As accountants and finance professionals, we need to play a critical role in the creation of sustainability strategies for the businesses we work in and currently the timing for ensuring we are up to speed with the latest thinking in sustainability is crucial.
We need to be in a position to respond coherently to the upcoming IFRS Sustainability Disclosure standards, the first of which will be released at the end of June: IFRS S1 General Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures. The standards are currently in draft form with the International Sustainability Standards Board (ISSB) and are being finalised so that an entity will be able to disclose information about its climate-related risks and opportunities.
In addition to becoming familiar with the standards and how to apply them, we also need to increase our knowledge of social and environmental issues so that we have the skills and competencies necessary to be able to support sustainability objectives in the businesses we work in.
Accounting 4 Sustainability (A4S) recently announced a collaboration with the IFRS foundation with the aim of giving accountants the tools required to provide high quality sustainability reporting. Jessica Fries, executive chair for A4S says:
"Our education activities, including our A4S Academy and dedicated reporting workshops, are designed to upskill and empower finance and accounting professionals. Working with the International Sustainability Standards Board (ISSB), A4S will be supporting capacity building to enable effective, efficient, and impactful sustainability reporting."
The A4S is planning to play a key role in increasing awareness and addressing practical obstacles that companies encounter when adopting the standards.
The need to be on the ball when it comes to sustainability affects all accountants globally, whether in business or in practice. A report conducted by IFAC and AICPA and CIMA which reviewed data from 1,400 global companies found that 64% of companies obtained assurance over at least some ESG information in 2021, up from 51% in 2019.
Additionally, accountancy practices hold the largest segment of market share at 57% for sustainability/ESG assurance engagements, but this has declined by 6% since 2019. In countries such as the United Kingdom and the United States most assurance engagements are conducted by service providers outside of the accounting profession such as engineering firms.
As the sustainability assurance market expands, Jeremy Osborn, global head of ESG at AICPA and CIMA, believes there needs to be help for smaller firms to understand there is demand for a service line that most are not currently offering.
"Obviously, they would have to be highly skilled, and they would have to understand how to use an ASC 3000, for example. But that's no different from asking an accountant to get their heads around a new financial accounting standard. So I think there’s a job to be done to help the accountancy profession globally understand that there is a market here, it's a growing market, and they have the skills to do it."
Whatever role we are playing as an accountant, getting to grips and being up to speed with the key issues in sustainability is essential. We do not want to risk being left behind as initiatives in this area gather momentum. John Edwards, IFA chief executive says:
"It is very easy to maintain focus on the most pressing timeline issues and the turbulence of the last few years has certainly left many accountants feeling like they are constantly firefighting. Though this is entirely understandable, it undermines the value that accountants can potentially bring to their role. It's also a major risk-factor to the future of their own businesses. We are recommending that accountants prioritise updating their knowledge of the regulatory requirements, giving themselves time to adopt new skills at a pace that fits in with their other business responsibilities."
As trusted advisors who are used to dealing with the intricacies and complexities of financial reporting we have a real opportunity to upskill and take the opportunity to become leading experts in sustainability standards.