Non-financial reporting (NFR) – the disclosure of performance and activities related to environmental, social and governance (ESG) factors – is set to have ‘a moment’.
Against a backdrop of flooding, heatwaves, droughts and wildfires, a damning Intergovernmental Panel on Climate Change report, a make-or-break United Nations Climate Change Conference this November, movements such as Black Lives Matter and #MeToo, rising economic inequality and a global pandemic, the need for accountable material change has never been greater.
The most important task in NFR is the coordination of various reporting streams. ESG reporting is a vast area, where data goes across pretty much all of a company’s functional and business areas: production, procurement, commerce, HR, finance and so on.
‘There is nothing yet set in stone in the ESG area. We need to explore and learn’
The NFR specialist needs to be familiar with internal and external reporting requirements in a number of topics, which makes the role challenging but also incredibly interesting.
‘The content is different, but in structure and format it is still very similar to financial reporting: you follow a reporting drumbeat, monitor internal and external reporting, monitor external and internal developments, and reflect this in a continuous reporting process,’ says Olga Smirnova FCCA, non-financial reporting manager at The Heineken Company in the Netherlands.
NFR reports are increasingly important for companies seeking investment, with many asset managers viewing strong ESG credentials as indicative of responsibly governed and well-operated businesses, capable of long-term growth and stable returns.
The technical skills required are very similar to finance: reporting, data monitoring and analysis. While there is a great deal to learn from a subject-matter standpoint, putting in place reporting and governance frameworks and processes requires the same kind of logic-based approach that accountants will have gained through their training and experience.
‘We are pretty much building our own career paths and setting up the future’
Because NFR is young, there is, as yet, little internal knowledge, nor too many external reference points. ‘This means the role consists of a lot of learning – which never stops – along with knowledge sharing and convincing stakeholders,’ Smirnova says.
‘It requires strong project management skills – again because nothing is yet set in stone – and you need to build a lot of new processes. It also involves a great deal of creativity, which makes it very exciting.’
Alongside being proactive and self-motivated, also valuable is an accountant’s natural curiosity, as well as a mix of passion for the topic and patience. ‘These qualities are essential,’ Smirnova says. ‘I was used to the financial world, which is very well regulated. There is nothing yet set in stone in the ESG area, but a lot is emerging.
‘We are at the phase now where we need to explore and learn.’
Getting in and getting on
Being an accountant is a great entry point. As yet, there are very few university courses that incorporate sustainability management and ESG. Therefore, experience in financial accounting, with its data collation and reporting; auditing, with its analysis and complete view of business operations; and management accounting, with its strategy and decision-making, are highly valued.
Being such a young and vibrant discipline, the scope is to develop the area and to forge new career paths. The role will evolve with you; you might even create it within your organisation, or as a function of finance or an extra responsibility to your main role.
‘We are pretty much building our own career paths and setting up the future,’ says Smirnova. ‘It creates enormous opportunities: ESG governance and reporting in corporations or non-profit organisations, project work, work in global institutions and standard setters, education and external assurance.’