In today’s world, sustainability is no longer just a ‘nice to have’. For large corporations, it has become a business imperative that touches all aspects, from vendor relations to financial reporting. Investors, regulators, customers, and the public demand transparency not just on profits but on how organizations impact the environment, society, and governance (ESG). Accordingly, sustainability accounting — capturing and reporting on non-financial performance such as carbon emissions, waste, labor practices, and governance standards — has moved from the periphery to the center of finance.

For SMBs and mid-market firms, this shift presents both opportunity and challenge. On the one hand, strong ESG credentials can enhance brand, access to capital, and competitive differentiation. On the other hand, building and maintaining accurate sustainability accounts involves data collection, new standards, systems, and often scarce internal expertise.

Outsourcing has begun to play a pivotal role in helping companies bridge that gap: enabling access to specialist resources, technology, and process frameworks that turn sustainability accounting from a burden into an enabler of value.

Key Takeaways

  1. Sustainability accounting is becoming core finance
    The article explains that tracking ESG-metrics (carbon, waste, labour practices, governance) is no longer a peripheral activity — it’s moving into the finance function and gaining strategic importance
  2. In-house sustainability accounting is challenging
    Firms face issues such as identifying the right ESG data points, integrating fragmented data from operations/supply chain, navigating multiple disclosure frameworks (e.g., International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB)), and resource constraints.
  3. Outsourcing offers strategic benefits
    Outsourced sustainability accounting brings specialist expertise, improved data quality through automation/analytics, cost-effectiveness (versus building capabilities fully in-house), and scalability to adapt as regulations evolve.
  4. It’s not just about compliance — it’s about value creation
    Beyond meeting regulatory or investor requirements, outsourcing can help uncover cost savings (e.g., resource/waste inefficiencies), better risk-insight (carbon intensity, social issues), and support growth via green product lines — turning sustainability into competitive edge.
  5. A thoughtful approach is required for success
    The blog emphasises that firms must ask key questions: what is their sustainability strategy, which frameworks apply, what internal gaps exist, what to keep in-house vs outsource, how to ensure data integrity and governance. It also suggests best practices: treat sustainability accounting as part of

What Is Sustainability Accounting — and Why Is It Growing?

‘Sustainability accounting’ (also referred to as green accounting, non-financial reporting, or triple-bottom-line accounting) involves integrating ESG metrics into an organization’s reporting and decision-making framework.

Why is it growing so quickly?

Investor demand: Firms with strong ESG performance increasingly attract investment, and weak ESG practices raise risk profiles.

Regulatory change: Bodies such as the International Sustainability Standards Board (ISSB) and frameworks such as the Global Reporting Initiative (GRI) or Sustainability Accounting Standards Board (SASB) are driving new disclosure regimes globally.

Competitive advantage: Identifying resource inefficiencies, waste, or social risk can reduce cost and boost reputation.

As this landscape evolves, CFOs and finance leaders are finding themselves responsible for sustainability accounting — not just for financial statements. One recent study found that 32% of organizations make the CFO primarily accountable for sustainability reporting, highlighting the overlap between finance and ESG.

The Challenges of In-House Sustainability Accounting

Sustainability reporting covers several parameters and reports on thousands of data points.

This BDO article explains that most CFOs, CSOs, and CEOs are unprepared for the level of commitment and investment required —time, people, and money. Paring down the reporting parameters might help, but that doesn’t seem a real possibility, what with sustainability reports continuing to grow, running to up to 83 pages in 2024 as compared to 70 in 2021. So naturally, collating vast amounts of data and creating accurate reports takes a lot of time, institutional buy, and specialized capabilities.

Common pain points in developing strong sustainability accounting internally include:

  • Identification of ESG Data Points: Determining which parameters truly matter to the business for ESG disclosures can be challenging. Lack of structured processes, fragmented data, multiple stakeholders (including vendors and partners with limited reporting capabilities), conflicting priorities, and a lack of expertise make it difficult to implement an effective ESG strategy and identify data points to report on.
  • Data complexity: Environmental and social metrics originate from multiple sources (supply chain, operations, HR, procurement). Consolidating them with financial systems is hard.
  • Standards & frameworks: With multiple overlapping frameworks (GRI, SASB, TCFD, ISSB), understanding what to report, how to measure, and how that translates into value is a steep learning curve.
  • Resource constraints: Many mid-market companies have slim finance teams. Investing in sustainability-specific data experts, systems, and processes may seem overwhelming.
  • Risk of error or misstatement: Poor sustainability disclosures can undermine credibility, invite regulatory scrutiny, or erode investor trust. Outsourcing is increasingly seen as a way to mitigate that risk.

