Accounting
The accounting profession’s role in ESG reporting
As the concerns over climate change, depletion of natural resources (i.e., deforestation and water scarcity), and health and safety issues are reaching new levels, there has been growing sentiment among business leaders, investors, consumers and regulators that innovative business strategies and risk management practices are necessary to sustain profitability. Here are a few eye-opening statistics:
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global study published in February by the Association of International Certified Professional Accountants and the International Federation of Accountants found that 98% (99% in the U.S.) of companies publicly disclosed some level of environmental, social and governance information. And 69% (88% in the U.S.) have obtained some level of assurance. - The CDP Global Supply Chain Report in 2021, a study of over 200 supply chain members with $5.5 trillion in procurement spending, shows that over 90% of companies are engaging suppliers on environmental performance, representing over 41% in year-over-year disclosures.
- A recent study by another large accounting firm indicates 74% of M&A participants have ESG considerations as part of their agenda; a similar survey by another firm stated that 57% of inventors view sustainability information as “critical” in evaluating investments.
These trends demonstrate the momentum in measuring and reporting information around sustainability, specifically how sustainability strategies translate into longer-term financial performance and cash flows, new products and technologies, and ethical business practices.
What standards are companies using to report its sustainability or ESG information? ESG reporting has had a long history of inconsistency. The above-referenced AICPA and IFAC survey shows that 87% (93% in U,S.) of companies reported under multiple ESG reporting frameworks. However, the past few years have seen a flurry of consolidation, standardization, and alignment in this space that has paved the way for regulations to come into play. Again, this activity is driven by the need for consistent, accurate and relevant data that can be used by stakeholders in making decisions.
Importantly, ESG reporting is investor-driven. The International Sustainability Standards Board, established in November of 2021, has consolidated international frameworks and standards for ESG reporting and passed its first two rules in June 2023. The European Union formally adopted the European Sustainability Reporting Standards that inform the Corporate Sustainability Reporting Directive rule in July 2023 that allows for interoperability with the ISSB’s new standards.
In the U.S., the Securities and Exchange Commission passed its climate disclosure rule in March 2024, requiring publicly traded companies to report on Scope 1 and 2 emissions, when material. California passed two sets of regulations for greenhouse gas emissions reporting and ESG reporting in October 2023. Illinois, New York, Colorado, Vermont and Maine all have regulations pending in various stages of approval related to ESG reporting and compliance.
Many technology solutions have entered the market to make data aggregation and ESG reporting achievable.
In the coming months and years there are sure to be challenges to ESG reporting regulations in the United States. It is likely that lawsuits will argue claims related to a state’s extraterritorial authority (e.g., requiring Scope 3 emissions from a company’s value stream outside of a state’s jurisdiction). The SEC rule has already been met with significant legal challenges, and the SEC has voluntarily issued a stay pending judicial review. And many are awaiting for the results of the upcoming elections to act. But what is clear in this space is that standardization and consolidation of frameworks have increased significantly, and as a result of this alignment, regulations are being promulgated across the globe and are here to stay. Furthermore, these regulations impact U.S. companies.
The EU’s ESRS are already effective and apply to multinational companies with significant EU operations. These requirements are expected to affect over 3,000 companies in the U.S. The related assurance requirements begin to rollout in 2025.
Regardless of what happens with the SEC standards, there remains a strong desire from many stakeholders in the United States to formalize regulations for GHG emissions and ESG reporting modeled after the ISSB framework and standards. Many expect the state regulations will fill the gap left by less stringent national regulations, but perhaps at a cost to more complicated, fractured reporting requirements.
The importance of assurance
To ensure stakeholder’s confidence in the ESG data being disclosed, many companies have started engaging third-party firms to provide assurance on the ESG information. As referenced above, 88% of U.S. companies reporting ESG information obtained some level of third-party assurance. The trend toward greater assurance is evident; however, the high percentage does not tell the full story. For one, 82% of assurance was provided in the form of “limited assurance”. Limited assurance, or review engagements, are much less rigorous than audits. As the use of ESG information continues to increase we should start to see a move from limited to “reasonable” assurance.
To date most assurance has been voluntary; however, that trend will likely start shifting to mandatory in the coming years as new sustainability reporting standards require assurance. We are already seeing this in Europe with the ESRS. The recent SEC and California regulations also have assurance requirements.
