Sustainability accounting: What it is and how to comply with key standards

Published on Wednesday 27 August 2025

Table of Contents

• What is sustainability accounting?
• What is sustainability reporting in accounting?
• What is the Sustainability Accounting Standards Board (SASB)
• What are the fundamentals of sustainability accounting and ESG?
• Why sustainability accounting matters: A catalyst for healthier growth
• Sustainable reporting benefits
• How to implement sustainability principles in your practice
• Sustainability accounting with Xero

Helping Clients Navigate Sustainability Reporting

The focus on sustainability accounting is increasing in the US. Many public companies are required to make climate-related disclosures under the Securities and Exchange Commission (SEC) rules. There are also requirements at state and local levels that govern air pollution, water quality, and greenhouse gases. Global frameworks and standards, such as the EU’s Corporate Sustainability Reporting Directive, also impact US companies that trade overseas.

But becoming more sustainable isn’t just for big companies. Smaller businesses may also seek to report on these areas, in order to provide transparency to potential customers, investors, and employees. Embracing sustainability could improve access to capital, inspire customer loyalty, or enable qualification for green incentives and grants. As such, clients may come to you, their accountant, for support with measuring and reporting on their sustainability.

In this guide, we’ll explore how you can help them. We’ll look at sustainability accounting standards and frameworks, along with what sustainability in accounting means for your practice.

What is sustainability accounting?

Sustainability accounting involves collecting, analyzing and reporting on the social and environmental impact of a business. This reporting can be part of compliance with SEC rules, Sustainability Accounting Standards Board (SASB) standards, or for your clients’ own interests in sustainable accounting.

Along with the business’ impact on the environment, accounting for sustainability also extends to paying employees fairly and supporting the communities the business operates in. If your clients engage with their local community, follow fair labor practices, and have a process for mitigating supply chain disruption, this all comes within the scope of sustainability.

Measuring and analyzing environmental, social, and governance (ESG) aspects allows you to get a clear picture of the impact a business has on the world. It can also help businesses stand out – for example, some investors work exclusively with businesses who prioritize sustainability.

What is sustainability reporting in accounting?

Sustainability reporting in accounting involves documenting metrics data, and case studies on business performance. You may have heard about Environmental, Social, and Governance (ESG) reports, which combine research, data and internal case studies to show the sustainability of a business, from its carbon footprint to its pay scale.

While there’s no single set of federal requirements for sustainability reporting in the US, large, public companies need to make climate-related disclosures as part of SEC requirements. And a growing number of businesses around the world, including in the US, are voluntarily using the SASB standards.

Sustainability reporting could be a valuable opportunity for your practice. There’s potential to offer new services, such as support with data gathering and analysis for sustainability reporting, regulatory preparation, and helping clients apply for green certifications.

What is the Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards Board (SASB) provides globally recognized standards for reporting sustainability information. The standards include a range of sustainability issues that are linked to financial performance across 77 industries. The standards are used by companies and investors to gauge ESG performance, cost-effectiveness, and suitability for investment. The businesses using them disclose information on sustainability-related risks and opportunities for their specific industry, to help investors make informed decisions.

You can support clients with meeting SASB standards by helping them gather data and run reports. For example, exporting clients’ expenditure data so that they can calculate their carbon footprint. You can also help clients by providing evidence to attract grants, funding, or certifications.

It’s much easier to gather and analyze sustainability data when your clients keep financial information in a single, secure space. With accounting software like Xero, you can draw on current and past financial data to compile reports and spot patterns and trends. Xero provides a secure, centralized place for financial records, and reporting features your clients can use to compile sustainability reports.

What are the fundamentals of sustainability accounting and ESG?

Sustainability accounting works alongside financial reporting – addressing the environmental, social and governance performance. For this reason, accounting practices are well-placed to help make small businesses environmentally sustainable, by guiding them on what to measure and how to measure it.

ESG reporting helps US businesses meet growing investor scrutiny, as well as federal and state-level climate regulations, including SEC requirements.

Within an ESG report, there are lots of different factors to include. Here are some examples:

Environmental:

• carbon emissions
• waste management
• impact on local biodiversity
• energy use and renewables

Social:

• community initiatives
• corporate culture
• human rights
• modern slavery

Governance:

• executive pay
• board diversity
• business ethics
• anti-corruption

There are several global frameworks and standards your clients can base their reports on, including the SASB standards, the GRI standards, and the ISSB standards. As their trusted advisor, you can help clients align with these standards, or simply help them gather more reliable data on the sustainability of their businesses.

