Tim Mohin, from the Global Reporting Initiative, explores the need for robust sustainability reporting and the important role accountants can play in helping businesses with their response to climate change.
The unprecedented challenges posed by COVID-19 have reminded us that we are a global community. While the pandemic has dominated our attention, we must not lose sight of the broader UN Sustainable Development Goals and the Paris Climate Agreement.
Corporations are essential to sustainable development. Most large companies recognise their responsibility and voluntarily report progress, using the Global Reporting Initiative (GRI) Standards. But it is crucial that all businesses recognise their impact on society.
This needs a change of outlook in boardrooms. A shift in thinking emerged in 2019 when the leading CEOs in the US Business Roundtable declared that their companies will serve the interests of all stakeholders, not just shareholders.
It’s encouraging that we have seen continued focus on the private sector’s responsibilities for a sustainable world. For example, the World Economic Forum released the Davos Manifesto, which articulated steps to respond to pressing environmental and social challenges. Yet without a full understanding of impacts, businesses cannot enact the changes needed.
Transparency is key. For more than 20 years GRI has advanced the practice of reporting and managing impacts. This kind of disclosure is needed to advance sustainable development and provide the accountability demanded by investors, consumers and employees.
The quality of reporting is critical. For transparency to be effective, disclosures must be complete, accurate and timely. Many companies do an excellent job, but more work is needed to raise the bar when it comes to the robustness and relevance of sustainability data.
Companies and their accountants play a big role in improving quality. Policymakers must also require consistent, reliable, high-quality environmental and social governance (ESG) disclosure. I am encouraged by the recent EU initiative to enhance the non-financial reporting directive under its Green Deal.
The Accounting for Sustainability call to action in response to climate change, signed by 14 accountancy bodies from around the world, emphasised the influential role of accountants in supporting businesses to respond to the climate emergency.
I was particularly encouraged to read ICAEW’s Michael Izza reiterate this point following the World Economic Forum 2020 meeting. As he said, “it’s not just about collecting the data, it’s what you do with it” before going on to identify the importance of chartered accountants using their skills to measure, report, audit and assure data.
Good corporate governance requires a long-term perspective that understands, considers and balances the multiple and competing demands of stakeholders. Robust, reliable and complete ESG disclosure based on the GRI Standards has long been the tool of choice for corporate leaders to make this possible.
If COVID-19 has taught us anything, it is that we are facing multifaceted challenges as one interconnected global society. We must all be good stewards of one another and the global commons.