Developments affecting sustainability-related financial and non-financial disclosures are going through a period of relatively rapid evolution. During the 21st century, demand for such information has steadily grown, along with an accompanying plethora of related frameworks and standards, particularly around climate. Since the COP20 climate change conference, the climate disclosure/reporting landscape has become less competitive and more collaborative – but no less confusing for many stakeholders.
It can sometimes feel as if there are now even more changes, developments and possibilities to consider if you want to stay on top of what’s happening and what’s coming. ICAEW is providing resources to assist, as highlighted in recent Audit & Beyond articles on what auditors need to know about new standards for sustainability reporting, Paris-aligned accounts and the auditor’s responsibilities and good practices around climate change risks and financial statements.
Information hubs
The Audit and Assurance Faculty and the Financial Reporting Faculty are working to develop more sustainability and climate-related resources that will be useful to auditors. To keep up to date with developments affecting members of the profession – and those they work with and for – make regular visits to specialist ICAEW hubs and resource lists. They include the following.
‘Non-financial reporting’. The resources cover areas ranging from assurance guidance, through the strategic report and the director’s report to Task Force on Climate-related Financial Disclosures – and more. The ‘Reporting on climate change’ area offers an overview of current UK reporting requirements and signposts to relevant practical guidance, while the area on ‘International sustainability reporting standards’ presents a Q&A introducing IFRS Sustainability Disclosure Standards and explaining the story so far.
‘Sustainability and climate news and insights’. Links are provided to recent related ICAEW Insights articles. They include, for example, matters such as benchmarking the transition to net zero, carbon tracking software, EU sustainability standards, ISSB’s international sustainability disclosures, and a number of articles on sustainability in the UK public sector. Some readers may want to consider joining ICAEW’s Public Sector Community – which is free – as it offers articles, tools, resources and other support tailored specifically to this sector (see https://www.icaew.com/groups-and-networks/communities/public-sector).
International developments
During the first half of 2022, national, regional and international sustainability-related standards were proposed by various standard-setters and regulators.
The European Financial Reporting Advisory Group (EFRAG) released drafts for proposed European Sustainability Reporting Standards. An update on developments is at efrag.org
The recently formed International Sustainability Standards Board (ISSB), part of the International Financial Reporting Standards (IFRS) Foundation, released drafts for proposed IFRS sustainability and climate-related disclosure standards. An update on developments.
There have also been developments at a national level. In the US, for example, the Securities and Exchange Commission (SEC) proposed rules that would require public companies to disclose extensive climate-related information in their SEC filings.
In the UK, The Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022 came into effect (from 6 April 2022). The regulations are introduced in a Financial Reporting Faculty webinar and many other associated resources can be found on the ICAEW website. Government guidance on these regulations is also available.
To place some emerging sustainability-related developments in a local context, the UK Financial Reporting Council and the International Sustainability Standards Board held a joint webinar on 12 May 2022, which is now available as a recording.
Not all auditors need to know about all of these sustainability-related developments, but they are likely to be interested in the direction of travel. The resources above should help with the journey.
Audit & Beyond
This article was first featured in the July/August 2022 edition of Audit & Beyond.