Because of these hurdles, outsourcing has gone from a back-office cost lever to a strategic enabler for sustainability accounting.

You can also read: Save Hrs By Automating These 10 Finance Workflows

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Why Outsourcing Makes Sense for Sustainability Accounting

Here are the key reasons CFOs are turning to outsourcing partners for their sustainability accounting needs:

a) Access to specialist expertise

Outsourcing service providers have specialized teams and resources dedicated to sustainability accounting. Since they have worked with multiple clients across industries, they have institutional knowledge of global reporting frameworks and best practices, helping to set up processes and workflows and enabling a structured, seamless reporting practice.

b) Efficiency and cost-effectiveness

Building an in-house sustainability accounting capability means new hires, software, training, and process change. Outsourcing spreads costs and risk: you pay for what you need, scale when required, and reduce capital investment.

c) Better data quality and integrity

Outsourced sustainability accounting providers often deploy automated tools and analytics platforms for data collection and reporting, improving accuracy and consistency — a key challenge in sustainability accounting.

d) Strategic insight and value creation

Beyond compliance, outsourced sustainability accounting can provide strategic insights — identifying risk areas (e.g., carbon intensity, resource constraints), cost savings (e.g., energy efficiency), and growth opportunities (e.g., green product lines). These insights elevate the role of finance from reporting to strategic advisory.

e) Scalability and readiness for evolving regulation

As regulations and expectations evolve quickly (e.g., the CSRD in the EU, SEC climate disclosure proposals in the US), outsourcing partners remain up to date, allowing firms to adapt without building new capabilities each time.

Key Questions CFOs Must Ask Before Outsourcing Sustainability Accounting

Before deciding to outsource or scale up, CFOs should pose a set of strategic questions:

  • What are our sustainability strategy and goals? Do we have a clear vision of what we want to track (e.g., carbon neutral by 2030, SDG alignment, social impact) and how it aligns with financial strategy? In fact, this very insightful article says that throwing a very wide net for ESG, or sustainability as it is more commonly termed now, can only make it more complex and slow you down from actually innovating or getting closer to achieving the goals.
  • Which frameworks/standards do we need to comply with or adopt? Do we need GRI, SASB, TCFD, ISSB disclosures? Are we required by regulation, or are we doing this for investor differentiation? According to reports, sustainability disclosure frameworks are dominated by SASB and TCFD, with approximately 90% prevalence, followed by GRI (73%) and the UN SDGs (64%). To better evaluate social, environmental, and economic areas, the International Financial Reporting Standards (IFRS) has set up the International Sustainability Standards Board (ISSB), which develops IFRS Sustainability Disclosure Standards. These standards integrate sustainability information into financial reporting, requiring companies to disclose related risks and opportunities.
  • What internal capabilities do we currently have, and what gaps exist? Assess data, analytics, systems, governance, and domain expertise. Run a GAP analysis, identify benchmarks, document gaps, develop an action plan, etc. You can also conduct this exercise with a sustainability accounting partner to determine the optimal course of action.
  • What parts of sustainability accounting are best retained in-house, and what can be outsourced? For example, core strategy and oversight may stay in-house; data collection, analytics, and disclosure may be outsourced.
  • How do we ensure data quality, system integration, and audit-trail transparency? How will the vendor ensure accuracy, traceability, and standardization of sustainability metrics?
  • What are the cost, scalability, risk, and governance implications of outsourcing? Are we paying a vendor fee vs making a capex investment? What SLA/KPIs are in place?
  • How will sustainability accounting outsourcing help us embed sustainability into our core finance function? Not just reporting, but integrating sustainable metrics into budgeting, forecasting, investment decisions, and risk management.

