April 5, 2020

By Michelle Pelletier Marshall

Matt Armstrong serves as K·Coe Isom’s leader for sustainability assurance out of their Kansas City, Kansas, area office. K·Coe Isom, a top 100 accounting firm, is a leading food and agriculture consulting firm, and top provider of sustainability assurance. The company, founded in 1932, has its sight clearly on its core mission to make a difference in the lives of its people, its clients, and the world in which we live. This includes sustainability insights and solutions for food and agriculture, biofuels, land management, manufacturing, construction, and the banking industries.

For his part, Armstrong has helped K·Coe Isom establish itself as the premier firm for assuring sustainable performance in production ag and land management. Working primarily with land managers and investment groups, his team’s efforts have allowed clients to engage in first-of-its-kind audits, and achieve “certified sustainable” outcomes that customers demand.

Armstrong developed an assurance process that employs AICPA accepted practices, ISAE 3000, and COSO frameworks for maximum reliability. Additionally, Armstrong is also a licensed AA1000AS provider, and an accredited verifier for CARB’s Low Carbon Fuel Standard.

GAI News spoke to him about his latest projects and the increased focus on sustainability in the agricultural world and beyond.

1). Sustainability is the new buzzword across many sectors, especially agriculture. K·Coe Isom has been focused on this for years. Can you explain the pathway to this focus and its prevalence in your firm’s work?

Sustainability might be new to certain sectors, but it’s always been a part of agriculture. It might have gone under different names, like conservation, input management, efficient production, best management practices; it’s all been based around the same concept – managing production farmland in a manner that provides for current needs while not preventing the land from providing for future needs.

The sustainability team at K·Coe Isom has been helping farmers and producers make informed decisions since the 1990s. We cut our teeth in risk management services, environmental consulting and assessments, as well as natural resource management. Since then we’ve expanded our services to meet the evolving needs of our clients and industry partners. As practices became more nuanced in their implementation, we began focusing on assisting ag and food companies with their internal sustainability programs and external reporting. We think we’ve been very successful in popularizing the practice, based on how CSRs (Corporate Sustainability Reports) have become standard operating procedure for so many industries today.

From sustainability reporting we’ve added capacity in what we believe is a key topic: building confidence with customers and stakeholders through assuring sustainability data. In brief, we bring the same level of rigorous review that we employ on financial or internal control audits, and apply it to sustainability programs and data.

Another critical area we operate in is assisting companies with developing processes to capture data on material sustainability issues, and help identify systems that will help to manage their sustainability data for easier analysis and reporting. Additionally, we support companies through their decision making by assisting them with materiality assessments, program development, quality system compliance, and third party program adherence.

To keep things simple, we break our sustainability services into three primary areas; Data Management, Sustainability Assurance, and Decision Support.

2). Food and agriculture are at the heart of K·Coe Isom, comprising two-thirds of its business. What trends in sustainability and transparency have you seen within this group?

We pride ourselves on keeping our fingers on the pulse of emerging issues, and firmly believe that we serve the most important industry in the world. I mean, agriculture and reliable food sourcing brought us out of the Stone Age. Sustainability is at the center of that reliability. But sustainability, like anything, can be prone to trends. I remember a few years ago, everything you read was about Sustainable Intensification. Then for a while you would read some similar articles about Regenerative practices. Things like that catch people’s eyes. Sometimes there are differences, but at their heart they are taking slightly different approaches to the same problem humans have been facing for 10,000 years: how to responsibly feed a growing world.

Sustainability practices continue to mature of course, using things like remote sensing and field mapping technology, thermography, and software solutions for field measurement. Automation and machine control, combined with skilled management has seen some great promise in gaining efficiencies and reducing waste and runoff. Carbon accounting has come a long way in both measurement and protection, and, thanks to a healthy carbon trading market, is starting to play a role in land manager’s financial strategy.

A lot of practices that are promoted as cost savings measures tend to be sustainability tactics in effect, like machine control and autopilot systems for equipment and implements. They’re sold as tools to save fuel, inputs, and time. But they also reduce emissions, reduce soil compaction, and minimize soil disruption.

Companies take myriad approaches to communicating the good work they do, and practices are always evolving. I believe we have a crisis of trust in our food system, and there’s no better way to illustrate this than to go to a grocery store. Trying to be an informed consumer takes time and effort, and usually leads to more confusion than confidence.

Brands used to combat this through marketing claims like “Natural” or “Better for you”. Marketing was then enhanced with label claims and customer preference research, so we got the deluge of special interest logos like Organic or non-GMO on our products. These helped, but added to the confusion at the market.

