Build your skills for a career in ESG

Last November, Jackie Umstead, CPA, started the next chapter of her career — though she didn’t know it at first.

An auditor by trade, she was working at PwC as a director focused on public accountancy and multinational companies. But she sensed that her future might be in a new specialty: the fast-growing effort to track businesses’ performance on environmental, social, and governance (ESG) issues.

Umstead’s transition into ESG started with a specific client’s project. She learned that the client wanted to obtain attestation for data they were collecting on diversity, equity, and inclusion — one of the pillars of ESG. Umstead raised her hand to help.

“It helped flex a new muscle,” Umstead said of the project. As she developed new skills, she reached out to other leaders at PwC and said that she wanted to be part of the firm’s expanding effort to serve ESG needs.

Today, she’s a director with PwC’s trust solutions practice in ESG, part of a larger group working in the area. “It’s been a whirlwind, to say the least,” Umstead said, “but really fulfilling.”

And the lessons she and others have learned could provide a road map for accountants to build their expertise in this emerging field.

Jumping into a specialty as new as ESG isn’t easy for accountants or their employers. Accounting firms are looking for employees with strength in the core accounting disciplines as well as subject matter expertise in areas like carbon emissions and knowledge of sustainability standards that are still in the draft stage.

In short, it’s an emerging field where almost everyone is still adapting and learning. But that may also mean it’s the perfect time to get started.

“You have nothing to lose by educating yourself on ESG,” said Colleen Rozillis, a partner at Moss Adams LLP leading business consulting services. “It absolutely is the future of our profession.”

THE DIFFERENT ROLES OF ACCOUNTANTS, EXPERTS, AND CONSULTANTS

Before you can find your own ESG path, it’s important to understand the variety of roles that comprise the ESG teams recently created by public accounting firms.

As large accounting firms build their ESG practices, they’re hiring staff with audit and attestation skills, strategy-oriented consultants, and nonaccountant technical experts. “We are all coming from different backgrounds — engineers, those that have done tours in Peace Corps, lobbyists, people in public policymaking,” Umstead said.

A recent survey by the Center for Audit Quality (CAQ) found that 93% of public companies issued an ESG report or similar document and that 63% of those had obtained some form of assurance or verification over certain ESG metrics or information.

In interviews, several firms reported that their early work is largely focused on carbon emissions reporting, which requires companies to track their carbon footprint and report it under a standard such as the Greenhouse Gas (GHG) Protocol. The pressure for companies to report on their climate change impacts is only expected to grow under a draft proposal published by the SEC.

For that reason, ESG teams are especially focused on recruiting people with experience in interpreting and implementing new accounting standards, with some drawing a comparison to the implementation of Sarbanes-Oxley standards. Under the Sarbanes- Oxley Act of 2002, P.L. 107-204, the SEC required companies to implement new disclosure controls and procedures in order to foster more reliable financial reporting and enhance audit quality. That effort to guarantee quality information for investors and others could provide a blueprint for carbon emissions and other new types of reporting.

“Many of the traditional skills that CPAs have — like looking at process, understanding controls, and bringing objectivity and standards-based analysis to the review of company-reported information — are transferable to other types of reporting like climate,” said Dennis McGowan, CPA, vice president of professional practice at the CAQ, which is affiliated with the AICPA.

But interpreting and applying new sustainability standards will be just one part of an ESG team’s work. Some ESG leaders are also hiring experts outside the accounting profession in climate and other topics, who will work closely with auditors and accountants.

Finally, firms are looking for team members who can help clients assess their needs and craft a larger strategy for ESG reporting and compliance. That might include finance and accounting professionals who have worked on transformational projects.

“We’re always looking for people who’ve been in consulting roles, especially those who’ve taken companies through an ESG journey, from scratch to report — irrespective of where they are in the process. We’re also looking for consultants who understand how to integrate sustainability into corporate strategy and deliver long-term value for stakeholders,” said Karen Baum, CPA, leader of ESG and sustainability services for BDO USA. Firms will fill these new roles in various ways.

Every new team faces this question, Baum explained: “Do you build, do you buy, or do you partner [to bring the expertise into the firm]?” The answer will depend on how quickly and to what degree clients are embracing ESG transformation opportunities.

HOW TO MAKE THE LEAP

ESG teams are hiring from several sources, all in pursuit of the rare candidates with experience and knowledge in the specialty.

There’s also a growing pool of auditors and accountants with advanced education in ESG, said Justin Neff, CPA, a partner at Moss Adams leading the ESG assurance practice.

“What we’re seeing in public accounting, specifically, is people coming out of school with an accounting degree and a secondary ESG focus,” he said. “They’re looking at how to exclusively create a career in ESG assurance and ESG advisory.”

But despite the race to hire those with extensive ESG experience or education, Neff and others said there is plenty of opportunity to make midcareer transitions, too.

At BPM LLP, Kristi Staley, CPA, co-leader of the ESG practice, sees plenty of opportunity for accountants from across the firm.

“While the initial role will likely be advisorydriven, we’re open to our colleagues at various levels from all aspects of the firm,” Staley said. “Many skills from audit and tax work are transferable. We see a lot of opportunity internally for those passionate about ESG.”

