Sustainability accounting: a guide for US accounting professionals

Published Thursday 11 June 2026

Table of contents

• How sustainability accounting fits into your practice
• Sustainability reporting standards and frameworks
• US regulatory landscape for sustainability reporting
• Why sustainability accounting matters for your practice and clients
• How to build sustainability accounting services in your practice
• Grow your practice with sustainability accounting
• FAQs on sustainability accounting

Key takeaways

• Sustainability accounting is a growing practice area. As US regulatory requirements evolve and client demand for environmental, social, and governance reporting increases, accounting professionals are well positioned to offer sustainability advisory services.
• The US regulatory picture is shifting fast. The SEC has proposed rescinding its climate disclosure rules, but California's SB 253 creates the first mandatory Scope 1 and 2 reporting deadline for large companies in August 2026, making state-level requirements the primary driver for now.
• Accountants bring core skills to this work. Data management, reporting, and compliance expertise translate directly into sustainability accounting; the gap is learning the frameworks and building service delivery workflows.
• Both your practice and your clients benefit. Adding sustainability services diversifies revenue, deepens client relationships, and helps clients manage risk, attract capital, and meet stakeholder expectations.

How sustainability accounting fits into your practice

Sustainability accounting applies the data management and reporting capabilities you already use to a different category of metrics: environmental impact, social responsibility, and governance performance. It sits alongside traditional financial reporting and gives stakeholders a structured view of non-financial risks and opportunities.

For your clients, this could mean tracking greenhouse gas emissions, documenting fair labor practices, or disclosing board diversity. For your practice, it means extending your existing skills into a growing service area with its own frameworks, standards, and regulatory requirements.

The scope goes beyond environmental metrics. Social factors such as community engagement, employee wellbeing, and supply chain accountability all fall within sustainability accounting, along with governance areas like executive compensation, ethics policies, and anti-corruption measures.

Sustainability reporting standards and frameworks

Several global frameworks guide how businesses measure and disclose sustainability performance. Understanding these is essential if you plan to advise clients on reporting or build sustainability services into your practice.

SASB standards (now under the ISSB)

The Sustainability Accounting Standards Board (SASB) developed industry-specific standards covering 77 industries. In August 2022, the International Sustainability Standards Board (ISSB) assumed responsibility for SASB standards under the International Financial Reporting Standards (IFRS) Foundation. The standards remain widely used and map sustainability issues to financial performance by industry, making them practical for client advisory work.

ISSB standards (IFRS S1 and S2)

The ISSB published its own sustainability disclosure standards in 2023: IFRS S1 for general sustainability-related financial disclosures and IFRS S2 for climate-related disclosures. These standards are designed for capital markets and are gaining adoption globally. While not yet mandatory in the US, they provide a robust baseline if your clients operate internationally or want investor-grade reporting.

GRI standards

The Global Reporting Initiative (GRI) standards take a broader stakeholder approach, covering economic, environmental, and social impacts. GRI is widely used for voluntary sustainability reports, particularly by companies that want to communicate with customers, employees, and communities alongside investors.

GHG Protocol

The Greenhouse Gas (GHG) Protocol is the most widely used framework for measuring and managing emissions. It defines three scopes of emissions: Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions across the value chain). California's SB 253 uses these scope definitions, so familiarity with the GHG Protocol is essential for advising clients subject to that law.

US regulatory landscape for sustainability reporting

The US regulatory environment for sustainability reporting is evolving rapidly. Understanding the current state of federal and state requirements helps you advise clients accurately and position your practice to respond as deadlines approach.

SEC climate disclosure rules

The Securities and Exchange Commission (SEC) adopted climate-related disclosure rules in March 2024, but stayed them in April 2024 pending legal challenges. On May 29, 2026, the SEC proposed to rescind the rules in their entirety. Final rescission is expected in late 2026 or early 2027. As a result, there are currently no federal climate disclosure requirements in effect for public companies.

California SB 253 (Climate Corporate Data Accountability Act)

California's SB 253 is now the most significant US sustainability reporting mandate. The California Air Resources Board (CARB) approved implementing regulations on February 26, 2026. Companies with more than $1 billion in annual revenue that do business in California must report Scope 1 and 2 emissions by August 10, 2026.

Scope 3 reporting begins in 2027. If your clients meet these thresholds, they need data collection and reporting systems in place now.

California SB 261 (Climate-Related Financial Risk Act)

SB 261 requires large companies to publish climate-related financial risk reports. However, the Ninth Circuit issued an injunction delaying enforcement, and CARB will not enforce the original January 1, 2026 deadline while the appeal proceeds. Monitor this closely; if the injunction lifts, reporting obligations could resume with limited lead time.

IRA clean energy incentives after the OBBBA

The Inflation Reduction Act introduced substantial clean energy tax credits, but the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, scaled back many of these incentives. Several credits have been terminated, including clean vehicle credits (ended September 30, 2025) and residential energy credits (ended December 31, 2025). Some energy credits remain, but advise clients to verify eligibility carefully before relying on IRA-era incentives in sustainability planning.

Why sustainability accounting matters for your practice and clients

Sustainability accounting creates value on two fronts: it opens new service lines for your practice and helps clients manage risk, meet stakeholder expectations, and strengthen their competitive position.