Companies then went on to report on their overall sustainability performance, but without a good materiality analysis they risked putting time and expense into areas their customers weren’t demanding. Now, sustainability programs are much more precise and exact, and they are starting to be attested to by auditors like ourselves.

3). In 2019, K·Coe Isom performed one-of-its-kind independent examinations on sustainability performance across an entire organization’s portfolio of direct managed properties. Please explain how this works and the benefits gained by your agricultural clients.         

We are so proud to have been a part of that project. When we were originally contacted, it was because the client was in need of a group with expertise not just in audit methodology, but also agriculture as well as sustainability. At the same time, we had been searching for a group that wanted to have their sustainability efforts across an entire operation assured. It was a match made in heaven.

In the examinations we perform, we apply guidance from a variety of accepted non-traditional assurance practices, and have built an audit system that can stand up to the rigor of a financial audit while being applied to management decision making and practices in place. Normally in a financial audit, the assertion an auditor is attesting to is that a company’s financial records are presented in accordance with GAAP, end of sentence. We needed an analogous assertion to test to, since the focus of the audit was on management’s decision making as it related to sustainability performance. Along with the client, we determined that the assertion being tested was if the entire organization was operating in conformance with a new comprehensive Sustainable Agriculture standard. (NOTE: This standard is to be officially launched at GAI New York, but after launch if anyone wants to talk through how it works we would be happy to accommodate them.)

The audit process includes risk assessments and sampling from sites that make up ag portfolios, staff interviews, evidence requests and reviews, and on-site visits to confirm practices. Then those findings are collected in a report that states the overall level of conformance (or reasons for a non-conformance finding), as well as opportunities for improvement. We have found that clients gain a fantastic insight into how their operations are currently performing, and the report serves double-duty as a guide for continuing improvement in the interim until the next audit cycle.

4). Your team has done analysis of emerging frameworks across commodities and specialty crops, dairy, and animal protein. Can you provide an overview of the findings?

Sure thing. Because of our experience assisting companies implementing a sustainability framework or creating their own, we have been exposed to a lot of what has worked and what hasn’t. Framework and program creators ask us to come in and review the frameworks pre-release versions for weaknesses or blind spots. We’ve been able to take the perspective of a wide variety of stakeholders, say, dairy farmers in the U.S. and European investors, and align their expectations. Improving the ability for all parties to understand and implement a system only helps to improve uptake of the new framework.

Also, like in our audit reports, framework designers are given a gap analysis to help guide their next steps. Some improvements that we’ve suggested have been items that needed to be rated higher on materiality assessments, auditor instruction and implementation guidance, and even phrasings that would prove be difficult to translate successfully for other language users.

5). K·Coe Isom published its own Sustainability Report, which is unusual for a services firm. What were the key findings from producing the report?

That’s a great question. The first thing I’d want to mention is why we engaged in producing a sustainability report in the first place. We thought if we had been advising so many other companies on the benefits of the practice, we should walk the walk as well. And it was fascinating! It really drove home that the value of engaging in this type of reporting is the process of creating the report, maybe more so than the actual report. The data gathering on its own, as well as the identification and continued monitoring of material issues, were eye opening. We learned a lot for ourselves, and still refer back to those lessons when producing reports for others.

A huge takeaway for us was learning about areas where we had waste and unnecessary cost that needed to be reined in. Having this data on hand helped us improve efficiencies in a lot of areas. Another was how preparing the report improved communication across the firm, united our staff to look at performance in a new way, and let people who did good work in our communities really shine. It gave our leadership a way to showcase where we’re heading as a company, and our clients a new way to connect with the overall firm.

ABOUT K·COE ISOM

K·Coe Isom is a top 100 accounting firm, a leading food and agriculture consulting firm, and a top provider of sustainability assurance. With roots dating back to 1932, the firm has expanded upon traditional accounting services to deliver increased value for clients through comprehensive advisory consulting. Its consultative service offerings include complete policy-to-plate strategies, sustainability programs, federal affairs, land conservation, wealth management, succession planning, and talent strategy. K·Coe Isom also provides ground breaking non-traditional assurance engagements, including sustainability audits, examinations of sustainability reporting and benefit claims, readiness reviews, and pre-audit advisory services to a number of certifications, audit programs, and verification systems.

 Learn more about K·Coe Isom at www.kcoe.com or meet with them at the upcoming 12^th annual Global AgInvesting conference in New York City, of which they are hospitality sponsors.

~ Michelle Pelletier Marshall is managing editor for Global AgInvesting’s quarterly GAI Gazette magazine and a contributor to GAI News. She can be reached at mmarshall@globalaginvesting.com.