Sustainability for Accountants
What is sustainability?
In any context, something that is sustainable is consistent, dependable and replenishable over the long term. With the challenges presented by climate change and growing social inequalities, sustainability today is predominantly focused on sustainable development and the principle of intergenerational equity – meeting the needs of present generations without compromising the needs of future generations. A sustainable future is one that achieves an effective balance between the pursuit of economic development, the maintenance and restoration of the environment, and the health and prosperity of society.
Sustainable Development Goals and the push for the private sector to take the lead:
Sustainable development in the present day is most prominently being driven by the United Nations Sustainable Development Goals (SDGs), which were introduced in 2015. The SDGs recognise that improving living standards and overall prosperity is connected to a range of factors, including action on climate, economic growth, healthcare, education and more, resulting in a total of 17 ambitious goals.
What is the role of the accountancy profession?
The International Federation of Accountants (IFAC) has aligned their strategy and outcomes with the SDGs, setting the tone for member organisations to follow suit.
In IFAC’s Accounting for Sustainability guide, there is a call for “accountants…to consider how, through their work and positions of influence, they can contribute to business resilience and influence organisations to integrate sustainability matters into…strategy, finance, operations, and communications”.
Read the full publication of IFAC's Accounting for Sustainability Guide today.
What are the options for sustainability reporting?
The current landscape of sustainability reporting consists of four major organisations:
The Value Reporting Foundation: a recent merger between the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB).
The Global Reporting Initiative (GRI)
The GRI standards aim to help organisations report their economic, environmental, and social impacts.
Climate Disclosure Project (CDP)
The CDP works aspires to help companies and cities disclose their environmental impact, enabling them to manage risks and opportunities in the areas of climate change, water security, and deforestation.
Climate Disclosure Standards Board (CDSB)
The CDSB also has its own framework for reporting environmental and climate change information.
IFRS is in the process of developing the Sustainability Standards Board, which strives to build on the achievements of the above organisations and present one global framework and set of standards to guide sustainability reporting for the future.
What is the value of sustainability reporting?
- Increasing transparency to stakeholders.
- Improving governance.
- Enhanced awareness and management of risk.
If integrated thinking and reporting is adopted, broader organisational benefits are also expected, such as:
- Awareness of how value is created, maintained, and destroyed.
- Reduction of silos leading to improved information and data flows.
- Better understanding of business model and purpose.
- Having a future-orientated outlook.
The G7 supports the recommendations of the Task Force on Climate-Related Financial Disclosures’ (TCFD), which would make climate-related disclosures mandatory for companies. While optional, SMEs can benefit from making climate disclosures if their business model is affected by climate risk.
How is the IPA engaging with sustainability?
- Counting on U.
- Commencing our Integrated Reporting journey.
- Applied to become a signatory of the United Nations Global Compact, meaning the IPA is committed to upholding the ten principles and reporting on progress every two years.
- Engaging with the Sustainable Development Goals.
- Supporting IFAC’s sustainability focus and the IFRS Sustainability Standards Board.
- Thought leadership – August 2021 sustainability special edition of Public Accountant.