There's a new finance role

Currently, only a handful of large companies—Google, DuPont, Caterpillar, Aflac, and CVS Health among them—employ ESG controllers. But the role “has taken off,” according to Wes Bricker, vice chair and US trust solutions co-leader at PwC, and one may soon be coming to a company near you.

With stakeholders increasingly requesting reliable ESG data, and with the SEC climate change proposal on the horizon, companies are looking to improve their collection and reporting. Some have opted to have an ESG controller to oversee those processes, said Bruce Klein, partner at CrossCountry Consulting, where he leads ESG efforts.

“Just like a financial controller is responsible for ensuring the integrity and validity of financial data that is disclosed to the public, an ESG controller is responsible for validating the integrity and the correctness of the ESG data that’s also now being disclosed to the public,” he said.

ESG controllers, Bricker said, pull together information from multiple domains, including finance, operations, governance, and science and engineering, and “provide the confidence that [data] is investor-grade.” (A recent Deloitte study, in fact, found that 75.5% of companies with ESG controllers are confident in their ESG reporting abilities, compared with 45.7% without.)

The ESG controller role can be relegated to one person, two people, or to a committee, Bricker said. Sometimes it falls under finance, and sometimes under the sustainability function, Klein said, noting that “people are still figuring it out.”

ESG controllers “work right alongside” CFOs, Bricker said. Though the CFO will be the one on earnings calls talking about ESG disclosures, “the ESG controller has to at least educate the CFO on the key points of climate risks and climate metrics,” Klein said.

The business case for ESG controllers. Companies may question whether they can afford to create ESG controller roles. But Bricker believes there’s a strong business case to be made for the position. ESG, he noted, “is an area of specialized expertise” just as tax or financial reporting is. With that being the case, having a designated role to oversee it “tends to elevate the quality and the quantity of reporting,” he said.

ESG controllers also help companies identify both opportunities in the ESG realm “as well as the other side, which is risk management and the resilience of the business model against change,” including climate change, Bricker said.

There are other ways in which ESG controllers manage risk: Their expertise can prevent mistakes or misstatements on SEC filings, which can open companies up to penalties and other adverse consequences, such as class-action lawsuits on the part of shareholders, Klein said. They can also help ensure a company’s messaging about sustainability, on, say, its website, is consistent with its disclosure documents, Bricker said.

Plus, finance teams, which often run lean, may not have the bandwidth to handle ESG reporting on top of their other duties, Klein said. That’s where an ESG controller can come in handy.

An opportunity for auditors. The difficult part of finding an ESG controller is “finding someone with the right portfolio of skill sets,” Bricker said. People in this role need to understand business operations and the company’s core processes and governance, as well as a certain amount of the “science and engineering that go into the products and services” and how those products and services can become reengineered to be more carbon-neutral.

Employees with an audit background are often the best fit, said Klein, as it’s easier for an auditor to “learn the key metrics on sustainability than to go from a sustainability background and learn what audit financials and metrics look like,” he said.

But ESG controllers also need to have good people skills, Klein said, observing that it’s more of a client- and internal-stakeholder-facing role than a pure technical role.

An ESG controller boom? ESG reporting can have “a real impact on a business,” Bricker said. Companies require personnel with specialized knowledge in order to make good on the ESG commitments they’ve made, he said, “and that’s why I see ESG controllers being a role that’s here to stay.”

Klein predicts that it will become more of the norm for companies to have ESG controllers in years to come. But once finance gets a better grasp on ESG reporting, he said, the roles of the ESG controller and financial controller might “converge.”

The role could be a “dream job” for accountants with an interest in environmental and social causes, he said. “It lets you tell your parents you got a corporate accounting job and still lets you feel you’re doing something idealistic,” he quipped.