On 2 June 2021, EU policy makers, global standard-setters, business, investors and the accountancy profession discussed the role of sustainability reporting in driving the changes in business behaviour that will benefit people and planet over the long-term at a joint ACCA, IIRC & SASB event, as part of EU Green Week 2021.
Against the backdrop of Covid-19, the changing shape of markets and global value chains, the redefinition of risks and the focus resilience, we face a fundamental question: how can we all work together to create the required zero pollution transformation while rebuilding our economies to support societies to thrive? This question was central to the discussion at a joint event organized as part of the EU Green Week 2021 by ACCA, the IIRC & SASB (soon to be merged as the Value Reporting Foundation), called Creating value and managing impact through integrated sustainability disclosure.
The event was well attended by over 800 participants, including EU policy and decision makers, accounting and audit professionals, national and global regulators and standard-setters, representatives from financial institutions, businesses, investors, academia, as well as ACCA members and students.
After a welcome address by ACCA Chief Executive Helen Brand OBE and Charles Tilley OBE, CEO, IIRC, keynote speech was delivered by Heidi Hautala, MEP, Vice-President of the European Parliament. The panel discussion, moderated by Peter Bakker, President and CEO of the World Business Council for Sustainable Development (WBCSD), welcomed Alain Deckers, Head of unit Corporate Reporting, Audit and Credit Rating Agencies, DG FISMA, European Commission, Lee White, Executive Director, IFRS Foundation, Rients Abma, Executive Director, Eumedion, Stefan Schnell, Global Head of Group Reporting and Performance Management, BASF. Concluding remarks were delivered by Janine Guillot, CEO, SASB.
The meeting discussed the current tectonic shifts in the corporate reporting world. The European Commission recently released its new Corporate Sustainability Reporting Directive (CSRD), and the European Financial Reporting Advisory Group (EFRAG) has been mandated to develop a set of sustainability reporting standards. In parallel, the IFRS Foundation proposed to set up a new International Sustainability Standards Board (ISSB), alongside the important work of the so called “Group of Five” (the IIRC, GRI, SASB, CDSB and CDP), as well as the welcomed merger between the IIRC and SASB.
Speakers agreed that disclosure isn’t the end goal for the business, and that changing corporate culture and practices to align with sustainable development goals and global climate policy takes more than standard-setting and disclosure.
Helen Brand OBE, Chief Executive of ACCA set the scene: ‘As sustainability disclosure requirements develop, we need to ensure that we are not simply responding to short-term political imperatives and simply adding to the alphabet soup of codes, frameworks and organisations in the corporate reporting ecosystem. We have to make sure that the progress we’re making is really capable of driving the changes in business behaviour that will benefit people and planet over the long-term’.
Charles Tilley OBE, CEO, IIRC: ‘The development of the IFRS Foundation’s ISSB and the EU commission’s CSRD is laying the foundations for a comprehensive system of corporate reporting. However, for this system to be globally adopted will require a comparable and consistent standard-setting, focusing on the interoperability of regional or jurisdictional standards and frameworks with a globally accepted baseline. Through our merger with SASB we have a set of tools that can contribute to this goal’.
The debate highlighted the current discussions around the need for consistency, complementarity and alignment between the global and the EU initiatives. It was stressed on the one hand that sustainability problems are world-wide problems that need global solutions for capital markets, which would allow comparability, but also efficiency in terms of providing the information. It would be unhelpful if multiple standards would be applied for the same risks faced by the same companies that happen to raise capital or operate globally.
On the other hand, it was argued that it is very important to get the balance right between striving for international consistency, while ensuring that we meet the needs of European legislation. The issue of proportionality of the standards was also raised.
Heidi Hautala MEP, Vice-President of the European Parliament said: ‘What we are witnessing today is nothing short of a revolution. The new CSRD legal framework will bring sustainability into the core of the private sector across the board and systemic challenges need systemic solutions. Single companies cannot alone solve these issues, so I want to see this as a true Brussels moment. The EU is in a position to lead the way to eventually even a global standard for sustainable business. And of course the EU is the most interactive international player and wants to have global frameworks.’
There was a clear call from all speakers to join forces and work collaboratively, as everyone has a part to play in the process. It was stressed that having a constant feedback loop between standard-setters, policy-makers and practitioners while developing sustainability reporting standards will help ensure that these standards are practical, applicable and implemented efficiently, and also will enable to detect potential pitfalls.
Janine Guillot, CEO of SASB concluded: ‘Together, we are making progress towards a coherent, comprehensive system of corporate reporting that can help bring the interests of businesses, investors, and broader society into close alignment. By building the foundation for a globally accepted system of sustainability disclosure, we can accelerate our collective global progress’.