Aeries: Pioneering Sustainability Linked Finance & Accounting Solutions

Introduction

In a time when sustainable finance and Environmental, Social, and Governance (ESG) metrics are in the spotlight, the CFOs and Financial Controllers are experiencing a significant transformation. The integration of ESG criteria into finance and accounting has transcended being a mere forward-thinking strategy to becoming an essential pillar. It marks a shift from traditional bookkeeping and reporting paradigms, with sustainability as the foundation of resilience and strategic growth. Consequently, businesses worldwide are recalibrating their finance operations to align with global sustainability trends, marking a pivotal era for sustainability linked finance and accounting.

This new approach broadens the scope to encompass a company’s broader impact on the external environment, enhances transparency in data capturing, preparation of reports, execution of systems and workflows, reporting and disclosures, statutory compliances and taxes, robust cybersecurity framework to prevent a customer data breach, ensuring that sustainable business operations are firmly grounded in the DNA of the organization through practices that impact People, Process, and Technology.

Financial Operations Reimagined: Integrating Sustainability into Accounting, Reporting, Accounts Payable and Accounts Receivable

Imagine transforming the mundane tasks of managing receivables and payables into powerful tools for sustainability. Companies are doing just that by adopting electronic invoicing, implementing green procurement policies, and choosing suppliers who share their commitment to the planet. It reduces their environmental footprint, streamlines operations, and strengthens their financial health. Here are some examples –

Sustainable Accounting & Reporting 

1. Sustainability Reporting: Organizations adopt standards like GRI and SASB to report their ESG achievements. Transparent communication of ESG metrics strengthens relationships, aligns strategies with expectations, and bolsters accountability.
2. Transparency in workflows and reporting: Focusing on financial reports with in-depth analysis, complete transparency, and disclosures enables an organization to gain the trust and confidence of internal and external stakeholders.
3. Cost Control: Cost Control strategies have expanded to include analysis of the long-term financial benefits of sustainability initiatives like energy-efficient technologies.
4. Integrated approach: This approach aligns financial and non-financial performance to guide strategic decisions. It helps to evaluate the financial implications of environmental actions while providing a comprehensive view of a company’s impact and value creation on its environment and society.
5. Adherence to Statutory compliances: Tax professionals help organizations comply with tax laws to ensure organizations meet their obligations to statutory provisions and government regulations and create overall value for the industry and the betterment of society.

Sustainable Accounts Payable 

1. Electronic Invoicing and Payments: Implementing electronic invoicing and payments drastically cuts down on paper usage, leading to a reduction in a company’s carbon footprint. It also streamlines the payment process, allowing quicker, more reliable transactions and better tracking of financial flows.
2. Supplier Sustainability Assessments: Companies can ensure their supply chain is environmentally friendly and socially responsible by assessing suppliers’ sustainability practices, such as evaluating carbon emissions, waste management, labor practices, and overall environmental impact. It leads to informed procurement decisions.
3. Green Procurement Policies: Companies with green procurement policies prioritize purchasing products and services that are environmentally sustainable. It includes sourcing from suppliers that use renewable energy, minimize packaging, and have a lower carbon footprint, thereby supporting the broader goal of environmental conservation.
4. Sustainable Vendor Payment Terms: Offering better payment terms to vendors who demonstrate strong sustainability practices can encourage suppliers to adopt greener practices, which align with the company’s values and ESG goals while fostering a sustainable supply chain.
5. Digital Payment Platforms: Using digital payment platforms enhances transaction efficiency and security while supporting sustainability by reducing the need for physical checks and the associated environmental impact.
6. Energy-Efficient AP Software: When choosing accounts payable software, consider the environmental impact of the servers or data centers. Opting for energy-efficient servers or data centers with reduced environmental impact can help a company achieve its sustainability goals. This approach can lower energy consumption and enable cloud services committed to carbon-neutral operations.

