ESG Symposium synopsis: How to put firms in the driver’s seat

From coast to coast — quite literally — it’s a busy time in the ESG space.

At the Climate Week NYC Opening Ceremony on Sunday, California Gov. Gavin Newsom announced his intention to sign into law a bill requiring public and private companies making more than $1 billion annually who do business in California to report climate-related disclosures beginning in 2026.

Days earlier at the AICPA and CPA.com offices in New York, mere hours after the California legislature passed the bill, more than 60 representatives from firms and companies in the environmental, social, and governance space gathered for the second annual ESG Symposium.

“There are very few billion-dollar companies in this country that aren’t doing business in California. So while it’s in one state, it’s going to have a pretty significant impact in a lot of businesses in all states,” said AICPA & CIMA CEO Barry Melancon, CPA, CMGA, during a LinkedIn Live event at the symposium.

California’s new law is simply the latest in what Melancon called “market drivers” that are quickly making ESG reporting a topic that many corporations can’t simply choose to ignore — and that many CPA firms can’t afford to ignore. Three participating leaders from top 100 firms categorized ESG as at least a $100 million opportunity for their firm.

That came as no surprise to the AICPA’s CEO of public accounting, Sue Coffey, CPA, CGMA.

“There was just so much excitement in the room about the opportunity for our profession in so many different ways,” Coffey said during the LinkedIn Live event, “whether you’re in management accounting working for a corporation and addressing these issues at a corporate level, to large and small CPA firms and what their role is in supporting clients.”

Melancon acknowledged there has always been controversy in the ESG space, but he separates that from both the opportunity and the obligation that ESG reporting presents the profession.

“It really is about our public interest mandate as a profession in a lot of ways. This is information that people will rely on — just like financial information. It’s just a different set of information,” Melancon said. “The profession obviously is a critical component — [it’s] that trusted adviser that helps businesses deal with these issues and, ultimately, based on the laws, there’s going to be assurance or attestation over the information flows.

“This is clearly an evolving space in the profession, and that came across really clear in this symposium.”

Symposium seeks solutions

Melancon addressed the “why” when it comes to the accounting profession embracing ESG. The “when” of ESG disclosure requirements will come into focus, well, in due time.

But what about the “how”? How exactly do firms of all sizes go about seizing the ESG opportunity?

The hosts of the ESG Symposium are helping answer that question. On the eve of the symposium, CPA.com and Good.Lab announced a business model design program focused on helping firms accelerate their ESG advisory services. CPA.com is the AICPA’s business and technology subsidiary.

“We’ve seen this in other areas, how important that firm practice strategy is in an emerging area,” CPA.com President and CEO Erik Asgeirsson said on LinkedIn Live. Asgeirsson said CPA.com is already working with a number of top 100 firms to develop a firm practice services road map focused on building awareness and developing service delivery plans.

“You can bring in a subject matter expert — that’s important — but you need to figure out how you are going to go to market, how you are going to engage the overall partnership to really help move this forward,” Asgeirsson said.

Added Coffey: “I know CPA.com is doing a lot to make sure that firms have resources to develop the business model around that. And organizationally we’ve got a lot of resources in the area of training and guidance to make sure that members have the competency to actually perform the services that their clients are asking of them.”

The importance of getting on the same page

Between the SEC closing in on issuing a climate disclosure rule, European rules affecting U.S. companies, and now states like California getting involved, Melancon called the regulatory landscape “a matrix.”

Even so, thanks to the issuance of the first two global standards related to sustainability reporting earlier this summer, ESG reporting has a chance to develop in a more cohesive way than financial reporting, which first developed on a national level and then took decades to develop useful international interoperability.

“The notion is that this is going to evolve from a standards perspective on a global basis. Environmental issues are not going to be country-specific,” Melancon said. “It’s different for accounting or even auditing for private companies, where the system has grown up in the United States and a few other countries, and then it became globalized. This sequence is going to be different. It’s going to have more of a global feel.”

The International Sustainability Standards Board (ISSB), the board overseen by the IFRS Foundation that is responsible for setting global standards related to ESG reporting, recently asked stakeholders for feedback on its priorities for the next two years. Melancon wrote the official AICPA & CIMA response, showing support for the ISSB’s efforts while stating, in part, “We believe that the ISSB’s priority should be to provide organizations with tools, resources, and supporting materials needed to adopt S1 and S2 and embed these standards into their business models.”

Melancon added during the LinkedIn Live session that wrapped up the ESG Symposium: “What we have is an opportunity here today to take a step back and not let that disparate way develop, and actually to have it occur where there is at least as much commonality as possible throughout the world. We are seeing that.”

— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.