/business-and-financial/budget-analysts.htm
  8. United States Environmental Protection Agency. "Laws and Executive Orders." July 3, 2023. Retrieved Nov. 8, 2023 from https://www.epa.gov/laws-regulations/laws-and-executive-orders
  9. Peterdy, Kyle. "ESG (Environmental, Social, & Governance)." Corporate Finance Institute. Retrieved Nov. 8, 2023 from https://corporatefinanceinstitute.com/resources/esg/esg-environmental-social-governance/
  10. Jones, Jeffrey. "Americans' Identification as "Environmentalists" Down to 42%." Gallup. Apr. 22, 2016. Retrieved Nov. 8, 2023 from https://news.gallup.com/poll/190916/americans-identification-environmentalists-down.aspx
  11. SASB Standards, "Download SASB Standards." Retrieved Nov. 8, 2023 from https://www.sasb.org/standards/download/?lang=en-us
  12. Global Reporting Initiative. "English: GRI Standards." Retrieved Nov. 8, 2023 from https://www.weforum.org/impact/stakeholder-capitalism-reporting-metrics-davos2023/
  13. World Economic Forum. "Stakeholder Metrics Initiative: over 150 companies implement sustainability reporting metrics." Jan. 9, 2023. Retrieved on Nov. 14, 2023 from https://www.weforum.org/impact/stakeholder-capitalism-reporting-metrics-davos2023/

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