Sustainable Accounts Receivable

1. Sustainable Payment Terms: Organizations might extend flexible payment options to customers who engage in sustainable practices. It could mean more lenient payment timelines, which can help support the financial stability of smaller, sustainability-focused customers.
2. Inclusion of ESG Metrics in Credit Risk Assessments: Incorporating ESG performance can provide a more comprehensive risk profile. Customers with robust ESG practices are less risky, leading to more favorable credit terms.
3. Supply Chain Sustainability: Sustainability in accounts receivable involves incentivizing customers to improve their sustainability metrics to ensure the company’s income is derived from ethically sound sources.
4. Transparency and Reporting: Maintaining clarity in invoicing and collections, including any sustainability-related incentives, ensures that customers understand the values of the company and the expectations of the financial relationship.
5. Collaboration with Customers: Creating partnerships with customers to promote sustainability can enhance the brand image and customer loyalty. This might involve working together on sustainability projects or sharing best practices for reducing environmental impacts.
6. Risk Mitigation: Companies can use sustainability metrics to assess the risk profile of their customers. More sustainable businesses may have lower risks of reputational damage or regulatory fines, making them more stable and reliable in their financial commitments.
7. Incentivizing Sustainable Behavior: Offering discounts or better terms to customers who adopt sustainable practices, such as paperless billing, not only supports the environment but can also streamline accounts receivable processes and improve cash flows.

Aeries’ Role in Promoting Sustainability in Finance and Accounting

Aeries Technology is at the vanguard of sustainable transformation in finance and accounting, championing the integration of Environmental, Social, and Governance (ESG) principles into business operations. Aeries takes a comprehensive approach that encompasses People, Process, and Technology to foster sustainable practices across organizations.

• People: Aeries Technology believes in fostering a healthy work culture that eliminates bureaucracy and prioritizes employee well-being as a vital component of its sustainable business model. As an equal opportunity employer, Aeries focuses on diversity in its hiring practices, including ethnic, cultural, economic, gender, and differently abled individuals. In addition, Aeries places a high value on creating process resiliency by implementing robust backup systems and strategic workload management to ensure employees have regular breaks and vacations to prevent burnout and improve productivity. Aeries’ policies reflect this ethos by offering a supportive and adaptable environment that promotes professional growth and training, empathy, and personal well-being. This investment in people reinforces engagement and retention which demonstrates Aeries’ commitment to creating a people friendly environment thereby fostering sustainability linked finance and accounting delivery. By ensuring that the team delivering these services is content and efficient, Aeries can provide superior outcomes for clients.
• Process: Aeries prioritizes process efficiency and sustainability in finance and accounting, emphasizing rigorous control, targeted training, and thorough documentation. A structured approach towards innovation and process improvement fosters a culture of idea generation. It enhances operational transparency and service quality. Additionally, the company’s dedication to continuous improvement and workforce development ensures adaptability and resilience. Aeries’ focus on process optimization supports its sustainability goals and delivers sustainable outcomes to clients, reinforcing its role as a leader in sustainable finance and accounting services.
• Technology: Aeries is committed to achieving its environmental and operational goals by utilizing advanced technology. With the integration of workflow automation, standardized systems, and cutting-edge technologies like general AI, Language Models (LLMs), and AI-driven analytics, Aeries makes its processes more efficient, reduces manual errors, and enhances overall productivity. By adopting various technological layers, Aeries can optimize its resources and drive innovation in sustainable finance practices. This strategic adoption of technology is a testament to Aeries’ commitment to sustainability, and it enables the company to provide eco-friendly, reliable, and forward-thinking financial services that meet the evolving needs of its clients while promoting a sustainable future.

In merging these three pillars, Aeries advocates for sustainable business practices and aids organizations in aligning their financial activities with global sustainability standards, leading to more resilient and ethically sound businesses.

Conclusion

The future of finance and accounting is indelibly tied to sustainability and ESG integration, promising enhanced resilience and a commitment to environmental stewardship and social welfare. This shift towards sustainability marks a new epoch in corporate history, characterized by ethical responsibility and a profound commitment to global well-being, setting the stage for businesses that prioritize sustainability to lead the way into a new era of financial success.