Accounting, finance, and business in general are undergoing dramatic changes that are redefining entire industries and professions. Accountants, especially young CPAs just beginning to establish themselves in the marketplace, must embrace the changing business environment.
With more non-accountants increasingly becoming involved in financial reporting and disclosures, it is more important than ever that accounting professionals be well-positioned to leverage new opportunities. While there are a large number of trends and news headlines driving both financial decision-making and accounting at large, particular areas stand out as strategically important. One of these is sustainability.
Though it might be most associated with traditional environmental groups, sustainability is not merely reserved for them. Instead, sustainability and clean energy represent big business opportunities for accountants. For instance, your firm may have clients that want to know how energy tax credits and other incentives are calculated and reported. Or they may ask you: What are the business models for alternative energy organizations without such subsidies and incentives?
A new class of organization, dubbed the B corp. (benefit corporation), makes sustainability an integral part of its business model. Accountants must be prepared to report on, manage, and lead such organizations.
The business opportunities embedded within the growing importance of sustainability to both business organizations and practitioners make this an area of particular interest to young professionals. Instances such as the BP oil spill in the Gulf of Mexico in 2010, as well as other environmental incidents, demonstrate the need for organizations to more accurately quantify and report on both the opportunities and environmental risks associated with their activities, with a greater emphasis placed on sustainability. Lifecycle accounting, renewable energy tax credits, and infrastructure expenditures associated with renewable energy and sustainability initiatives are growing in importance as well as in the effect they have on business decision-making.
CPAs must be able to understand, report on, and interpret the meaning of these initiatives and information as an increasing percentage of organizations adopt such measures. Put simply, it is up to CPAs to understand sustainability, sustainability-related decision-making, and how sustainability can be leveraged to both make better business decisions and increase the organization’s profitability.
Knowing that sustainability is a growing area of interest and opportunity for accounting professionals is one matter, but young CPAs can also take proactive steps to explore this expanding practice area. The good news is that many excellent resources are available.
The AICPA offers several resources related to sustainability accounting, sustainability reporting, and sustainability assurance. Sustainability also is covered in the CGMA competency framework. As sustainability becomes increasingly important in risk management, strategy, and long-term planning, it is essential that accounting professionals understand the importance of such a framework.
The rise of integrated financial reporting, sponsored and put forth by the International Federation of Accountants (as well as a growing number of corporate and industry partners), is a clear market-generated reaction to the importance of sustainability and the effect it has on business.
Another resource for business professionals is the Sustainability Accounting Standards Board, a not-for-profit organization focused on creating reporting metrics related to sustainability and business performance. The work of the staff and industry professionals who volunteer their time and expertise (including myself) has led to the creation and implementation of dozens of reporting standards that apply to publicly traded corporations.
Accounting is on the cusp of dramatic changes, and young CPAs are entering the field at a time of numerous challenges and opportunities. It is important to remember that while tax, audit/attestation, and other managerial advisory services remain the pillars of the profession, accountants can, and should, position themselves in many other areas.
Only one question remains regarding the opportunity provided by sustainability: When will more CPAs take advantage of it?
Sean Stein Smith, CPA, CGMA, is a financial analyst–Joint Ventures at Hackensack University Medical Center in Hackensack, N.J. He also is an adjunct professor at both Fairleigh Dickinson University in Teaneck, N.J., and Montclair State University in Montclair, N.J.
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