By ICAS
26 June 2023
ICAS has welcomed today’s release of new sustainability reporting standards, which help establish a global baseline for sustainability disclosures.
We welcome today’s publication of two much-anticipated standards by the International Sustainability Standards Board (ISSB).
Responding, Fiona Donnelly, Director of Sustainability at ICAS said “These new standards provide the basis for a more comprehensive, global, corporate reporting system for businesses and organisations. This is a great start, but we believe that businesses should also report on the impact they have on the economy, environment and society.”
She went on, “ISSB has clearly taken on board many of the comments made during the consultation exercise, and as a result, the standards will now help align expectations on how businesses report sustainability risks and opportunities. The standards offer a sound starting point and global baseline that can be built upon”.
The focus of the standards is driven by ISSB’s view of what the primary users of financial reports need (namely investors and other finance providers). ICAS supports the increased prominence these standards give to an entity’s interactions with stakeholders, society, the economy, and the natural environment. This highlights the importance of investors’ interest in more holistic reporting, something that ICAS firmly believes in.
J Bruce Cartwright CA, CEO of ICAS, commented on the standards, stating: “Sustainability reporting needs to be on par with the level of detail and scrutiny given to financial reporting. Having this global baseline for disclosing sustainability-related financial information marks an important next step in achieving this. We do however, strongly encourage that disclosure requirements are extended beyond only considering matters that are financially material to also include information about how organisations impact both society and the environment. We believe this approach would produce more holistic and comprehensive reports for investors, as well as serve the needs of a wider range of stakeholders. This is likely to be an evolutionary process, but we will continue to support and call for the end goal of double materiality.”
This view was echoed in a recent survey of business leaders conducted by ICAS. The research, which collected responses from 581 ICAS Chief Executives, Managing Directors, Chief Financial Officers, and Financial Directors across the UK, found that when asked 45% of respondents argued for a double materiality approach on the type of information businesses should report on. This was an encouraging response given double materiality is a relatively new concept, and represents a step change for many, in determining sustainability-related disclosures.
Fiona Donnelly added: “We believe that increasingly, in five, maybe ten years, sustainability factors will not be considered on their own, but routinely will be integrated throughout the strategy and functions of a business, so that the whole organisation operates in a comprehensively sustainable way. Reporting will follow suit, so that sustainability disclosures will increasingly form a part of routine reporting and the impacts of an organisation are seen as equally important as the financial impacts on an organisation.”
J Bruce Cartwright CA concluded, “Recent years have brought about much consolidation of sustainability framework setting bodies and change to sustainability-related governance and disclosure frameworks. We look forward to continuing to work with the ISSB, and other standard setting bodies, to shape disclosure requirements that are appropriate for the report preparers and useful for all report users.”