A further look at the firms providing assurance is noteworthy. Most of the assurance service providers in the U.S. are not CPA firms, but rather boutique, engineering and consulting firms. In fact, only 23% of the firms providing assurance in the U.S. were traditional CPA firms. This presents a significant opportunity for the accounting profession.
Similar to sustainability reporting standards, a global baseline for assurance has not existed. That is about to change with the expected issuance of International Standard on Sustainability Assurance 5000 expected to be issued by the International Auditing and Assurance Standards Board by the end of the year.
All of these factors point to the need for the accounting profession to prepare for the increasing demand for assurance services.
The role of the accountant
What does this all mean for the accounting profession? The evolving landscape of ESG reporting, coupled with the increasing global demand for high-quality, accurate sustainability information, means a significant opportunity for CPAs and accountants to add value to business. CPA firms are perfectly positioned to provide advisory and assurance services, given their infrastructure around audit quality, independence requirements, and professional development.
The technical training accountants receive in enterprise risk management, internal controls and financial reporting are essential building blocks to the skills needed to implement a successful sustainability reporting program. Just as important are the critical thinking and communication skills needed to influence change across an organization. One of the keys to implementing a successful ESG reporting infrastructure and providing quality assurance services is applying the concept of materiality to business risks and opportunities; this has also been one of greatest challenges to ESG reporting. This is another area CPAs are familiar with.
There is no question that CPA firms will need to invest in cross-functional capacity building and training around the evolving ESG reporting and assurance standards to meet the demands of stakeholders. Firms will also need to establish relationships with subject matter specialists that may not reside within the firm. Many tools have developed in recent years to assist firms in this regard.
As ESG reporting and assurance requirements expand, companies, investors and other stakeholders will turn to the trusted accounting profession. Those CPA firms that focus now will be best prepared to meet the demand expected in the next few years.
Jody Padar, an author and speaker known as “The Radical CPA,” and Katie Tolin, a growth strategist for CPAs, together launched a training and technology platform called XcelLabs.
XcelLabs provides solutions to help accountants use artificial technology fluently and strategically. The Pennsylvania Institute of CPAs and CPA Crossings joined with Padar and Tolin as strategic partners and investors.
“To reinvent the profession, we must start by training the professional who can then transform their firms,” Padar said in a statement. “By equipping people with data and insights that help them see things differently, they can provide better advice to their clients and firm.”
The platform includes XcelLabs Academy, a series of educational online courses on the basics of AI, being a better advisor, leadership and practice management; Navi, a proprietary tool that uses AI to help accountants turn unstructured data like emails, phone calls and meetings into insights; and training and consulting services. These offerings are currently in beta testing.
“Accountants know they need to be more advisory, but not everyone can figure out how to do it,” Tolin said in a statement. “Couple that with the fact that AI will be doing a lot of the lower-level work accountants do today, and we need to create that next level advisor now. By showing accountants how to unlock patterns in their actions and turn client conversations into emotionally intelligent advice, we can create the accounting professional of the future.”
“AI is transforming how CPAs work, and XcelLabs is focused on helping the profession evolve with it,” PICPA CEO Jennifer Cryder said in a statement. “At PICPA, we’re proud to support a mission that aligns so closely with ours: empowering firms to use AI not just for efficiency, but to drive growth, value and long-term relevance.”
The accountant the world urgently needs has evolved far beyond the traditional role we recognized just a few years ago.
The transformation of the accounting profession is not merely an anticipated change; it is a pressing reality that is currently shaping business decisions, academic programs and the expected contributions of professionals. Yet, in many areas, accounting education stubbornly clings to outdated, overly technical models that fail to connect with the actual demands of the market. We must confront a critical question: If we continue to train accountants solely to file tax reports, are we truly equipping them for the challenges of today’s world?
This shift in mindset extends beyond individual countries or educational systems; it is a global movement. The recent announcement of the
The CIMA/CGMA proposal for 2026 is not just a curriculum update; it is a powerful manifesto. This new program positions analytical thinking, strategic business partnering and technology application at the core of accounting education. It unequivocally highlights sustainability, aligning with IFRS S1 and S2, and expands the accountant’s responsibilities beyond mere numbers to encompass conscious leadership, environmental impact and corporate governance.
The current changes in the accounting profession underscore an urgent shift in expectations from both educators and employers. Today, companies of all sizes and industries demand accountants who can do far more than interpret balance sheets. They expect professionals who grasp the deeper context behind the numbers, identify inconsistencies, anticipate potential issues before they escalate into losses, and act decisively as a bridge between data and decision making.
