In recent years, ESG (Environmental, Social and Governance) has become a top priority for businesses, shaped by evolving regulations, rising investor expectations and growing consumer awareness. PwC’s 27th annual CEO survey highlights that ESG remains a key focus for organisations – not only to fulfil regulatory requirements, but also to safeguard business reputation in an era of increased scrutiny.
This shift toward ESG is fundamentally transforming how companies operate, encouraging them to focus on long-term value creation. Today, integrating sustainability, ethical practices and social responsibility into core strategies is vital. This shift impacts every aspect of business operations, from supply chain management to hiring practices.
To break it down:
- Environmental: Companies are working to reduce carbon emissions, improve energy efficiency and manage waste sustainably
- Social: There is an increasing emphasis on diversity, equity and inclusion (DEI), employee well-being and community engagement
- Governance: Ethical leadership, transparency and board diversity are receiving increased scrutiny.
This comprehensive approach not only helps businesses manage risk and meet regulatory requirements, but also builds trust and loyalty with stakeholders.
Why is ESG so important?
Investor pressure
Increasingly, investors view ESG factors as indicators of a company’s sustainability, risk profile and long-term performance. ESG metrics are being evaluated alongside traditional financial data, leading to a surge in ESG-focused investment funds, including sustainable investing, impact investing and socially responsible investing (SRI). Businesses that excel in ESG practices can be seen as more resilient and adaptable to regulatory change, and less likely to face reputational damage.
Regulatory requirements
Governments and regulatory bodies are increasingly imposing stricter ESG reporting mandates. The EU’s Corporate Sustainability Reporting Directive (CSRD) requires companies to disclose their environmental and societal impacts, with mandatory auditing of this information. Additionally, the global adoption of the Task Force on Climate-related Financial Disclosures (TCFD) guidelines is ensuring greater transparency around climate-related risks. This regulatory push means businesses must implement robust ESG data collection and reporting systems and finance and accounting professionals are essential in ensuring that ESG data is as rigorous and auditable as financial information.
In addition, as public interest and scrutiny in sustainability continue to grow, it’s no surprise that Google Trends data shows a significant rise in searches for both “ESG reporting” and “sustainability reporting” over the past five years with notable peaks in 2024.
Redefining the role of accounting professionals
Between 2022 and 2023, professional and financial services saw a 14.5% increase in green job openings, largely driven by the rise in sustainable finance and climate change reporting. However, many of these green jobs are evolving into sustainability positions, reflecting the rapid expansion of environment, social, and governance (ESG) investing and portfolio management. This shift has opened up new opportunities in sustainable finance, although there is a significant skills gap to be addressed.
Accounting professionals are stepping into vital roles within ESG reporting, ensuring the accuracy and reliability of non-financial data. This emerging responsibility goes beyond traditional financial reporting and requires expertise in tracking and verifying metrics related to sustainability, social impact and governance.
Today’s accountants are called to:
- Measure and report on ESG performance: Integrate ESG metrics into financial statements, using frameworks like the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB).
- Ensure regulatory compliance: Stay ahead of evolving regulations such as the EU Corporate Sustainability Reporting Directive (CSRD).
- Support decision-making: Provide data on ESG performance to help management make informed decisions about long-term sustainability and risk management.
In response to these market changes, the Association of Chartered Certified Accountants (ACCA) has recently launched a new Professional Diploma in Sustainability. This program offers participants the opportunity to gain in-depth knowledge of sustainability frameworks, strategy, management, reporting, and assurance through over 60 hours of learning spread across four certificates and one exam. This comprehensive training will better equip accountants to support businesses in their sustainability journeys and unlock new career opportunities.
Helen Brand, Chief Executive of ACCA, emphasised the vital role of accounting professionals in supporting sustainable business practices – “The expertise of accounting and finance professionals in driving sustainable approaches to business is essential if we are to make the progress the planet so desperately needs. With their central role working in and for countless businesses and organisations across the world, professional accountants are well placed to play a key role in shaping the future we need.”
Alex Alcock, head of Distinct’s accountancy practice division adds – “We’re seeing exciting shifts within the accounting market, with a growing demand for accountants who not only possess technical expertise, but also a solid understanding of environmental frameworks and compliance with new regulations. This trend is creating opportunities for tax and audit professionals to expand their skill sets and adopt more strategic advisory roles.”
As ESG continues to rise in importance, accountants equipped with this knowledge will be in high demand, positioning them to contribute to a more sustainable and equitable future.
The role of ESG in employee attraction and retention
As a recruitment agency, it’s important to highlight the significant role that ESG plays in attracting and retaining employees. According to an IBM survey, 71% of employees find environmentally sustainable companies more appealing.
Recent findings from PwC’s Global Workforce ESG Preferences Study 2024 also indicate that ESG has a substantial impact on attracting talent. While 38% of participants reported prioritising salary above all else, many also place a high value on a company’s ESG policies.
The study went on to summarise that ESG not only contributes to attracting talent but also presents organisations with the opportunity to enhance their ESG profile during the recruitment process. By effectively communicating the personal impact of ESG on employees, organisations can provide a more tailored and engaging experience that may significantly boost retention.
ESG is driving transformation in business and accounting, expanding the scope of what companies must report, how they manage risks and how they create value. Accountants play a crucial role in ensuring that ESG data is accurate, compliant and aligned with business strategies. As sustainability and responsible business practices become mainstream, ESG will continue to influence how companies operate, grow and measure success.
Working with Distinct
At Distinct, our journey to becoming a B Corp began in 2023. We not only believe in the importance of sustainability and ESG practices, but also feel a real responsibility to our staff. We understand that this journey can be daunting and we’re happy to share insights and learnings from our experience so far.
As a leading recruitment specialist, we’re here to help you find finance and accounting professionals who can support your business through these transitions. So if you are looking to bolster your team or simply want to discuss trends within the market, please don’t hesitate to reach out.