Accounting for Climate Change: How our members engage with governments & regulators on climate action

Tackling the climate crisis is a joint effort, which is why Chartered Accountants Worldwide member institutes are working closely with governments and regulators in their respective countries to help the push towards achieving sustainability goals.

In the second of our four-part series documenting our members’ efforts to tackle climate change and sustainability, we summarise our findings based on a survey of Chartered Accountants Worldwide member institutes.

ISCA explores green finance push in Singapore

Sustainability has always featured prominently in Singapore’s nation building. Recently, the Singapore Government has intensified efforts to build a green economy and has introduced initiatives to support local businesses in utilising green finance.

To equip accountancy professionals and support government efforts, the Institute of Chartered Accountants Singapore (ISCA) is exploring a range of activities to promote the adoption of green finance. These include publications and guidance on green finance. ISCA seeks to facilitate a multi-pronged approach and is in discussions with government agencies to explore collaboration opportunities regarding green finance and other sustainability-related matters.

ICAI in talks to develop SDG framework in India

The Institute of Chartered Accountants India (ICAI) is in discussion with Niti Aayog, a public policy think-tank, to develop a framework for measurement and monitoring government projects in India in relation to the UN Sustainable Development Goals (SDGs).

Progress to date includes raised awareness on environmental issues among the members and other stakeholders at large, building capacity and nurturing members’ skills for the preparation and assurance of non-financial reports/disclosures. In addition to this, growing numbers of corporates are producing non-financial disclosures subject to assurance with involvement at a senior level.

ICAI is working with the Securities and Exchange Board of India (SEBI), the regulatory body under the jurisdiction of Ministry of Finance, Government of India, “Technical Group on Social Stock Exchange”. The Group is developing a framework for onboarding non-profit organisations and for-profit enterprises on the Social Stock Exchange.

Input to regulators at the heart of ICAZ work

The Institute of Chartered Accountants of Zimbabwe (ICAZ) works closely with the government and often contributes on matters of policy, providing input to regulators. In May 2021, ICAZ and its technical partner, the Institute for Sustainability Africa (INSAF), held an inaugural webinar for boards across the public and private sector aimed at raising awareness on matters of economy, environment, social and governance (ESG) issues.

The event was well attended, with over 100 organisations represented, including various regulators and compliance monitors such as the Corporate Governance Unit, Public Accountants and Auditors Board, Securities and Exchange Commission, Auditor General, Central Bank, Zimbabwe Energy Regulatory Authority, Procurement Regulatory Authority of Zimbabwe, Insurance and Pensions Commission among others.

The next step is to start training the organisations in order to ensure that their processes include measures to improve on their ESG. Public entities in Zimbabwe are already required to adopt ESG as a business strategy, while stricter legislation is on the horizon for private entities. ICAZ will be involved in the conversation around compliance monitoring and tighter legislation as well as assisting the market to be better prepared.

ICAEW helps chart the path to sustainability

The Institute of Chartered Accountants in England and Wales (ICAEW) has strong ties and an influential voice in government, regularly reporting on consultations, and providing its expertise in response to policy change, including the most recent BEIS consultation on mandatory climate disclosures.

ICAEW is also a founding signatory of the Green Finance Education Charter which is critical in helping to incorporate sustainable finance principles and practice throughout the business, finance, and professional services sectors. In partnership with the think tank E3G, it has been leading on building a community of professional bodies and learned societies in the UK to come together and sign the Professional Bodies Climate Action Charter. The Charter aims to meet the terms of the Paris Agreement by pledging to empower and inspire members to drive sustainable growth, chart the path to sustainability for members, and speak with a unified voice to and with professional bodies, government, and the public.

In the run up to the COP26, the UN climate change conference taking place in Glasgow later this year, ICAEW will hold a five-day virtual summit of events, videos, podcasts, and articles to help ICAEW Chartered Accountants act on climate. Scheduled for October, this is the first such summit ICAEW have held to bring members from across the profession together on the issue of climate change.

ICAS’ involvement in monthly Race to Zero meetings 

The Institute of Chartered Accountants Scotland’s (ICAS) head of sustainability and reporting, Anne Adrain, attends monthly briefings with the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), to /influence the COP26 team as part of its Race to Zero campaign. The objective is to hear from the government on its progress and understand how ICAS can encourage their members to make the transition to net-zero carbon target.

