Innovation Insights Podcast: Hong Consulting, LLC
Taking Over a Family Business Made Him an ESG Expert
The proverb, “Necessity is the mother of invention,” could not be more true for Hong Consulting, LLC. It was created to help other companies with environmental, social, and governmental (ESG) reporting, but it was born of a passion for helping others from founder Adrian Hong.
After working in auditing in public accounting, Hong took his talents to the Financial Accounting Standards Board (FASB) to update external taxonomy. However, home came calling.
Hong moved back to Hawaii, where he was born and raised to take over the family business, Island Plastic Bags.
“As president, I learned a lot about sustainability, about environmental legislation, about compliance,” he explained. “And so I started Hong consulting to help other businesses like I helped Island Plastic Bags, draft and publish sustainability reports and educate professionals.”
While many may feel that ESG shouldn’t be an accounting concern, Hong says they couldn’t be more wrong.
“Hundreds of billions of dollars in tax credits and grants and funding are going into these areas. And so, if you can show brands or technologies or products that service these things, service what the consumer is looking for, services [what] the government is trying to incentivize, there’s a significant amount of money to be made as well.”
Hong said, “So people ask me all the time, ‘Isn’t ESG just PR, like public relations?’ And it can be that, especially in the United States where it’s not a requirement to report these sustainability reports…But if people are taking them seriously, they really provide context for the financial statements, the context for the business.”
He continued, “It lets people know about things inside the organization, like how inclusive and diverse it is, how it views long-term risks, the assets that might be stranded because of regulation.
“And so it gives so much context about potential liabilities that aren’t on the balance sheet now but might be in the future.”
Citing increased focus for numerous companies on reducing carbon footprints, Hong said ESG reports can also increase revenue.
“[There are] hundreds of billions of dollars…going into new green technologies, whether it’s carbon capture, whether it’s the electrification of vehicles or the grid,” Hong explained. “Hundreds of billions of dollars in tax credits and grants and funding are going into these areas. And so, if you can show brands or technologies or products that service these things, service what the consumer is looking for, services [what] the government is trying to incentivize, there’s a significant amount of money to be made as well.”
- ESG reporting provides insights not available on financial statements, like DEI programs, business continuity issues and opportunities, and risk management.
- Even companies not required to undertake ESG reporting should consider it because of the vendors that want to do business with other companies that provide sustainability reports.
- ESG could provide the inspiration for new products and services that meet the demands for ESG accountability.
- More benefits to ESG reporting include:
- An edge in recruiting, as companies with higher ESG scores also have higher employee satisfaction and attractiveness;
- Allows you to address negative or false rumors and to show your company cares about the community in which it conducts business;
- Increases opportunities to apply for government grants and tax incentives that have reporting requirements; and
- Increases credibility with investors, the government, and other stakeholders.
Want to learn more from Adrian on sustainability reporting? Join us for Island Plastic Bags: A Case Study in Sustainability Reporting, a one-hour program hosted by Adrian Hong, CPA.
Learn more about ESG. Join us for How ESG Reports Can Help with Recruitment and Retention, a one-hour program hosted by Donny Shimamoto, CPA, CITP, CGMA. During the program, participants will learn how a much simpler version of ESG reports that small and mid-sized organizations can use to show their commitment to the environment, the communities they are in, and making more holistic business decisions.