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Professional accountants are being urged to respond to increasing demands from investors for information on environmental, social, and governance (ESG) disclosures.

A new report by the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) highlights an evolving trend toward greater interest in ESG factors, and integration of these factors and ESG performance information into investment processes and decisions.

“As professional accountants both support and fill leadership roles in management operations and control, as well as stakeholder communications, they are well placed to apply accounting discipline and rigor to the collection, analysis, and reporting of ESG data, and to support the incorporation of ESG factors into their organisation’s management processes, systems, and reporting,” says Roger Tabor, chair of the PAIB Committee.

Tabor adds that the involvement of accountants in improving the relevance and quality of their organisation’s internal and external business reporting will be critical to meet the challenge of increasing the use of ESG information.

In response to the challenges of ESG integration, the report recommends that accountants engage investors effectively to understand their information needs and communicate performance.

Accountants should also incorporate ESG factors and non-financial performance information into governance and accountability arrangements to improve information and disclosure quality.

Another recommendation is to link financial and non-financial performance and outcomes to improve understanding of sustainable value creation.

Accountants should also ensure that ESG disclosures meet investor needs by being material, timely, consistent, and comparable in order to improve usefulness of reporting and greater transparency.

The report also suggests bringing together data that may be dispersed in different parts of the organisation or its supply chain to support internal and external decision making.

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