Key themes in ESG implementation for mid-market accountancy firms

Accounting leaders at innovative UK firms discuss how they’re developing Environment, Social and Governance (ESG) strategies for their clients, and their own firms.

Developing, measuring and delivering ESG policy is now a central part of operations for accounting firms. Happily, a growing number of accounting leaders at some of the UK’s most innovative firms are taking a proactive role in developing ESG strategies both for clients and the firms themselves.

They talked to us about the challenges facing the sector as compliance, engagement and leadership morphs from a ‘nice to have’ to business as usual. In this piece, they focus on the importance of engagement, authenticity and measurement.

‘There’s no substitute for authenticity’

Mhairi Poole, Head of Sustainability, Forvis Mazars

There are three parts to an effective ESG strategy that people can believe and buy into. First of all, you can’t talk the talk if you don’t walk the walk. So that means our strategy as a firm has to be aligned to the advice that we are giving to clients in this space.

Second, we’ve got growing client expectations and requirements, which means we have to demonstrate our commitment in this space as part of tenders, throughout engagements and as part of ESG ratings. And then finally people’s expectations. It’s a really important factor when it comes to recruitment and retention. People want to work at firms that live up to their own values – we see that all the time.

Ultimately, it’s about being authentic. People, whether that’s clients, potential recruits or wider stakeholders, notice if you’re saying one thing, but then actually doing something quite different.

‘The risks from ignoring this are real’

Mark Lumsdon-Taylor, Partner, MHA Baker Tilly

If we didn’t look at ESG internally, from a purely financial perspective, I think it would have damaged our ability to offer services. Because, as our Chairman says, how can we expect you to do something if we don’t do it ourselves?

So the first thing is, it’s important to demonstrate genuine commitment to ESG. So part of our strategy within the firm is quarterly reporting of our four pillars (innovation, trust, talent & climate) to the main board. The board can see performance against each of them, and there are KPIs against all of those. If we’re not doing that as a firm, how can we talk to a FTSE 100 business about what we think they need to do?

Second thing is, as an ethical and credible business, how do we support our recruitment of the next generation of accountants who look at sustainability and the way in which we look after the planet. Taking this seriously affects our DNA as a company.  

Thirdly, it would completely undermine our ability to go out there and win and retain work. When we get tenders, they will be rigorous, particularly in the public sector, and they want more than simply boxes being ticked. It’s changed. They want to know, What are your policies? What are your procedures? What are your kite marks? What is your transition planning? Do you publicly state?

Accounting skills will change

Yi Zheng, Senior Manager ‑ Sustainability & ESG, Saffery

I think right now practitioners are trying to upskill themselves through continuous professional development courses. I also believe accounting bodies are incorporating sustainability as part of the qualification, with the modules now having designed sustainability as part of the work or study content for newer accountants to come into the profession.

But right now in the workplace, I think that the situation is still quite mixed, with less confidence among the general accountant population, just because the expertise in sustainability still lies with people who have years of experience.

If accountants are buried in day-to-day account preparation, audit and tax work, then I would say the breadth of information they can absorb could be diluted. And then it’s about keeping up with the regulatory requirement, new expectations, new science, everything around that. And they may need external support to keep themselves up to date.

However, in the newer generation, such knowledge will be more expected – especially when it comes to data quantification of ESG.

‘DEI requires rigor – and a focus on real outcomes’

Alex Hindson, Partner, Head of Sustainability, Crowe

Environmental targets are more numerical, so with Net Zero we signed up to the Science Based Target Initiative (SBTI) and they’ve validated our numbers. Then it’s a case of delivering the projects; ultimately there are clear rules of the game.

However, there is more to ESG than that. Diversity, Equity and Inclusion (DEI) is less tangible in some ways, and has gone through a few iterations. We’ve come to the point where we’ve got these groups you expect to have: gender, ethnicity, neurodiversity etc. And what we’re trying to do is link that to our people and talent strategy.

At a base level of communication and awareness, celebrating lots of things is great. But now we’re asking, ‘Okay, with our Southeast Asian employees, how’s their life different as a result? Why is what we’re doing going to make them want to come here and stay, and thrive, and contribute?’

I think we’re actually doing quite well in hiring a diverse group of people and promoting them. But at the end of the day, why are you doing it? I don’t think diversity is an end, it’s a means.

Christian Doherty is a business journalist and freelance writer for AAT.