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 is changing, due to the IFRS Foundation’s International Sustainability Standards Board (ISSB) which was announced at COP26 in Glasgow.
The ISSB strives to build on the past achievements of various organisations, building one global set of standards to guide sustainability reporting for the future.
The IFRS Foundation has since consolidated:
- The Value Reporting Foundation, which houses the Integrated Reporting Framework, Integrated Thinking, and the SASB Standards; and
- The Climate Disclosure Standards Board.
In developing the first standards for the ISSB, the IFRS Foundation has leveraged the four pillars of the popular Task force on Climate-related Financial Disclosures (TCFD).
These four pillars are:
- Risk Management
- Metrics and Targets
Currently, the IFRS Foundation has released draft standards for general sustainability disclosures and climate. Click here to see the latest news from the ISSB.
The Global Reporting Initiative (GRI)
The GRI Standards are a multi-stakeholder approach to sustainability reporting, focusing on societal and environmental impact, in addition to financial consequences. The IFRS Foundation and GRI have signed a cooperation agreement, although they currently represent two different approaches to sustainability reporting – single materiality vs double materiality.
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. Access TCFD free online courses here.
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.
- In 2022, the IPA donated money raised from the sale of hardcopy Tax Agent Guide Roadshow notes to Carbon Positive Australia. Through this donation, Carbon Positive Australia was able to plant 847 native trees across Australia, helping to offset our carbon foorprint and restore natural habitats and biodiversity.