The Prince of Wales’ Accounting for Sustainability project and the International Integrated Reporting Council intend to promote sustainability reporting and integrated reporting at the World Congress of Accountants that’s set to take place in Sydney, Australia in early November.
The WCOA conference, taking place November 5-8, is expected to attract more than 6,000 business and finance leaders. Prince Charles himself is expected to address the conference.
“We’re really delighted to be partnering with the World Congress of Accountants, and His Royal Highness will be delivering the keynote message to the conference,” Jessica Fries, executive chairman of the Accounting for Sustainability (A4S) project, told Accounting Today. “His Royal Highness set up A4S in 2004, so it’s getting to be 14 years ago now. All of our work is focused on the role of the finance and accounting community in creating a sustainable world, understanding that link between social, environmental and financial trends, and thinking about how accountants can play that role.”
Accounting for Sustainability executive chairman Jessica Fries speaking at the CFO and Investor Session held at St James’s Palace in London and hosted by the Prince of Wales
Photograph by Ian Jones for A4S
A4S had discussions with the team organizing the World Congress of Accountants about some of the underlying themes. “There are very strong themes that are going to be at the heart of the WCOA conference around purpose and looking to the future and the kind of growth that accountants need to really be equipped to deal with some of the challenges, whether it’s companies or the public sector space,” said Fries. “It felt like a really great fit from our perspective to be a sustainability supporter and to see how we could help to contribute to the content at the World Congress.”
Fries visited New York during the annual meeting of the United Nations General Assembly in late September, and she sees an alignment with the U.N.’s Sustainable Development Goals.
“One of the key things we’re doing is with the U.N. Sustainable Development Goals,” she said. “I think the SDGs really provide a good frame of reference for everyone to be thinking about what their contribution is around the question of purpose and impact. We find through our work with investors and with companies and of course with government, which is where the SDGs originated, that there is a lot of traction and focus on aligning or thinking about how those organizations can contribute to the SDGs.”
Some of that work is being done with the World Business Council for Sustainable Development. “I think there is a positive focus on how you can really play a part in positive social outcomes, but at the same time it does create commercial opportunities as well,” said Fries. “That’s a really good way of aligning the strategy of an organization with that broader focus and impact on the communities and of course on the environment. The SDGs really give quite a simple framing to be thinking about that kind of impact in a new way. It’s three years on from the SDGs being agreed. That makes it very timely to be looking at the SDGs, the goals and the contribution that everyone has to deliver on those goals. Of course at the moment we are a long way from meeting those goals. There really does need to be acceleration and focus, and I think that’s a key role that the accounting community can play in that contribution.”
HRH The Prince of Wales hosts a meeting of his A4S, Accountability for Sustainability forum, part of the Prince of Wales’s Charities, at St. James’s Palace. A4S executive chairman Jessica Fries is sitting to his right.
Photo by Ian Jones, courtesy of Accounting for Sustainability
A4S also has been working with a CFO Leadership Network that the Prince of Wales launched in December 2013 at St. James’s Palace. “The work that we do through our CFO Leadership Network seeks to provide a lot of the really practical examples, case studies and guidance that can be drawn on to help organizations to respond effectively, whether that’s the whole strategic planning process and the role that accountants have to provide the kind of insight to the organization and really broadening out the kind of insight provided to look at some of these broader risks and opportunities and how that is relevant to the organization, or things like the whole infrastructure capital expenditure space,” said Fries. “If you look at the SDGs, that’s one of the really big areas of focus. From the accounting community perspective, it’s thinking of how, when it comes to capex and infrastructure, you can really understand the dependencies that a particular investment might have around something like water stress or the impact around climate change and development.”
The International Integrated Reporting Council also plans to participate in the World Congress of Accountants and will be making a major announcement about aligning several of the existing frameworks for sustainability and integrated reporting. “In the Corporate Reporting Dialogue, we have agreed on a very major project to align the different frameworks, both on the sustainability side in terms of developing common metrics, but also at each stage preparing them for readiness for integration in financial reporting,” IIRC CEO Richard Howitt told Accounting Today. “That’s the core mission of the IIRC and its Corporate Reporting Dialogue. It will start with aligning to the recommendations of the Financial Stability Board’s TCFD Task Force [Task Force on Climate Change-Related Financial Disclosures], which all of the members are signed up to and see as crucial. This is a financial issue. It’s not a nonfinancial issue. But it will go much further than that. All of the partners have signed up. The funding is secured. We’re simply now doing timetabling and planning. We are going to do a joint announcement at the World Congress of Accountants in November in the southern hemisphere, and a second one in the northern hemisphere on the same day. It’s a very exciting moment for the IIRC in our whole mission towards the global adoption of integrated reporting.”
The Corporate Reporting Dialogue includes not only the IIRC, but also the Financial Accounting Standards Board (FASB) in the U.S. and the International Accounting Standards Board (IASB), as well as the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), the Carbon Disclosure Project (CDP) and the Carbon Disclosure Standards Board (CDSB).
“The IIRC is the convener,” said Howitt, “and the concept of integrated reporting, they all agree, is the umbrella for the other forms of reporting.”
He isn’t promising a single set of standards like the single set of globally accepted accounting standards that was the goal when FASB and the IASB embarked on their convergence project for U.S. GAAP and International Financial Reporting Standards.
“We’ll see in November, but I don’t want to raise expectations that we’ll have a single framework by the end of three years,” said Howitt. “But I do want to raise expectations that this is a very considerable alignment exercise for those corporates that are worried about what they perceive as proliferation in the market. This is going to be the biggest sign that the frameworks are aligning, and I hope it will give confidence to the corporates to begin the process if they haven’t already started.”
The IIRC and A4S have long enjoyed a close relationship.
“A4S was instrumental in the creation of the International Integrated Reporting Council, and we housed the IIRC for the first couple of years before it became an organization in its own right,” said Fries. “During the first period when I was at Accounting for Sustainability, a lot of the focus was on the reporting agenda, particularly looking at how you could bring together the world’s financial accounting and sustainability accounting, which up until that time had been pretty separate. We felt that there were those links you could really see increasing the financial materiality and social and environmental issues, but also the need for that monolithic approach. So we brought together a lot of development organizations globally to explore these issues and that then led to the establishment of the IIRC in 2010.”
A4S also sees value in the work done by SASB for the investment community. “We recently unveiled a report, Financing Our Future, looking at the role across each part of the investment chain to drive sustainable outcomes to deal with some of the risks and opportunities that in some cases are on the horizon and in some cases are really in the here and now,” said Fries. “One of the five key recommendations from that and one of the themes that we hear a lot, particularly from the investment community, is the need for standards and good quality information upon which to base investment decisions. SASB clearly has a role to play in providing that kind of accounting framework and understanding around the kind of individual KPIs and indicators to report when it comes to social, environmental and broader sustainability matters in terms of accounting for sustainability in our work. As far as Accounting for Sustainability and our work, we are focused a lot on creating some of that management accounting guidance, which is a key bedrock upon which the external information that then gets reported needs to be based. I think that there’s a very high degree of complementarity in the work that we do.”
