The rise of sustainability requirements that businesses must navigate creates opportunities for businesses, other organisations and their professional services providers. Understanding sustainability issues will enable advisers to create a strategy that helps their clients in planning, decision making, operational efficiency and improving investor relations as well as anticipating and complying with legislation.
Unlocking opportunities
The right strategy will not only avoid the risks of non-compliance with sustainability regulations but will help unlock new advisory opportunities, manage risk and deliver real value to your clients.
The Mercia Sustainability Navigator provides a step-by-step guide for accountancy practices on entering and succeeding in this emerging and profitable market.
Profitable relationships
Ross Haydock, Technical Consultant at Mercia, says: ‘You are trusted advisers for the firms you work with and understand them best. If you do not fully engage with these new issues and opportunities, you are not giving them the full service that you can offer them.
‘If you are fully apprised of what is going on in the future and can anticipate what is about to hit them regarding sustainability, and what they can do take the opportunity, which is absolutely vital to maintaining profitable relationships.’
Materiality and sustainability
The first part of the Sustainability Navigator relates to the Double Materiality Assessment. This starts the process of ascertaining where an organisation and its operations effect the environment and wider society. It provides a useful view of how ESG/sustainability matters will affect an organisation financially. We call this double materiality.
This is followed by the Sustainability Gap Analysis, which assesses the difference between where the entity is in terms of sustainability and where they hope to be at in the future with a perfect status. This examines the organisation’s controls, the planning and the attitude to the topic and where they hope to be at in the future with a view to developing a route to success.
Down the supply chain
As sustainability reporting is becoming more critical, more businesses will be required to report their results. Companies down the supply chain will also be required to report their results. Significantly some larger organisations, will require this information from smaller entities even if the smaller entities are not legally obliged to report directly.
That is where companies need a Carbon Reduction Plan which also covered in the Navigator. These are relatively simple to draft but the controls must be in place and this is where we can help. SMEs may not be able to get involved in procurement with larger organisations is without this plan. It is relatively easy to produce with our step-by-step guide and may be a higher value service than normal assurance.
Other organisations such as academies and other academic organisations are also required by the Department for Education and may need help so part of the Navigator will help these institutions to develop the required Carbon Action Plans.
All shapes and sizes
Sustainability is increasingly relevant for all sizes of UK business as it can provide many ways to save money and increase efficiency, such as the purchase of solar panels.
In addition, as the UK’s sustainability reporting standards come on board, more and more larger companies will need to know this information from their suppliers. If a smaller entity cannot provide this information, they will be overlooked.
As companies grow and start doing businesses with organisations like the NHS, Amazon or M&S they will have to start reporting their carbon footprints. When these organisations take on new suppliers, they will require the ability to vet them over relevant concerns about sourcing and waste.
Diversifying your offering
All these areas create an opportunity for accountants to diversifying their offering with services that can add value and help mitigate risks.
Haydock says: ‘If you are offering traditional audit and tax, these sustainability issues are relevant to what is happening. There are tax advantages and implications to sustainability.
‘To offer more flexible sustainability services diversifies the service line that you are offering. It is not just all audit, it is a little less traditional, more advisory and a bit more value added that you are offering to clients.'
How we can help
The Mercia Sustainability Navigator provides a step-by-step guide for accountancy practices on entering and succeeding in this emerging and profitable market. It provides detailed guidance, working papers and template reports to perform the most valuable Sustainability Advisory services. Find out more here.