A first step would be to become more knowledgeable about the area. So, how can accountants and others get a foothold on this new topic?

For Umstead, it starts with the work you’re already doing. She recommended that auditors and accountants begin by examining the ESG efforts and plans of their clients, their employers, and others.

Start by examining organizations’ published ESG reports, Umstead suggested. “Understand how they’re telling that story, especially if it’s your own client,” she said. “Really understanding where they are in their journey helps to show where you can start to help.”

That kind of research can lead to new conversations about potential ESG projects, including projects for clients as well as internal efforts at their own firm. Getting aboard just one of those projects can open doors, as it did for Umstead.

Umstead also recommended developing related skills, especially in data visualization and data processing. Those skills are important across the profession, but they can be especially helpful as accountants delve into sources of data that a company may not previously have examined or standardized.

Accountants can also get ahead by getting familiar with the ever-evolving standards and regulations on climate reporting, including the SEC’s draft exposure rule, as well as the voluntary standards that have guided early reporting, especially the GHG Protocol and the Sustainability Accounting Standards Board (SASB) Standards, Baum said. This year, the Value Reporting Foundation, which publishes the SASB Standards, and the Climate Disclosure Standards Board both merged into the IFRS Foundation, which is developing new standards through the International Sustainability Standards Board.

By studying the protocols that may govern ESG activities, “you’re starting with the end point. You can know what companies are going to actually have to deal with,” Baum said.

Neff agreed that understanding the existing and proposed standards and frameworks, especially the SEC draft rule and the GHG Protocol, is important. (See the AICPA’s summary on the SEC proposed rule on climate-related disclosures.)

“In the coming years, I anticipate baseline knowledge around these areas will be a requirement for a career in accounting,” he said. But it’s not just a matter of understanding the technicalities of a single document, he said, especially given how fast some of the voluntary standards are changing.

Instead, Neff said, the goal is to get a deeper, contextual understanding of “what ESG means, and how it’s impacting our clients,” he said. “What are their stakeholders looking for?”

He and others suggested keeping current on ESG topics by following ESG-related podcasts, blogs, and more, as well as the resources published by organizations like the AICPA.

TAPPING INTO CORE SKILLS

As they’re hiring accountants for ESG, team leaders are looking for hires who can thrive in a complex, fast-changing specialty, where the right answer isn’t always obvious. That requires a strong set of core accounting skills, as well as other soft skills and attributes that can help in navigating change.

For Kevin O’Connell, CPA, Trust Solutions ESG practice leader at PwC, that means experience with evolving GAAP standards and other forms of change in accounting, since they will be helping clients to implement new forms of reporting.

Besides mastering new standards, his team will have to help clients align ESG reporting with their existing financial reporting schedules. For example, O’Connell said, some ESG reports are currently completed during the summer but may need to move to February or March to align with the 10-K reporting cycle.

That points to a larger need for expertise in related specialties like change management and project management. “If you’re good at understanding business processes and controls, there’s a place for you in [an] ESG practice,” he said.

Candidates for ESG jobs also have to be comfortable with ambiguity and open-ended questions.

“Accountants have historically been able to come in and have a universally accepted framework to follow that comes with their job — financial accounting standards,” Neff said. But in ESG, there’s not always a clear answer to every question, or even a singular framework to follow, he said.

That’s why he and others have looked for candidates with intellectual curiosity — an attribute that could help them plan projects where there isn’t a single, clear-cut protocol or method of execution.

At Moss Adams, Rozillis said she looks at candidates’ ability to learn quickly by asking questions:Are they good interviewers?

“We actually provide a lot of our new hires with training in conducting interviews,” she said. The goal is to allow employees to lead conversations that build trust with clients and surface important information.

“What we want to learn is what is working for [clients], how can we make things work better, how do we move the needle in the organization? And that requires folks to trust you,” Rozillis added.

Rozillis also looks for humility. If someone needs to be the “smartest guy in the room,” that often leaves them unable to learn and adapt — especially in an area like ESG, where standards and protocols aren’t yet finalized.

“You’ll have to be willing to do a lot more learning, a lot more listening,” she said. “That can be really humbling, especially if you’re advanced in your career.”

But the challenges of a shift to ESG can come with rewards, too, no matter where someone is in their career. Besides the thrills and opportunities of joining a fast-growing part of the profession, ESG accountants often report a personal satisfaction in working on issues with an importance that extends far beyond the world of business.

About the author

Andrew Kenney is a freelance writer based in Colorado. To comment on this article or to suggest an idea for another article, contact Courtney Vien at Courtney.Vien@aicpa-cima.com.

LEARNING RESOURCE

Fundamentals of ESG Certificate

Kick-start your understanding of ESG (environmental protection, social inclusion, and governance) issues with this course, designed to help you learn how the landscape has developed and the key role CPAs and finance professionals have to play.

For more information or to make a purchase, go to aicpa.org/cpe-learning or call the Institute at 888-777-7077.

AICPA RESOURCES

Webcast

New developments in sustainability standard setting and SEC rulemaking

Practice aid

Considerations of ESG-related matters in an audit of financial statements