Social Responsibility and Sustainability Reporting Open Opportunities for CPAs

Jun 24, 2020

Corporate social responsibility (CSR) is a management concept companies use to integrate social and environmental concerns into their business operations – a balance of economic, environmental, and social imperatives.1 CSR programs can include charitable giving, community development and volunteering, socially and environmentally conscious investing, participating in fair trade, improving labor practices, green supply chains, and reducing carbon footprints. Regulations and pressures from both the public and investors are nudging corporations toward accountability for their impacts on the environment and society.

In action, a sustainable program may look like Google Green, an effort to use resources efficiently and support renewable power. Google Green has led to an overall drop in power requirements for Google’s data centers by an average of 50%.2 Need more examples? In 2016, IKEA turned a profit by recycling waste – which had cost the company more than $1 million per year – into some of its best-selling products.3 In 2018, then-CEO and chair of Vanguard, Bill McNabb, called on companies to integrate sustainability into their business strategies: “For too long, companies have sacrificed long-term value creation to generate short-term results, which erodes the sustainability strategy investors seek.”4

CSR does carry a cost, but a 2012 MIT Sustainability and Innovation Global Executive Study shows that companies benefit financially from sustainable business practices.5 Data shows there is a positive connection between sustainability reporting and corporate performance, with consumers and investors more inclined to purchase the products of corporations with green initiatives, and employees more inclined to work in green corporations that safeguard their interests and provide a healthy work environment.6 Thus, financial and nonfinancial benefits include increased consumer loyalty and sales, improved corporate reputation, and improved employee morale and productivity.

The balance between cost and benefit requires a CSR strategy that ensures corporate activities are appropriately designed and implemented. One study documents the following costs: strategy development, alignment with CSR, CSR activities, operations, CSR management and analytics, participating in global value chains, and opportunity cost. A well-defined CSR strategy will measure the total cost and return on investment.7

Once a strategy has been defined, implemented, and begins having a positive impact on a business, how does the corporation measure these programs? The answer is the triple bottom line, a term coined in the 1990s that added two additional areas – “people” and “planet” – to a business’s focus on shareholder value and profit. Together, the three Ps create new values for a business’s social, human, and environmental impact.

Measuring the three Ps, however, has grown increasingly complex. Nearly every large corporation, both in the United States and internationally, issues annual sustainability reports, but the guidelines for these reports are numerous and inconsistent. They include the following:

  • The AICPA Attestation Engagements on Sustainability Information
  • The 17 sets of metrics of the United Nations Sustainable Development Goals
  • The 15 components of integrated reporting from the International Integrated Reporting Council
  • The International Standard on Assurance Engagements 3000 from the International Auditing and Assurance Standards Board
  • Standard ISO14064-3 from the International Organization for Standardization
  • Standards AA1000AA and AA1000AS from international not-for-profit AccountAbility8

These standards are designed to serve different industries and audiences. A large contingent of companies, though, has been using a framework from the Global Reporting Initiative (GRI), and investors have demonstrated a preference for the guidelines from the Sustainability Accounting Standards Board (SASB).

GRI was founded in 1997 in Boston and has been a key consulting body to the United Nations Environment Programme and the European Union (EU) since it first released a sustainability framework in 2000. GRI moved to Amsterdam in 2002, and has opened offices around the world to help influence sustainability reporting. In 2016, GRI published the fifth edition of the GRI Standards, covering the economic, environmental, and social impacts businesses have on their communities. GRI also published a subset of standards for different situations that companies can find themselves grappling with, whether that be labor/management relations, freedom of association and collective bargaining, rights of indigenous peoples, environmental compliance, market presence, or anti-corruption measures. GRI has published over three dozen comprehensive standards.

In the United States, the SASB was established in 2012 as a nongovernmental and nonprofit organization to develop standards for companies to create consistent, comparable, and reliable disclosures regarding environmental, social, and governance (ESG) matters. Including members of the Big 4, industry, academia, and government, the SASB publishes standards for 77 different sectors.

Each set of standards has template disclosures and key performance metrics that companies can elect to disclose. For example, the professional services industry disclosures include metrics on data security, workforce diversity, workforce utilization, and diversity. The SASB centralizes these disclosures in its Navigator product and allows consultants and industry participants to benchmark the companies they work with against others in their industries.

Requirements for sustainability reporting, however, are few. In the United States, the Environmental Protection Agency (EPA) published a rule in 2009 providing comprehensive, nationwide emissions data on the sources of greenhouse gases paired with a guide to developing policies and procedures to reduce emissions. The EPA rule requires mandatory reporting of greenhouse gases from sources that emit 25,000 metric tons or more of carbon dioxide equivalent per year.9

The European Commission (EC), a committee under the EU, published Directive 2014/95/EU, also called the nonfinancial reporting directive (NFRD) in June 2017. The NFRD established disclosure rules for large European listed companies, banks, insurance companies, and other companies deemed public-interest entities. The information to be disclosed under this nonbinding provision includes metrics relating to environmental protection, social responsibility and treatment of employees, respect for human rights, anti-corruption and bribery, and diversity of company boards. The first reports required to have these disclosures came out in 2019 and pertain to the 2018 fiscal year. This will affect both EU and U.S. companies listed on European exchanges.

