The opening session of “The Basics of Corporate ESG Implementation”—an event presented by the NYSSCPA, the Accountants Club of America (ACA) and the Sustainability Investment Leadership Council (SILC) on Oct. 26—gave a broad overview of the development of environmental, social and governance (ESG) reporting, which focuses on nonfinancial factors used by investors to identify material risks and growth opportunities.

The event, which took place in the office of EisnerAmper in Manhattan and could also be attended remotely, aimed to familiarize participants with the basics of corporate ESG implementation, including costs, human capital, overcoming objections, financing options, software and available hosting platforms and strategic end-user requirements.

“ESG implementation … has become a growing area of focus for accountants in recent years,” said keynote speaker Michael Cohn, editor-in-chief of AccountingToday.com. “ESG is just the start. It’s not just environmental, social and governance reporting, but more and more, we’re hearing about biodiversity, nature-related financial disclosures, human rights reporting and all kinds of things that seem to go beyond sustainability.”

He noted that accountants are increasingly getting drawn into this area because their clients are coming to them for advice necessitated by increases regulatory actions. He mentioned how the Securities and Exchange Commission (SEC)’s proposed rule on climate-related disclosures received a record-breaking number of comments, delaying the finalization of the rule, which is expected by the end of the year. He noted, however, that lawsuits from industry and opposition in Congress to any final rule may delay its implementation for years.

Still, he said, U.S. companies will be affected by the European Union’s Corporate Sustainability Reporting Directive, which will take effect in January. “So even though a company may be U.S.-based, if it sells goods to Europe or buys from there, chances are it could get pulled into this reporting regime too.”

“We’re already seeing the rollout of new global standards from the International Sustainability Standards Board, which is overseen by the IFRS Foundation, the same folks who run the International Accounting Standards Board," Cohn said. "And they’re being asked by global financial regulators to look into expanding beyond the two standards they came out with this year on climate and sustainability reporting, and maybe tackling things like biodiversity and human capital reporting, as if they don’t have enough on their plate already.”

That set the stage for a discussion of what ESG is. Beth Byington, the managing director and global head of corporate ESG at MSCI, a provider of investment decision support tools, led the discussion, defining ESG as “a framework for decision making.” She said that there were three distinct investor objectives: incorporating personal values, making a positive impact and ESG integration.

Lourenco Miranda, a managing director of EisnerAmper’s ESG practice, said that clients are asking what ESG means for their business and how it affects the bottom line. He said that he tells them that ESG is tool that manages risks and helps them to stay competitive.

Maksim Rakhman, Executive Director of Debt Capital Markets at Morgan Stanley, explained why ESG should matter to investment advisers and their clients. He said that someone should establish who is responsible for ESG in the organization, as it is a governance issue.

ESG is “just a different set of acronyms,” said Miranda. That led Natalia Kaleta, director of growth solutions—ESG at  Workiva, a platform for corporate reporting, to point out that ESG moved from what was once known as corporate social responsibility, or CSR. CSR was “introduced in Europe,” she said, where it “helped to tell the marketing story” and “evolved to a strong focus on the environmental aspect.” One of the biggest effects of this evolution, she said, is that responsibility for ESG now resides in the office of the CFO.

“ESG is not philanthropy,” Rakhman emphasized. “It is about materiality: Who does what and who is responsible?”