For your practice

Adding sustainability services diversifies your revenue and deepens client relationships. You already have the reporting, data management, and compliance skills that underpin this work. Tools like those in the Xero App Store sustainability category can help you get started faster. Positioning your practice as a sustainability advisor can differentiate you from competitors and create recurring engagement around annual reporting cycles.

For your clients

Clients benefit from structured sustainability reporting in several ways.

• Risk management. Transparent reporting surfaces operational risks, from energy cost exposure to supply chain vulnerabilities, before they become crises.
• Access to capital. Many investors and lenders evaluate environmental, social, and governance (ESG) performance when making funding decisions. Credible sustainability data strengthens grant, loan, and investment applications.
• Regulatory readiness. Even clients not currently subject to mandatory reporting gain an advantage by building data infrastructure early, especially if California-style laws expand to other states.
• Reputation and retention. Customers, employees, and job candidates increasingly consider sustainability commitments when choosing who to work with.
• Operational efficiency. Measuring energy use, waste, and resource consumption often reveals cost-saving opportunities that improve the bottom line.

How to build sustainability accounting services in your practice

Building a sustainability accounting capability does not require starting from scratch. The steps below outline a practical path from internal readiness to client-facing delivery.

1. Assess your current capabilities

Start by mapping the skills your team already has. Financial reporting, data analysis, and regulatory compliance experience transfer directly to sustainability work. Identify gaps, particularly around sustainability frameworks such as SASB, ISSB, and the GHG Protocol, and plan targeted training to fill them.

2. Benchmark your own practice

Before advising clients, apply sustainability principles internally. Conduct an energy audit of your office, review your supply chain for sustainability credentials, and document your own governance practices. This gives your team hands-on experience and demonstrates credibility to clients.

3. Define your service offering

Decide which sustainability services to offer based on your client base and market. Options include emissions data collection and reporting, regulatory readiness assessments for SB 253 compliance, voluntary ESG report preparation, and advisory on green certifications. Start with one or two services and expand as demand grows.

4. Set up your data infrastructure

Reliable sustainability reporting depends on clean, accessible financial data. Accounting software with strong reporting features makes it easier to pull expenditure data, track purchasing patterns, and compile the figures needed for emissions calculations. Automated bank feeds reduce manual data entry and improve accuracy.

5. Integrate specialist tools

Connect sustainability-specific apps to your accounting platform to extend your capabilities. Two standout options for this work are listed below.

• Greenly. Measures environmental impact using financial data, provides expert support, and helps build action plans for emissions reduction. Learn more about Greenly on the Xero App Store.
• Sumday. Delivers carbon accounting services with training courses, templates, and AI-powered emissions analysis. Useful for baseline assessments and ongoing client reporting. Learn more about Sumday on the Xero App Store.

6. Engage clients with a phased approach

Introduce sustainability services to clients gradually. Start by identifying which clients are most likely to need support, whether due to California reporting obligations, investor expectations, or their own sustainability goals. Offer a baseline assessment as an entry point, then build toward recurring advisory and annual reporting engagements.

Grow your practice with sustainability accounting

Sustainability accounting is a growing field with real demand from clients navigating new regulations, stakeholder expectations, and operational challenges. Your practice is already equipped with the core skills this work requires. Taking the next step means connecting with the right tools, training, and community to deliver with confidence.

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FAQs on sustainability accounting

Here are answers to frequently asked questions about sustainability accounting.

Is sustainability reporting mandatory in the US?

There is no federal mandate currently in effect. The SEC proposed rescinding its climate disclosure rules in May 2026. However, California's SB 253 requires companies with more than $1 billion in revenue to report Scope 1 and 2 emissions starting August 10, 2026, with Scope 3 reporting following in 2027. Other states may introduce similar requirements.

Which sustainability framework should I recommend to clients?

It depends on the client's situation. For US companies focused on investor-facing disclosures, SASB standards are a practical starting point because they map sustainability issues to financial performance by industry. For clients with international operations or capital market exposure, IFRS S1 and S2 provide a broader framework designed for global adoption.

If clients want to communicate with a wider stakeholder audience beyond investors, GRI standards offer more flexibility. In practice, many companies use a combination of frameworks.

How can accountants help clients with sustainability reporting?

Accountants bring data management, analysis, and compliance skills that are directly applicable to sustainability reporting. You can help clients collect and organize emissions data, prepare reports aligned with frameworks like SASB or GRI, assess regulatory exposure under laws like California's SB 253, and identify cost savings through energy and resource audits.

Where should accountants start when helping clients measure emissions?

Start with Scope 1 and 2 data, which clients can typically derive from utility bills, fuel purchase records, and fleet expense reports already in their accounting software. Scope 3 is more complex because it spans supplier operations, employee commuting, and product end-of-life disposal. For most clients, focusing on Scope 1 and 2 first builds confidence and satisfies near-term regulatory requirements like California's SB 253, while your team develops the data collection workflows needed for Scope 3 reporting in 2027.

What tools can accountants use for sustainability accounting?

Accounting platforms with strong reporting and bank feed capabilities provide the financial data foundation. Specialist integrations like Greenly and Sumday connect to your accounting software to automate emissions calculations, generate reports, and support client advisory. Starting with your existing tech stack and adding purpose-built tools is the most efficient path.