To meet these expectations, a radical mindset shift is essential. There are firms still operating on autopilot, mindlessly repeating tasks with minimal critical analysis. Likewise, many academic programs continue to treat accounting as purely a technical discipline, disregarding the vital elements of reflection, strategy and behavioral insight. This outdated approach creates a significant mismatch. While the world forges ahead, parts of the accounting profession remain stuck in the past.
The consequences of this shift are already becoming evident. The demand for compliance, transparency and sustainability now applies not only to large corporations but also to small and mid-sized businesses. Many of these organizations rely on professionals ill-equipped to drive the necessary changes, putting both business performance and the reputation of the profession at risk.
The positive news is that accountants who are ready to thrive in this new era do not necessarily need additional degrees. What they truly need is a commitment to awareness, a dedication to continuous learning, and the courage to step beyond their comfort zones. The future of accounting is here, and it is firmly rooted in analytical, strategic and human-oriented perspectives. The 2026 curriculum is a clear indication of the changes underway. Those who fail to think critically and holistically will be left behind.
In contrast, accountants who see the big picture, understand the ripple effects of their decisions, and actively contribute to the financial and ethical health of organizations will undeniably remain indispensable, anywhere in the world.
Congressional Republicans are siding with Donald Trump in the messy divorce between the president and Elon Musk, an optimistic sign for eventual passage of a tax cut bill at the root of the two billionaires’ public feud.
Lawmakers are largely taking their cues from Trump and sticking by the $3 trillion bill at the center of the White House’s economic agenda. Musk, the biggest political donor of the 2024 cycle, has threatened to help primary anyone who votes for the legislation, but lawmakers are betting that staying in the president’s good graces is the safer path to political survival.
“The tax bill is not in jeopardy. We are going to deliver on that,” House Speaker Mike Johnson told reporters on Friday.
“I’ll tell you what — do not doubt, don’t second guess and do not challenge the President of the United States Donald Trump,” he added. “He is the leader of the party. He’s the most consequential political figure of our time.”
A fight between Trump and Musk exploded into public view this week. The sparring started with the tech titan calling the president’s tax bill a “disgusting abomination,” but quickly escalated to more personal attacks and Trump threatening to cancel all federal contracts and subsidies to Musk’s companies, such as Tesla Inc. and SpaceX which have benefitted from government ties.
Republicans on Capitol Hill, who had — until recently — publicly embraced Musk, said they weren’t swayed by the billionaire’s criticism that the bill cost too much. Lawmakers have refuted official estimates of the package, saying that the tax cuts for households, small businesses and politically important groups — including hospitality and hourly workers — will generate enough economic growth to offset the price tag.
“I don’t tell my friend Elon, I don’t argue with him about how to build rockets, and I wish he wouldn’t argue with me about how to craft legislation and pass it,” Johnson told CNBC earlier Friday.
House Budget Committee Chair Jodey Arrington told reporters that House lawmakers are focused on working with the Senate as it revises the bill to make sure the legislation has the political support in both chambers to make it to Trump’s desk for his signature.
“We move past the drama and we get the substance of what is needed to make the modest improvements that can be made,” he said.
House fiscal hawks said that they hadn’t changed their prior positions on the legislation based on Musk’s statements. They also said they agree with GOP leaders that there will be other chances to make further spending cuts outside the tax bill.
Representative Tom McClintock, a fiscal conservative, said “the bill will pass because it has to pass,” adding that both Musk and Trump needed to calm down. “They both need to take a nap,” he said.
Even some of the House bill’s most vociferous critics appeared resigned to its passage. Kentucky Representative Thomas Massie, who voted against the House version, predicted that despite Musk’s objections, the Senate will make only small changes.
“The speaker is right about one thing. This barely passed the House. If they muck with it too much in the Senate, it may not pass the House again,” he said.
Trump is pressuring lawmakers to move at breakneck speed to pass the tax-cut bill, demanding they vote on the bill before the July 4 holiday. The president has been quick to blast critics of the bill — including calling Senator Rand Paul
As the legislation worked its way through the House last month, Trump took to social media to criticize holdouts and invited undecided members to the White House to compel them to support the package. It passed by one vote.
Senate Majority Leader John Thune — who is planning to unveil his chamber’s version of the bill as soon as next week — said his timeline is unmoved by Musk.
“We are already pretty far down the trail,” he said.
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