Articulating impact in ESG – articleArticulating impact in ESG – article
With ESG continuing to trend upwards moving into 2023, we caught up with Colleen Rozillis, Moss Adams partner and lead of the business consulting group as well as the ESG consulting lead, and Justin Neff, Moss Adams partner and ESG assurance lead, to get their perspective on the importance and impacts of ESG reporting.
January 4, 2023
Sponsored by Moss Adams
What is ESG and why is it important?
Three categories comprise ESG—environmental, social and governance—and these provide an opportunity for organizations to gauge their positions in a market that is prioritizing sustainability. Moss Adams helps to break ESG down to the bare basics. ESG is about an organization living by its values, articulating what those values are, and then really walking the talk. Consumers have expectations for what organizations should be doing to support environmental and social goals, and they want to see those while making investment decisions. ESG is about creating more value with less impact, ensuring that an organization’s stakeholders, including their employees and their customers, are being prioritized alongside profit.
Does the size of a company determine if ESG should be considered?
While larger organizations generally have a more significant impact on their communities or their stakeholders, every organization, regardless of size, should be thinking about ESG and locating the spaces where they can have the most impact. Regardless of the size of the company, owners have something they're trying to accomplish, people they work with and serve, and a product or service that they want to improve. Even nonprofits and governments should consider ESG; everyone has an impact, and everyone has goals they want to achieve.
What role does ESG reporting play in garnering investment?
ESG’s role is high and increasing. For example, a lot of finance committees and boards are interested in establishing ESG-specific or socially responsible investment policies. Socially responsible investing itself has been around since the 1960s, so it’s both established and growing. For the kinds of investment coming out of higher education and the not-for-profit space, company impact is a huge piece. Everyone is asking: What is this company's impact? Does it align with our values? There is real pressure from the stakeholders of organizations to be transparent about ESG. Many organizations Moss Adams has engaged with on ESG thus far wanted to take an important step back and ask, “are we investing in and partnering with companies that align with our values?” This is particularly crucial for startups seeking venture funding. The way these organizations tell their stories, how they make themselves attractive, relies heavily on aligning values and perspectives.
What does the ESG reporting process look like? What are the initial steps?
Moss Adams begins by speaking with the person in the organization they’re serving who is responsible for ESG. This could be anyone who suits the role; they can be in finance or HR, and it's often someone in legal. Sometimes the CEO or the COO are passionate about ESG and choose to be involved. Other times, the ESG lead is simply someone who has a real interest in environmental and social sustainability. The discussion begins with ‘What does your strategic plan look like right now? Where does ESG potentially fit in with your values?’ Moss Adams completes an initial scan of what the organization is already doing well. Most organizations have a lot that they're already doing. They just haven't thought about it through an ESG lens. Most organizations come in with a healthy mindset of ‘We don't know what we don't know.’ Often, ESG is not a big mountain of additional work. It is reviewing questions like, ‘Do we have a pay equity initiative? Do we have DEI (diversity, equity and inclusion) initiatives? What does our governance structure look like? What is our climate impact?’ The most important element to this, and where Moss Adams’ experience shines bright, is clearly tracking and reporting all of this information with careful consideration of any present gaps.
How does Moss Adams aid organizations in selecting what to report?
It is important to be consistent and transparent. Every singular effort does not need specific reporting, but it is crucial to be forthcoming in the natural food and beverage industry. Even if goals are not met in the timeline proposed initially, consumers appreciate authentic communication around ESG attempts. This is another reason that Moss Adams’ initial assessment is important. This is where brands can ask: “Where can we move the needle? What do people care about?” This is how organizations can find key areas of impact and what can be tackled and measured in small increments rather than trying to report on 100 different KPIs or metrics right out of the gate. Moss Adams also helps to keep this storytelling authentic, avoiding greenwashing or simply checking a series of boxes. Moss Adams has been a pioneering ESG assurance practice for over 20 years now, working with some very large fortune 500 companies along with smaller organizations at the beginning of their story. The firm has the experience and the skills to help companies understand which data elements are reportable, repeatable and auditable. If these companies later want to work on setting up an assurance program, Moss Adams also has that experience, which is a significant advantage to an organization and adds credibility to their work.
What makes ESG different than other auditing measures?
What has been unique about ESG reporting is that there is no established framework. So, a lot of the companies that Moss Adams has worked with developed their own framework against which to measure their progress. Eventually there may be a time when there is one universally accepted framework, but this flexibility allows companies to think outside of the box to question the types of metrics reported, the application of the data, and the frameworks used in a more customized manner. Certain key performance indicators, known as KPIs, might be more relevant to one company over another. Establishing measurable and attainable goals that are relevant and exciting to an organization create the basis for success. The efforts that a company is making and the story they can tell through the reporting of these efforts articulate their impact and where they are heading into the future.
What makes Moss Adams an excellent partner choice in establishing and reporting ESG efforts?
The best professional service firms are thoughtful and creative and want their clients to be successful. Moss Adams truly wants to assist their clients in becoming better. Anyone who comes in with a template and says, ‘this is how you absolutely should do things,’ is not going to provide your organization with the most effective opportunities for success. Our partners love talking to companies in all phases, even those who are not ready for a specific project. They understand the importance of an absorbing phase and are willing to provide context and knowledge in lot of different ways. It's just a question of getting that timing right and understanding what an organization’s ultimate goals are and how we can help them achieve all they can.
Moss Adams, LLP is a professional services firm dedicated to helping their clientele prosper. Their deep industry focus means that their clients work directly with industry experts, and the firm is able to offer many pathways to ESG reporting. Moss Adams helps small and large companies access ESG standards and processes, creating à la carte opportunities for their clients. Find out more here
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