Synergy Enterprises’ partner and general manager Heidi Grantner and CFO Kira Rochefort, CPA, discuss how CPAs are harnessing their skills to bring value to business via sustainability reporting and carbon accounting.
Two emerging areas where CPAs are harnessing their skills to bring new value to business are sustainability reporting and carbon accounting. So how are they helping enterprises move ahead by applying sustainability metrics and standards? To find out, CPABC’s president and CEO Lori Mathison, FCPA, recently chatted with Heidi Grantner, partner and general manager at the sustainability consulting firm Synergy Enterprises and Kira Rochefort, CPA, CFO of Synergy.
Lori: How can CPAs leverage their skill set in sustainability reporting and carbon accounting roles?
Kira: There’s significant overlap between traditional finance roles and sustainability reporting. CPAs bring the same value they provide in financial reporting. They turn raw data into clear, comparable, decision useful information through judgment, controls, and context. They can also help organizations focus on what is material instead of trying to measure everything under the ESG umbrella. In addition to that, CPAs can connect sustainability risks and opportunities back to strategy, capital allocation, and financial performance – all areas where CPAs naturally shine.
Lori: Zeroing in on data, what strategies ensure sustainability data is captured with integrity and reported effectively?
Heidi: Collecting sustainability data often requires businesses to track information they haven’t historically tracked, such as total energy used in each facility or the percentage of energy from renewable sources.
Effective strategies include:
- Establishing clear data collection systems with instructions, assigned responsibilities, and quality controls.
- Avoiding the urge to measure everything.
- Prioritizing impacts that are most material to your company or industry and expanding that scope over time.
Usually with carbon accounting, a business will start by measuring emissions from sources they own or control or from energy they purchase (scope 1 and 2 emissions) and add in scope 3 later on. It’s important to start with a good plan and focus on quality data, rather than reporting what you have, then switching data sources or methodologies – that can lead to inconsistent results and difficulties with comparing results over time.
Lori: Turning to standards, can you share a key learning from using CSDS 1 and 2, the Canadian Sustainability Disclosure Standards?
Kira: Because CSDS 1 and 2 are new and currently voluntary, companies have an opportunity to proactively build processes and controls before compliance becomes mandatory. Historically, sustainability plans and goals were often siloed in a separate department and reviewed annually at most. However, if they’re included in key strategic plans and reported on regularly, this leads to better progress, stronger ROI, and greater organizational buy in. CSDS standards reinforce this integration by bringing sustainability into key business strategy.
Lori: Are you still seeing businesses report under other frameworks such as the Task-Force on Climate-Related Financial Disclosures (TCFD)?
Heidi: Yes. Sustainability reporting standards are converging, and TCFD is now integrated into the International Sustainability Standards Board’s (ISSB) standards (IFRS S1 and S2), which are essentially equivalent to CSDS 1 and 2. Effectively, companies reporting under ISSB or CSDS are automatically applying the TCFD framework, which creates consistency and streamlines reporting requirements.
That said, there are still some unique frameworks that work for certain clients because they’re well-suited to a particular use case, goal, or industry, such as:
- Airport Carbon Accreditation for airports;
- Towards Sustainable Mining for the mining sector; and
- Science Based Targets Initiative (SBTi) for companies focused on climate action and emissions reduction commitments.
Lori: Let’s explore a core part of sustainability reporting – carbon accounting. Can you give us an overview of what it is?
Kira: Carbon accounting is the process of measuring the greenhouse gas (GHG) emissions associated with an organization’s activities, with the ultimate goal of reducing their carbon footprint. It starts with identifying emission sources – direct sources like gas boilers or company vehicles, and indirect sources such as employee flights. Next, emissions are calculated by applying GHG emissions factors to the activity data. Reporting on GHGs helps companies establish a clear baseline, which is a critical starting point for implementing carbon targets and reduction strategies. The overarching goal of ISSB and CSDS standards in implementing these global standards is to benchmark information and then reduce GHGs to move toward our climate goals.
Lori: What is CO2e and how is it used in GHG reporting?
Heidi: There are different GHGs that need to be captured and reported on, and they are measured using a standardized unit called a carbon dioxide equivalent or CO2e. GHGs include a group of gases such as carbon dioxide, methane, nitrous oxide, and fluorinated gases. Each gas has a different impact on climate change; one gram of CO2 is not equivalent to one gram of methane when it comes to global warming potential. Converting all gases into CO2e standardizes the reporting unit and allows companies to compare the relative impact of different activities.
Lori: How should organizations approach carbon accounting across operations, investments, and supply chains?
Heidi: The GHG Protocol is quite broad, so meeting its guidelines requires measuring emissions along a business’s entire value chain, including emissions from owned facilities, those embedded in purchased materials, and even emissions generated by customer using a final product. Because of this breadth, organizations need a strong strategy.
Here’s how I would approach it with my clients:
- Build a cross functional team to get a solid picture of business impacts and identify opportunities for improvement. I’d seek representation from many departments, primarily operations, finance, procurement, and facilities.
- Focus on materiality to measure the most significant emission sources rather than measuring everything.
- Develop a clear plan outlining what will be measured, who is responsible, and how data quality will be ensured.
- Engage suppliers and partners to provide reliable data for scope 3 emissions; this can be challenging, as your partners own and control these emissions.
Lori: How does carbon accounting fit within broader sustainability reporting?
Heidi: Carbon accounting is one component of the “E” in ESG. It’s a deeper and more technical part of sustainability reporting that’s focused on quantifying impact versus assessing risk. Compared to other common ESG metrics like board diversity, GHG emissions are far more complex to measure accurately. Many businesses will need support with this, even if it’s just providing a verification of results. On the flip side, because it is a rigorous metric, it can lend a lot of credibility to a sustainability report. If GHG reporting is done well, it can be a good indicator of overall reporting quality.
Lori: How much demand is there for audit and assurance over carbon accounting?
Heidi: Demand for assurance is increasing as sustainability reporting becomes more common and companies begin treating it as standard practice. It can be especially useful for companies that manage their reporting internally, but need that extra stamp of approval to ensure good quality information is getting shared, especially in light of new consumer protection regulations like Bill C-59 and the European Union’s Green Claims Directive. It can also be a valuable process for a company to go through because as verifiers, auditors can provide recommendations to improve reporting processes and data quality.
Lori: What would you say to CPAs considering a career in sustainability reporting and carbon accounting?
Kira: There is significant opportunity ahead for CPAs – as voluntary standards become mandatory, there’s going to be ripple effects throughout the economy and the accounting industry. Synergy Enterprises was founded back in 2010, and we’re seeing more clients looking for support every year.
For more insight, check out CPABC’s collection of ESG articles and podcasts.
Lori Mathison, FCPA, LLB, is the president and CEO of CPABC.
Heidi Grantner is a partner and general manager at Synergy Enterprises. She works with a wide range of Synergy clients to integrate sustainability into planning, policy, and operations. An expert in GHG inventories, Heidi is an approved verifier for the Airport Carbon Accreditation Programme and has her GHG-IQ from the Canadian Standards Association.
Kira Rochefort, CPA, is the CFO at Synergy Enterprises. After completing an undergraduate degree in environmental studies and political science, she obtained her CPA designation in 2016 while in a client services role. As a CPA and business owner, Kira understands that a client-centered approach to providing transparent financial reporting and analysis is vital to moving toward corporate sustainability goals.
