“It has never been more exciting,” said Richard Spencer, Director of Sustainability, ICAEW. “Sustainability reporting has gone from cottage industry to the mainstream. Now, leading standard-setters are coming together – as well as the EU – and forging ahead, and it looks as though the Task Force on Climate-Related Financial Disclosures (TCFD) framework will be mandated across the globe.”
He asked an eminent sustainability panel: are we on the verge of victory and, if so, will non-financial disclosures play a part? Jeff Hales, Chair, Sustainability Accounting Standards Board (SASB), and of the University of Texas at Austin, responded that there are clearly more calls for the unification of standard-setting and the search for a global solution. He said he was optimistic, but the challenges are great.
He questioned if the quest was for the wrong thing. What is a global solution, he asked, and suggested that singularity around solving all problems might not be the right goal? He said companies want a workable solution to sustainability reporting and the idea that a single set of standards can facilitate accountability to all parties for all purposes was asking too much.
Hales pointed out that even the investor community is diverse and that is just one stakeholder group amongst many. There are myriad needs to be met over the long term.
Is reporting the goal or is better decision-making really where we need to get to? Professor Jan Bebbington from Lancaster University said that, ultimately, we are looking for timely, trusted, decision-useful information. She added that it is also about discharging stewardship responsibilities. Is there one type of information that will work going forward? No, she said. There are lots of different ways information will be needed.
When asked whether there is adequate information being produced to inform markets and stakeholders, Mardi McBrien, Managing Director, Climate Disclosure Standards Board, said that no solution can be everything to everyone about everything. Lots of different needs have to be met. She commented that anyone around when the Rio Climate Summit commitments were made around 40 years ago would probably be very disappointed by the dearth of progress. She said we are missing the skills to fix the data gap.
McBrien added that even if we create a perfect reporting environment, she is not sure that will achieve what Rio actually set out to achieve. She pointed out that companies are not all telling the same story. What is needed is for companies to think about how they are going to tell their sustainability story to the world, using the tools available and verified data.
McBrien warned against “sustainababble” and that net zero comes at a cost. If there are no numbers at the back of the company report on this area, that is sustainababble, she said, and you will get caught out.
If we are to do better in years to come, what are the implications for our research and teaching? Bebbington said we need skills, literacy and sustainability competency. She pointed out that it is important for scientists who are expert in this area to know what accountants do, and accountants need to apply their lens to the science. She urged accountancy educators to bring sustainability right into accounting education.
Hales said that we need to make sure there is a match between what we are preparing students for and what they are needed for. This means retooling and reteaching, and we need to understand how to apply existing financial reporting standards better for Environmental, Social and Governance issues.
McBrien pointed out that this is not supposed to be easy. This is why companies have to allocate significant resources to sustainability reporting and pointed to a new role for the CFO.
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