You can also read: Top 10 Accounting Outsourcing Firms in the USA: A 2025 Guide for SMBs

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Best Practices for Successful Outsourced Sustainability Accounting

To maximize value from outsourcing, CFOs and finance leaders should treat sustainability accounting as an integral part of the finance function rather than a separate silo. The CFO should own or jointly govern sustainability metrics, ensuring strong integration between ESG data and financial systems so that insights—such as carbon costs, resource usage, or social metrics—directly inform decision-making. Selecting outsourcing partners with proven ESG reporting expertise, compliance credentials, and robust technology for data collection and analytics is critical. Clear SLAs and outcome-focused KPIs, such as accuracy of emissions data, audit readiness, and time to close sustainability reports, help ensure accountability and performance.

A phased approach is recommended: start with a focused pilot, validate data processes, and scale once the vendor and internal teams are aligned. Continuous improvement and governance are key—dashboards, scenario planning, and regular decision-maker reviews keep the process evolving. Equally important is embedding a culture of accountability and training across operations, supply chain, HR, and procurement, ensuring that all stakeholders understand their roles in providing accurate, timely data for sustainability reporting.

Strategic Value: Beyond Compliance

Integrating sustainability accounting into the finance function gives organizations a strategic edge by connecting ESG performance with financial outcomes. CFOs can leverage sustainability data to make informed decisions, manage risks, and identify opportunities for cost savings and operational efficiency, such as energy optimization or waste reduction. By embedding ESG metrics alongside traditional financial reporting, CFOs not only enhance decision-making but also strengthen investor confidence, regulatory compliance, and long-term value creation for the business.

Outsourcing sustainability accounting can further accelerate this advantage by providing specialized expertise, advanced analytics, and scalable processes that may be difficult to maintain in-house. External partners help organizations implement best practices, ensure accurate reporting, and free up internal finance teams to focus on strategic initiatives. This combination of CFO leadership and outsourced support allows companies to efficiently integrate ESG considerations into core business decisions while driving transparency, innovation, and sustainable growth.

Conclusion

The role of outsourcing in sustainability accounting is emerging as one of the most significant shifts in the finance and accounting landscape. For SMBs and mid-market companies, the challenge of sustainability accounting is real — but so is the opportunity. Outsourcing offers a way to access specialist skills, automate complex data workflows, scale reporting, and embed sustainable metrics into decision-making — all while controlling cost and risk.

As a CFO or finance leader, your mandate is evolving. No longer is it only about managing books and closing month-ends — it’s about integrating the non-financial into the financial, turning sustainability into strategy, and transforming your finance function into a driver of value.

In that journey, outsourcing isn’t just a support mechanism; it can become a strategic enabler. By framing outsourcing in this way, you can turn sustainability accounting from a compliance obligation into a competitive advantage—one that strengthens your balance sheet, enhances your reputation, and future-proofs your business.

FAQs

1. What is sustainability accounting outsourcing?

Sustainability accounting outsourcing refers to the practice of engaging external specialists or service providers to manage and report on an organization’s environmental, social, and governance (ESG) performance.

It saves time, ensures data accuracy, and helps meet complex ESG reporting standards.

Mid-sized and growing firms that lack dedicated sustainability or ESG teams. 

Outsourcing improves ESG data quality by combining specialized expertise, advanced technology, and structured governance with an objective lens that ensures accuracy, comparability, and compliance. For sustainability leaders, this means more than better reporting — it means data you can defend, decisions you can trust, and impact you can measure.

Partner expertise, data security, compliance knowledge, and alignment with global frameworks like GRI or ISSB.

Picture of Ashish Gupta

Ashish Gupta

Ashish heads the Finance and Accounting operations portfolio at Datamatics Business Solutions Ltd. He has overall 29 years of experience into managing various verticals under F&A Including, Accounts Payable, Accounts Receivables, Treasury and Cash/ Bank Management, Report and Closing, Automation and Controls, Fixed Assets and Project Accounting.
Picture of Ashish Gupta

Ashish Gupta

Ashish heads the Finance and Accounting operations portfolio at Datamatics Business Solutions Ltd. He has overall 29 years of experience into managing various verticals under F&A Including, Accounts Payable, Accounts Receivables, Treasury and Cash/ Bank Management, Report and Closing, Automation and Controls, Fixed Assets and Project Accounting.

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