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CPAs have an integral role to play in the sustainable debt market

A new report by CPA Canada and IFAC outlines how the accounting industry can increase credibility in the evolving sustainable debt market

A businessman stands in an office next to a wall with plants on itCPAs’ skills could prove particularly useful during the assurance process of sustainable debt instruments and beyond (Getty Images/Westend61)

Sustainable finance is growing and CPAs are exploring what it means for their roles and career trajectories. The rise of the sustainable debt market is part of this. The market has exploded in recent years, as total global sustainable debt issuances in 2021 surpassed US$1 trillion. Further growth is anticipated over the next decade.

A new report by CPA Canada and the International Federation of Accountants (IFAC), Navigating the Sustainable Debt Market: Enhancing Credibility in an Evolving Market, outlines the current practices, trends, challenges and opportunities of this evolving market, highlighting the influential role professional accountants can play to enhance its credibility.


“CPAs have a major role to play as trusted advisers to companies navigating this tremendously exciting and fast-evolving space,” says Greg Oberti, energy transition leader at PwC Canada.

The current demand for sustainable debt instruments is driven by investor interest and pressure for organizations to integrate sustainability into corporate strategies and deliver on environmental, social, and governance (ESG) commitments. As a result, market capital has increased and the pool of investors has widened.

“The appetite for funds being allocated to debt instruments that service a sustainable purpose is at the heart of what is driving growth,” says David Madon, IFAC’s director of sustainability, policy and regulatory affairs.

This supply and demand dynamic also indicates that this sector has become more than a niche investment area, says Sarah Marsh, partner, national ESG reporting and assurance leader at PwC Canada. “It underscores the growing demand and interest in ESG and sustainable investing,” she says.

To access untapped capital and a widened investor base, organizations of all sizes need to act. CPAs, according to the report, can help them do so by identifying appropriate sustainable debt financing arrangements that are within organizational sustainability objectives and corporate strategies.


When it comes to sustainability practices, the potential for greenwashing remains a concern, says CPA Kaylynn Pippo, acting director, audit and assurance, research, guidance and support at CPA Canada. “As a result, investors are demanding greater disclosure and transparency of comparable and reliable information.”

There are a number of barriers to overcome including a wide range of voluntary guidance and a lack of standardized definitions and eligibility regarding sustainable activities. “You’re not going to get the consistency, comparability, reliability, let alone verification or assurance that you do with respect to financial reporting,” says Madon.

“We need to move away from voluntary principles to regulation and mandatory global standards and enforcement with respect to sustainability information overall.”

The development of global accepted sustainability disclosure standards through the IFRS Foundation’s newly established International Sustainability Standards Board will have a positive impact in this regard.

CPAs can help their organizations avoid greenwashing by implementing effective processes, internal controls and systems, says the report. These will, in turn, track the information necessary to evaluate performance and measure the impact of sustainable debt instruments, while supporting ongoing reporting.

“The accounting profession has a crucial role to play in enhancing confidence that sustainable debt is, in fact, being used to shift capital towards more sustainable activities and outcomes,” says Pippo.


Mitigating greenwashing is the responsibility of the organization issuing the debt and steps should be taken prior to issuance to mitigate this risk. Reviews or verification by an external service provider (e.g., a professional accountant in public practice) further mitigates this risk, suggests the report.

Two common types of external reviews are second-party opinions and third-party assurance engagements. A second-party opinion takes place before the debt issuance and includes an assessment of whether the bond’s framework is aligned to the accepted market standard or of whether the KPIs are adequate and whether the targets are ambitious and impactful. Third-party assurance on the other hand takes place after the bond is issued and can be obtained over the allocation of funds to green and/or social projects and over expected impacts, or over the KPIs.

It’s where the CPA’s repertoire of skills could also prove particularly useful, says Scott Morrison, director of ESG and sustainability at PwC Canada. “CPAs have a significant opportunity to help fill the gap by providing assurance that meets requisite criteria for attracting this increasingly important capital,” he says.

As more companies engage third-party assurance providers, Canadian issuers will become more comfortable with evolving requirements to ensure the trust of investors, they adds. This means the entire professional services ecosystem—including CPAs, lawyers, bankers and the issuing community (corporate to public sector entities)—must be aligned, Morrison adds.

“Professionals servicing clients in this space need to have the humility to accept that no one service provider holds all the answers,” he says. “We can’t act in silos but instead better serve mutual clients collectively and should make an effort to understand past mistakes in other markets to accelerate the learning curve.”

Pippo agrees, emphasizing the integral role of the accounting community in enhancing investor protection.

“As the sustainable debt market continues to evolve, professional accountants must remain cognizant of changes and potential impacts on investors, clients and the organizations they serve,” she says.