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Sustainability to be at the heart of corporate reporting in the transition to net zero

Author: ICAEW Insights

Published: 20 Jan 2022

Themed on sustainability reporting, the Financial Reporting Faculty’s January edition of its highly acclaimed magazine 'By All Accounts' features a practical guide on implementing TCFD recommendations, accounting for climate under FRS 102 and risk reporting. Normally exclusive to faculty members, a digital version of this special edition is accessible to all ICAEW members and members of ICAEW’s Sustainability and Climate Change Community.

“With sustainability increasingly at the top of corporate reporting agendas for preparers and other stakeholders, plus developments in the area emerging at such pace in recent years, the faculty believes this particular edition of the magazine will be of interest to a broad audience and so we’re making the digital version more widely available,” says Sally Baker, Head of Corporate Reporting Policy and Editor of the Financial Reporting Faculty’s bi-annual magazine By All Accounts.

Numerous reporting frameworks and a multitude of acronyms and abbreviations have created a confusing landscape, so a handy ‘jargon buster’ introduces the key initiatives to be aware of and provides a timeline of how the frameworks are consolidating. Alongside that, a nutshell guide answers some of the big questions to help companies understand the current state of play in sustainability reporting and what they need to know now.

Mandatory climate disclosures in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) are set to be introduced in the UK with effect from April 2022. In her article, Mei Ashelford, Financial Reporting Faculty Board member and Director of Reporting Intelligence at corporate communications agency Gather, shares practical tips to help companies start implementing the recommendations. Although the way companies implement the requirements will vary, it’s important to establish the necessary processes early: “The quality of your reporting is only ever as good as the evidence that underpins it,” writes Ashelford.

In another article, Merrik Bousfield, Project Director at the Financial Reporting Council, explains how the Financial Reporting Council is helping FRS 102 preparers improve reporting in ESG (environmental, social and governance) matters with a new staff factsheet Climate-related matters, one of a series of factsheets that accompany FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. In a further feature, the Climate Disclosure Standards Board explains why it is so vital that climate risk is incorporated into financial statements as well as the ‘front-half’ of annual reports and highlights the Board’s guidance, Accounting for climate, which aims to support preparers in doing so.

As sustainability reporting initiatives evolve, connecting financial and sustainability reporting will be key. Digital transformation expert and Global Accounting and Reporting Senior Director at Huawei, David Wray, discusses the importance of adopting a digital-first mindset to achieve their interoperability; a mindset with the end users in mind. “A connected and digital approach will ultimately help investors and other stakeholders analyse and compare large amounts of data across a large number of jurisdictions,” he writes.

While focused on sustainability reporting, the magazine features other topical articles, including a piece highlighting key issues for the 2021/22 reporting season for IFRS reporters, an article that considers how to meet investors’ information needs when it comes to reporting risks and uncertainties and also a feature on the complexities faced when preparing an annual report and how to overcome them.

“We’re delighted to be making this edition of By All Accounts more accessible and hope that those seeing the magazine for the first time find it an informative and valuable read,” says Director of Audit and Corporate Reporting Nigel Sleigh-Johnson. “We’d welcome any feedback. To get in touch, please email frf@icaew.com.”

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