ICAS is also engaging with the UK Regulatory body, the Financial Reporting Council, (FRC) on its expectations of the professional bodies to embed climate change in their strategy, regulatory activities and education, and  held a joint webinar with the FRC on this topic.

ICAS also responded to the IFRS Foundation Trustees consultation on sustainability reporting and the Foundation’s role in the development of globally accepted standards. The ICAS response was generally supportive of the IFRS Foundation taking the lead in this area with some reservations on the scope and the governance structure and related processes needed to ensure its success.

Chartered Accountants Ireland’s responses to consultations and involvement in the Ireland for Finance Action Plan

Chartered Accountants Ireland (the Institute) regularly responds to national and international public consultations of relevance to sustainability.

At international level, the Institute responded to the review of the EU’s Non-Financial Reporting Directive and the IFRS’s consultation on the establishment of global sustainability reporting standards in 2020.

At national level, in 2021, the Institute responded to the public consultation on the creation of Ireland’s Climate Action Plan 2021, which will set out actions that must be taken to help Ireland reach the 2030 target of a 51 percent reduction in greenhouse gas emissions, as well as achieve climate neutrality by 2050. The Institute also responded to a call for views on the Northern Ireland Climate Change Bill. This Bill aims, among things, to establish a legally binding net-zero carbon target for the region and provide for a Northern Ireland Climate Commissioner and Northern Ireland Climate Office. In our response the Institute advocated for, among other things, accountability for achieving targets, the setting out of interim targets for emissions-reduction, and a forum in Northern Ireland for professional bodies, such as Chartered Accountants Ireland, and government agencies to meet regularly, exchange information and ideas and collaborate in communications to the enterprise sector.

In October 2021, Chartered Accountants Ireland will participate in Ireland’s Climate Finance Week 2021 to increase capacity among finance professionals to meet the challenges presented by climate change. This initiative is part of the Ireland for Finance Action Plan 2021, published by the Department of Finance.

The Institute also attends monthly briefings with the UK Government’s Department for Business, Energy and Industrial Strategy (BEIS), and the COP26 team as part of its Race to Zero campaign. The objective is to hear from the government on its progress and understand how the Institute can encourage their members to make the transition to net-zero carbon target.

SAICA director heads climate working group

Loshni Naidoo, project director for integrated reporting at the South African Institute of Chartered Accountants (SAICA), chairs one of the five working groups set up under South Africa’s Climate Risk Forum. The working groups are tasked with supporting the objective of encouraging voluntary sustainable finance initiatives and further stakeholder engagement to strengthen sustainable finance in South Africa.

The Climate Risk Forum was established in 2020 to put into action the recommendations of the National Treasury’s draft technical paper, Financing a Sustainable Economy. The forum comprises regulators, industry bodies and associations across the financial services sector. The five working groups cover taxonomy; financial instruments; TCFD Recommendations; scenarios; and competency and capacity, which is chaired by Loshni Naidoo.

Win for CAANZ as regulators recommend accountancy involvement

In New Zealand, Chartered Accountants Australia and New Zealand (CA ANZ) has engaged closely with government on the introduction of mandatory, TCFD aligned climate-related financial disclosures. CA ANZ hosted the public consultation sessions, provided formal feedback on the related legislative bill and was invited to reinforce its position with an oral submission to the Select Committee considering the bill. In addition to this continued engagement as the bill is finalised and reporting standards are developed, CA ANZ provided feedback and guidance to the Aotearoa Circle’s Sustainable Finance Forum during the development of their Roadmap for Action.

CA ANZ has also actively advocated in this space for several years in Australia. CA ANZ was specifically mentioned in the Climate Change Authority’s recommendations that the Australian Council of Financial Regulators should engage with accounting bodies to explore mandatory climate-related financial disclosures. CA ANZ also co-presented to the parliamentary inquiry into the prudential regulation of investment in Australia’s export industries outlining the global trends on climate-related accounting standards and regulation, the growing demand in capital markets for robust and reliable climate-related financial information and the role that regulators play in providing a framework for this disclosure.

CA ANZ signed the global call to action on climate change issued by Accounting 4 Sustainability (A4S) in 2020and will have tailored content and resources centred around a climate theme for members to raise awareness of COP26 in its part of the world.