New disclosure standards could end climate confusion
Climate and sustainability disclosures have become key requirements for most businesses, but the lack of a robust, globally accepted reporting framework has caused confusion and even opportunities for “greenwashing”.
That confusion and opportunity for false claims could be over thanks to new, comprehensive sustainability disclosure standards to meet investors’ information needs.
Development of the standards and a global baseline will be led by the new International Sustainability Standards Board (ISSB), established by the International Financial Reporting Standards (IFRS) Foundation Trustees during COP 26 in Glasgow.
Chartered Accountants ANZ (CA ANZ) say this is a critical step towards a single set of robust global sustainability reporting standards that are integrated, consistent and of a comparable quality to financial reporting standards.
CA ANZ also welcomes the announcement that the Climate Disclosure Standards Board (CDSB) and Value Reporting Foundation (VRF) will be consolidated into the IFRS Foundation.
“This will provide much-needed harmonisation in what was a complex and fragmented reporting landscape,” CA ANZ Business Reform Leader, Karen McWilliams, said.
“Climate and sustainability disclosures have become key requirements for most organisations – they’re no longer a nice to have.
“But the lack of a robust, globally accepted reporting framework has given rise to confusion and a lack of comparability. Globally consistent reporting and common standards will also introduce greater accountability for organisations of all types.
Many Chartered Accountants are already reporting on sustainability issues and environmental regulatory compliance as part of the growing role for accountants in reporting and advising on non-financial business data and metrics.
“Just as the profession embraced IFRS two decades ago, we are ready to support the implementation and adoption of IFRS Sustainability Disclosure Standards,” McWilliams said.
CA ANZ’s latest Investor Confidence Survey revealed that more than 3 in 5 retail investors viewed climate-related information as important to investment decision-making, reinforcing the importance of sustainability reporting.
“It is vital that the ISSB and IASB work hand-in-hand to ensure financial reporting and sustainability reporting are aligned and drive corporate sustainability performance,” Ms McWilliams said.
“As a member of the International Integrated Reporting Council (IIRC), CA ANZ is pleased the Foundation intends to use the IIRC to provide advice into this process, specifically around establishing connectivity between the work of the IASB and the ISSB through the fundamental concepts and guiding principles of integrated reporting.”
Ms McWilliams said CA ANZ is looking forward to working with the new International Sustainability Standards Board during its consultation phases and amplifying the voice of the Australian accounting and business community.
“We also look forward to engaging with the Government and the standard setters around the mechanisms needed to incorporate of new international sustainability standards into the Australian corporate reporting environment,” Ms McWilliams said.
“Reform of this scale is not simple or straightforward, so it’s important we work collaboratively to get this right.”
About the International Sustainability Standards Board
Visit the ISSB website for more information.Find out more
2021 Investor Confidence Survey
2021 Australia and New Zealand Retail Investor Confidence surveys.Read more
The accounting profession has a significant role to play in climate change mitigation and adaptation. Here's what you need to know and what you can do.Find out more
Daniel Webster, Chartered Accountants Australia and New Zealand
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About Chartered Accountants Australia and New Zealand
Chartered Accountants Australia and New Zealand represents more than 128,000 financial professionals, supporting them to make a difference to the businesses, organisations and communities in which they work and live. Chartered Accountants are known as Difference Makers. The depth and breadth of their expertise helps them to see the big picture and chart the best course of action.