ACCA released a policy paper on sustainability business and reporting matters, comprising 6 pillars that would facilitate a better and more responsible business environment —
- sustainability reporting
- integrated reporting
- assurance of non-financial reporting and disclosures
- climate change
- natural capital
- green economy
Like how good audit standards and regulations would help prevent potential financial frauds and scandals such as Enron, non-financial reporting and accountability for companies’ insidious impacts on social and environmental aspects are certainly needed as well.
Currently, businesses are not required to adhere to any sustainability reporting requirements. The traditional model of reporting tends to however be restrictive and short-sighted, not accounting the potential non-financial damages that can be done to the environment around us.
After having spoken to some of the professionals working at Big Four firms in Singapore, I was told not many companies are paying attention to the external impacts made from their business decisions, nor are they invested in sustainability reporting. Only large companies that come under public scrutiny such as BP would try to comply with corporate social responsibility frameworks. Furthermore, end-users of financial statements themselves are generally not as keen in understanding beyond the financials of companies.
However, it is truly important that regulators start realizing the importance of laying out the ground rules for sustainable accountability. Companies should start developing metrics, information systems, reporting and designing economic instruments that help make our economy greener, looking beyond economic output to factor in non-traditional measures, such as human well-being and natural capital.
Note on ACCA and sustainability reporting:
ACCA works with standard setters, governments and regulatory bodies to ensure that standards and regulations concerned with corporate sustainability are fit for purpose. They are involved with the 2012 Rio+20 Earth Summit; technical working groups and governance boards of key standard setters, for example the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Climate Disclosure Standards Board (CDSB), the Sustainability Accounting Standards Board (SASB) and the Natural Capital Declaration (NCD).