Accountancy Europe calls for consistency in ‘non-financial’ reporting
24 January 2020: stakeholders need reliable and consistent information. Financial information is not enough and the plethora of non-financial information reporting initiatives is breeding confusion. That is why Accountancy Europe is calling for interconnected standard setting.
With the announcement by the European Commission president Ursula von der Leyen in December of a new European "green deal" and the commitments in the UK government’s green finance strategy, sustainability reporting is set to move up the agenda in 2020. But complications arise from the large amount of different standards available to companies reporting the non-financial information that sets out their environmental credentials.
A global solution is Accountancy Europe’s aim. In its new paper ‘Interconnected standard setting for corporate reporting’, it proposes a global standard-setter, the International Non-financial Reporting Standards Board, sitting alongside the International Accounting Standards Boards under an enhanced governance framework for global corporate reporting.
What is prompting this sea change? There are a number of considerations. The first is that climate change needs a global response. Also, companies often have international supply chains and client bases; digital platforms and services enable companies to have customers around the world; and capital flows are global. Through globally consistent standards, preparers will hopefully be able to manage the cost and complexity of reporting. There should also be an improvement in competitiveness, the free flow of capital and the comparability of information. These realities underpin Accountancy Europe’s thinking.
The paper defines non-financial information as information relating to environmental, social and governance reporting, corporate social responsibility, internally generated intangibles and other value drivers that are not usually measured in monetary terms. In others words, it is largely qualitative information that is hard to measure.
Accountancy Europe considers four approaches to interconnected standard setting in the paper and invites feedback "to provide additional market pull and help to accelerate solutions".