Vornado Realty Trust, a firm based in New York City, used its Securities and Exchange Commission filings to communicate its sustainability metrics. Its 2018 sustainability report was provided along with its first quarter 2019 Form 8-K. This was a first-of-its-kind for multiple reasons. The 36-page report follows SASB and GRI guidelines, and comments on topics such as the types of electricity used in each major market in which Vornado does business, the percentage of eligible properties in each portfolio with an energy rating, and the employee demographic layout by major market segment.10

Another significant milestone this disclosure created was that it had an independent CPA firm provide assurance on the figures, twice. In two separate attestation letters, Deloitte provided assurance that the disclosures were consistent with GRI and SASB standards. Utilizing AICPA’s Attestation Engagements on Sustainability Information Guide, Deloitte went so far as to certify that not only did the report comply with the relevant reporting standards of each framework, but also provided assurance of the accuracy of the figures reported. This new type of assurance opens a new way for CPA firms to diversify their offerings.11

Sustainability reporting has created a path for CPAs to expand their suite of services. Last year, The CPA Journal said CFOs, CPAs, and other financial professionals must play leading roles in how companies formally communicate with investors on sustainability and the value of sustainable business strategies.12

According to one report, the most common items companies obtain assurance on are greenhouse gas emissions; energy and water data; and health, safety, and diversity information.13 The list of potential consulting services that firms can offer is substantial. As an example, some sustainability-related services connected to going green might include assisting clients in managing business and environmental impacts of natural resource consumption; helping integrate environmental health and safety processes; assisting with assurance disclosures about environmental and social performance; climate-related financial risks; carbon footprints; and greenhouse gas inventories. In terms of the EU’s NFRD, firms can familiarize themselves with the guidelines and work with international partners to help bring domestic components of affected companies into compliance.

Sustainability is not just an opportunity or strategy for large global corporations: midsize and small businesses (including accounting firms) are also making the switch to sustainable programs. For example, Mazars USA LLP’s Earth Day project removes nearly all paper cups for two weeks and audits their usage. From 2018 to 2019, this initiative has seen a 12% decrease in paper cup usage at the start and 19% decrease at the end of the audit. In 2019, there was an overall 20% decrease in paper cup usage.

Mazars USA gives all employees a coffee mug, reusable water bottle, and a reusable straw, as well as promotes energy efficiency and reduction of waste through its applied Green Strategy. The plan includes reducing energy consumption through energy-efficient appliances and IT equipment settings, and automatic light control; reducing water consumption with low-flow taps and dual flushes; cutting paper consumption by setting copiers to double-sided prints, removing page separators, and using 100% recycled and/or Forest Stewardship Council chlorine paper; replacing kitchen plastics with metal cutlery and reusable mugs, cups, and dishes; and working with cleaning companies that use environmentally friendly cleaning products.

Sustainability initiatives don’t have to be complex or costly. Below are a few ways all firms and businesses can start small and then grow their green initiatives:

  • Providing clearly marked recycling bins
  • Start composting kitchen waste
  • Switch light bulbs to LED for more efficiency
  • Recycle or donate electronic devices to charity; this can cut down on disposal waste and help build the firm’s reputation in the community
  • Set default printer settings to print on both sides of the paper
  • Put a green reminder in standard email signature lines to think twice before printing
  • Reevaluate travel plans to see if it would be more cost-effective to telecommute or videoconference
  • Consider a four-day week outside of busy season
  • Reevaluate work-from-home policies
  • Request an energy audit from local utilities
  • Use natural light when overhead fluorescent lighting isn’t necessary
  • Consider the use of desk lamps when attendance is low in the office
  • Invest in a paperless work environment and leveraging cloud technologies
  • Work with leasing companies to ...

- Fix dripping water taps

- Install hand dryers

- Install low-flow toilets

- Install faucet aerators

- Install water filtration systems

CSR and sustainability reporting will become increasingly more important, creating opportunities for the CPA profession. Changes will range from developing sustainability strategies and performing sustainability attestation engagements, to leveraging new and old technologies to help improve cost structure. CPAs have an obligation to stay informed and be active in growing this new area for the profession. Sustainability initiatives not only generate revenue, but they can also be opportunities for CPAs and accounting firms to be socially and environmentally responsible. 

1 “What Is CSR?,” United Nations Industrial Development Organization.
2 Curt Moreno, “Doing Their Part: 3 Excellent Examples of Corporate Social Responsibility,” Redshift by Autodesk (2015).
3 “The Triple Bottom Line,” University of Wisconsin Sustainable Management.
4 Matthew Green and Simon Jessop, “Exclusive: Big Four Auditors Face Investor Calls for Tougher Climate Scrutiny,” Reuters (2019).
5 Leon Kaye, “MIT Study Shows that Sustainability Is Profitable,” Triple Pundit (2012).
6 Marcella Ekwueme, Chinedu Egbunike, and Onyali Innocent, “Benefits of Triple Bottom Line Disclosures on Corporate Performance: An Exploratory Study of Corporate Stakeholders,” Journal of Management and Sustainability, vol. 3, no. 2 (2013).
7 Sakir Yucel, “Estimating Cost of SCR Strategy,” Int’l Conf. Modeling, Sim. and Vis. Methods, MSV’18, ISBN: 1-60132-486-3.
8 Arthur J. Radin, “Assurance Attestation Statements on Sustainability Reports,” The CPA Journal (2019).
9 “Greenhouse Gases Reporting Program Implementation Fact Sheet,” Environmental Protection Agency (2013).
10 Environmental, Social & Governance, Vornado Realty Trust.
11 Tom Riesenberg and Alan Beller, “Sustainability Accounting Standards and SEC Filings,” Harvard Law School Forum on Corporate Governance (2019).
12 Shari Littan, “The COSO Internal Control Framework and Sustainability Reporting,” The CPA Journal (2019).
13 Kristin Lang and Blair Bateson, “Changing the Conversation: Redefining How Companies Engage Investors on Sustainability,” The CPA Journal (2019).


Alesha A. Brophy, CPA, is a senior consultant at Mazars USA LLP in Fort Washington. She can be reached at


Robert S. Forney Jr., CPA, is an internal auditor in the Philadelphia banking industry and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at

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