As highlighted in the Sustainability and business — the call to action; build back better report, we started on a programme of thought leadership exploring accountancy and sustainability. This is part of a series of briefs exploring the topic of sustainability, business and the finance professional’s key role. These briefs will help organisations consider the sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
This paper is a summary of a specific standard or framework. It was written from the management accounting perspective. As a finance professional, you will likely encounter one or many of the sustainability frameworks and standards. It is a crowded and fragmented landscape, with slightly different terms, inconsistent language and various measures between the numerous methodologies. Adding to the confusion is whether adoption is voluntary or mandatory, and that some organisations work with combinations of standards and frameworks at the same time. Finally, the approaches to reporting also differ. They range from annual reports, integrated reports, sections on an organisation’s website aimed at a specific audience or a stand-alone sustainability report.
Fortunately, there are several initiatives underway to address this fragmented accounting and reporting landscape and build a coherent global approach to corporate reporting that encompasses both financial and non-financial reporting.1
A framework or a set of standards? The difference
A framework is a set of principles-based guidance for how information can be structured and prepared, and what broad topics should be covered. A set of standards are specific, replicable and detailed requirements for what should be reported for each topic. They are rules-based requirements.
Background
The World Economic Forum (WEF) Report Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation is a collaboration between Deloitte, KPMG, EY, PwC and the WEF International Business Council (IBC). They committed in 2017 to align their corporate goals with the long-term goals of society. In 2019 the IBC reaffirmed the significance of ESG in business risk and long-term value creation. It also flagged the lack of consistency and comparability of reporting frameworks and metrics in the ESG space. Consequently, this project was launched to ‘identify a set of universal, material ESG metrics and recommended disclosures that could be reflected in the mainstream annual reports of companies on a consistent basis across industry sectors and countries’.2 Following a public consultation, the final report was published in September 2020.