Kreston: Thought Leadership
Developing an International ESG Strategy
How does an international network develop an ESG strategy for 160 member firms and make it create new business opportunities? Christina Tsiarta of Kreston ITH in Cyprus and Mahendra Rustagi of Kreston SNR in India explain the thinking and process driving its successful approach across Kreston Global’s network.
Kreston Global recently implemented a formal ESG Strategy with the dual aims of equipping its member firms to create their own in-house ESG frameworks and helping them develop ESG solutions for their clients. In the space of just a few months, we are delighted with the results so far.
The first step was to formally make ESG a priority for Kreston Global. We knew, via a survey, that our Member firms across 115 countries already recognised ESG as being important for their future growth. As well as the clear, positive effects of good ESG on the planet and in society, our three main business reasons to get ahead on ESG ‘in-house’ are: recruitment and retention of staff in a tight labour market, client demand and loyalty, and improved financial performance. We’ve seen compelling evidence that clear and practical ESG principles help accountancy firms attract new clients and build longer lasting relationships. An ESG strategy was therefore included as a core element of the network’s overall four-year Strategic Plan.
An ESG Advisory Committee was set up, led by Andrew Griggs - board director and senior partner of UK firm Kreston Reeves. The committee brought together experts from the network and ‘champions’ from across the firms to keep the momentum going. Three sub-committees were created – the first to deal with the regulatory background on ESG across regions, the second focused on the member firms’ own ESG journey and the third on developing ESG client solutions.
A major challenge for Kreston Global is that it covers so many jurisdictions, each with their own legislation, guidance, and regulations, either in place or pending. In the UK, for example, we await formal guidelines from regulators and other organisations, but we regard ESG as so important now that we didn’t want to wait. Our view is that we can always adjust and amend elements once official announcements come out – but we need to make a move on this now.
Christina Tsiarta
Kreston ITH in Cyprus
ESG ‘in-house’
Earlier this year, the two sub-groups began extensive research, consultation and discussion on what the ESG priorities should be, what member firms needed and how best to deliver these. It is key to our approach that we must have our own effective ESG policies so that we can provide credible ESG solutions to our clients.
Kreston firms are at different levels of ESG development, some just beginning while others are more advanced. Our approach was therefore to create a handbook or ‘manual’ for Kreston firms which gives advice and practical guidance on how firms can start, accelerate and make ESG policies sustainable in the long term. The handbook contains very detailed ‘roadmaps’ clearly showing how to follow a particular process step by step as well as case studies highlighting real challenges and solutions. The handbooks can save firms much time and expense on ‘trial and error’ as the content is based on experience and research.
Mahendra Rustagi
Kreston SNR in India
New business opportunities
At the same time, a subcommittee on developing ESG client solutions was set up to focus on how firms can develop ESG client services. Demand for ESG expertise and advice is strong as clients face increasing compliance issues, rising energy costs, and changing attitudes and expectations among the younger, skilled workforce and the public alike. Investors are also becoming more attracted to businesses with strong ESG frameworks in terms of ethics, and because ESG measures help to reduce an organisation’s operational costs.
As with the ‘in-house’ project, a great deal of research, consultation and discussion was carried out to identify and prioritise the specific ESG demands clients have. This major body of work has been distilled into a second handbook for Member firms. It sets out a series of ‘roadmaps’, each devoted to E, S and G, showing how particular client services and solutions can be developed by Kreston firms. They guide firms in first identifying their clients’ needs to help with effectively marketing the service.
The handbook also lists the main Key Performance Indicators that can be used to measure progress as well as case studies on each of the environmental, social and governance elements to show how some parts of Kreston Global are already successfully working with clients.
The handbook links with a series of webinars which also deal with specific concerns and questions on a particular firm’s circumstances. To date, around half of all Kreston firms have participated in these webinars which we think is impressive progress in just a few months. Each firm also appoints an in-house team to co-ordinate and implement ESG measures for their firm and to keep track of the latest innovations in this field.
One of the next steps is to create an ESG service hub to provide further training and other expert services to member firms, and undertake ‘deeper’ research work, looking at various areas of ESG and how they affect clients in different sectors.
The future
A crucial part of the success of this project so far has been communication. It was essential to make the whole network aware of the ESG strategy, the reasons for doing it, and how Kreston firms could contribute to it while it was being formulated.
We also stressed that feedback from Member firms during the roll-out was really important. This means some aspects can be fine-tuned accordingly, resulting in a shared project in which everyone feels involved. We believe this is the only way we will ensure long-term success.
Commitment has also been hugely important. Commitment from the senior levels of Kreston Global, in terms of belief, time and resources. This has been mirrored by the Kreston firms across the network. Any strategic project like this fails if it is merely regarded as a box-ticking exercise.
Different regions of the world are dealing with ESG issues in different ways and at different speeds – not all countries have a Net Zero policy, for example. The Kreston Global ESG strategy will never be ‘completed’ as ESG will constantly evolve. The goal is to ensure that our strategy adapts and stays ahead of change, so it remains sustainable for years to come.