Why sustainability accounting matters: A catalyst for healthier growth

A sustainability report can be used as a roadmap for change. Let’s say you calculate your client’s carbon footprint based on their yearly expenditure data. They’re surprised by the result, so they set the target of a 30% reduction for the following year. When your clients know where their business currently stands, they can work out how to improve it.

Sustainability accounting can be a catalyst for improving business performance. By analyzing financial data, you can help clients uncover high energy costs, supply chain risks, and unsustainable practices. From here, you can help clients set targets for reducing their carbon footprint, reducing their dependence on fossil fuels, and improving cost efficiency. By working with clients to make their business more resilient, you can also make it more appealing to potential investors, customers, and employees.

Sustainable accounting is necessary for compliance with SEC climate disclosure requirements, where public companies need to disclose risks, governance, risk management, and business strategy information. State-level requirements, such as California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, also require clients to engage with sustainable accounting tasks such as gathering and analyzing data and evidence.

Sustainable reporting benefits

Considering the connection between ESG performance and profitability, there's a powerful business case for sustainability accounting. Sustainability reports are a useful tool for external stakeholders – such as customers, investors and potential employees – who want to engage with you or your clients.

Here’s a closer look at the benefits of sustainability reporting:

• Risk management: Sustainability reporting drives transparency, and when you and your clients can see business operations clearly, you can spot opportunities for improvement.
• Cost reduction: Sustainability reports can highlight areas where your clients are overspending, or spending on the wrong things. They can also help clients save money in the long run, especially when it comes to regulatory compliance and related fines if operations aren’t up to scratch.
• Decision-making: Having an ESG report enables better decision-making in the future because businesses can align their choices with their sustainability goals. For example, they may decide against a certain supplier because their processes are heavily reliant on fossil fuels.
• Improved reputation: Sustainability starts conversations, and could encourage new customers. Plus, job candidates might choose sustainable employers above the rest.
• Increased investor interest: Specialist firms and investors are committed to funding businesses that do right by the planet. If your clients are committed to sustainability, it could pay off on the investor front.

How to implement sustainability principles in your practice

Unless you’re running a large, public practice, you’re not legally required to make climate risk disclosures under SEC requirements. But you can still explore ESG reporting and each of the sections – Environment, Social and Governance – to see how you measure up.

There’s evidence to suggest that companies embracing all areas of ESG outperform their peers. And governments around the world are slowly introducing measures that mean businesses will need to reduce their impact on the environment.

You and your colleagues will already have reporting and data management skills that are essential for this type of work, including regularly producing reports and forecasts, many of which will be needed to build a picture of ESG performance.

Think about what you can benchmark and measure for each of the three sections in your practice. For example – waste reduction in the office, partnerships with community groups, and the diversity of your leadership board. You could conduct an office energy audit, switch from paper processes to software-based ones, or seek suppliers with good sustainability credentials.

There’s a good chance you’ll find overlap between embracing sustainability and building a successful practice. Auditing your costs and processes can help you improve efficiency. And refocusing your efforts on social and community initiatives can help your whole team feel more engaged and aligned. Your good work won’t go unnoticed by clients, either.

Sustainability accounting with Xero

Xero has the tools to help you master sustainability accounting, whether you're providing the service for clients, or working on your own practice.

Built-in reporting features and automated bank feeds make it easier to track the carbon footprint of purchases. Draw up expenditure reports in a few clicks, and see how financially strong your clients and practice are with cash flow projections, profit and loss, and balance sheets. Use this data to bolster SEC disclosures and state-level reporting for climate laws, or help clients claim incentives to switch to green energy under the Inflation Reduction Act.

Plus, we have a library of app integrations to support your ESG management. These tools provide additional features to track, analyze and take action on sustainability in your practice and for clients. Here’s a quick breakdown:

• Greenly: Connecting you with climate expert support, Greenly helps you measure your impact on the environment, build an action plan to reduce it, and find offsetting solutions.
• Sumday: Deliver targeted carbon accounting services for clients, with Sumday’s selection of training courses, templates and guides. Complete baseline emissions assessments and support clients on their journey to carbon reduction.

Explore our software for accountants and bookkeepers to help you master sustainability accounting for your practice and clients.