The accountancy profession is poised to play a more prominent
role on sustainability issues, according to Big Four firm
leaders.
KPMG Sustainability Services global head Wim Bartels told
The Accountant there are three main sustainability areas
where the profession can increase its service offering and that
growth for sustainability services was well above KPMG’s overall
growth.
“I think that with the results of the readers’ survey [see
Stakeholders divided over reporting], the accountancy
profession needs to act. We have had some other issues in the
financial audit world, so we had to focus there, but we need to
build on what we already provide [on sustainability] so that for
the coming years we will be ready.”
Bartels believes services on sustainability reporting
and climate change internal controls are the areas where the
profession can take a leadership role.
On sustainability reports, he noted: “We are the ones who know
how to audit information. We know how to approach both data and tax
issues. That is one area where we need to work on and have a role
to play.”
Deloitte Global leader of internal audit services Eric
Hespenheide, who co-presented a seminar on SMEs and supply chain
reporting, agrees that both internal and external assurance on
sustainability reporting is a growing area for his firm and the
profession.
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By GlobalData“We have unfortunately found that while [organisations] can say
a lot of good things and mean it, there are times when the
information isn’t quite as accurate as they might otherwise like it
to be or represent it,” Hespenheide said. “So, internal assurance,
whether it is done by internal audit or whether it is done by
another compliance group, is an important element and we can
provide those services as part of our traditional internal audit
services.
“I think we are also beginning to see the emergence of greater
demand for external assurance on the broad CSR reporting.”
Both sustainability experts point to carbon emissions trading
and the accounting of carbon credits as another potential area of
interest.
“Greenhouse gas emissions seem to be an area [of growth],
particularly in the EU as well as what we are seeing in Japan with
the regulations on cap and trade systems,” Hespenheide said.
“We are starting to see the merger and the integration of some
of these things in the traditional reporting mechanisms that
companies have around their financials. In the case of carbon, it
may well result in some debits and credits and assets and
liabilities on companies’ balance sheets. So that will be one
[area] and perhaps the next area will be [accounting for]
water.”
Bartels said he has already observed a short-term demand for the
assurance of emissions trading schemes and other carbon-related
disclosures.
“In my view there will be a demand in the short term to assure
that information,” he added. “Companies are now starting to
disclose, tell us what they do, but the next question will be: ‘Is
this reliable information or not?’ It is coming up already – you
see some elements of information being challenged.”
The KPMG sustainability expert believes that financial auditors
also can play a key role on setting up internal controls of
non-financial information by drawing on their financial
experience.
As well as more services, both firms told The
Accountant the geographical spread of sustainability
initiatives, such as sustainability reporting, is also gathering
momentum. Hespenheide described Deloitte’s CSR services growth as
exponential.
“In Europe it has grown particularly well but also in Japan,
Brazil, Australia, Canada and now the sleeping giant in the US is
waking up to this,” he added.
Bartels said KPMG firms in Brazil, the Netherlands and the UK
are receiving great demand for sustainability services, while more
clients in developing markets such as China are enquiring.
He estimates KPMG’s sustainability services has grown between 20
and 30 percent during the past three years, higher than the
network’s overall growth of 17 percent in the past financial
year.
