The Evolving Role of Accountants in Sustainability Reporting
Sustainability reporting is gaining increasing traction globally and in South Africa. Recent years have seen a significant alignment among the major sustainability frameworks, such as the Global Reporting Initiative (GRI), the International Sustainability Standards Board (ISSB), and others. The role of accountants in guiding sustainable practices has never been more vital. This article looks at the convergence of global sustainability reporting standards and elaborates on the enhanced role of accountants, particularly focusing on the practical implications for small and medium-sized enterprises (SMEs).
Why Is Sustainability Reporting is Necessary?
What was the reason for developing new reporting standards?
Environmental and social governance (ESG) factors have become increasingly crucial to investors and stakeholders, and global standard-setters have no option but to respond to these needs. The new Sustainability Reporting Standards S1 and S2 standardise how companies report their impact on the environment and society and the information they disclose. For businesses, this means more consistency in reporting requirements; for investors and the public, it translates into more reliable and actionable data.
The New Global Reporting Standards
The ISSB has developed two primary standards to guide sustainability reporting:
IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) aims to provide an overall framework for disclosing sustainability-related financial information. It requires the disclosure of sustainability-related risks and opportunities that could reasonably be expected to affect their value creation over time.
IFRS S2 (Climate-related Disclosures): Building specifically on the climate-related aspects, S2 focuses on the entity’s exposure to climate-related risks and how these risks are managed.
How Can Accountants Better Assist Their Clients?
As sustainability reporting standards evolve and become more integrated into the corporate reporting framework, accountants have a unique opportunity to lead from the front. By understanding these new responsibilities and acquiring the required skills, accountants can assist their clients’ with their sustainability strategies and ensure compliance with global standards. This new role not only enhances the profession's relevance in today’s business environment but also contributes to broader corporate accountability and sustainability efforts.
With the new standards, the accountant’s role expands significantly beyond the traditional financial focus. Accountants now become pivotal in capturing and reporting on sustainability data—from environmental impact to social governance issues. This shift requires accountants to acquire new skills and knowledge, particularly in areas such as environmental laws, data analytics for sustainability, and strategic planning for environmental, social, and corporate governance (ESG) initiatives.
What Should Accountants Do Now?
In South Africa, as sustainability reporting becomes increasingly aligned with international standards, accountants play a crucial role in guiding their clients through these changes. Following the steps outlined below you can ensure their your clients not only meet their compliance obligations but also maximise the benefits of effective sustainability reporting.
1. Educate Yourself and Your Clients
Stay Informed: Keep up to date with the latest in sustainability standards, including the ISSB’s S1 and S2 standards and the JSE Sustainability Disclosure Guidance.
Workshops and Training: Encourage participation in workshops and seminars focused on sustainability reporting standards and best practices.
2. Assessment and Strategic Planning
Conduct a Sustainability Review: Evaluate your client's current practices to spot any gaps in their reporting compared to new standards like ISSB’s S1 and S2.
Create an Action Plan: Develop a clear plan that outlines steps to comply with sustainability reporting standards and improve practices over time.
3. Integrate Sustainability into Business Strategy
Advisory Services: Help clients weave sustainability into their business strategies, showing them its impact on risk management and competitive positioning.
Set Sustainability Objectives: Assist clients in setting achievable, measurable sustainability targets that align with their business goals.
4. Reporting and Disclosure
Guide on Disclosure Requirements: Teach clients about the JSE’s sustainability disclosure guidelines and how they tie into ISSB standards.
Choose Appropriate Frameworks: Help clients select and implement the right sustainability reporting frameworks that meet both local and international standards.
5. Leverage Technology
Recommend Tools: Suggest software and tools that help efficiently gather, analyse, and report on sustainability data.
Ensure Data Integrity: Make sure systems are in place to support the accurate collection and reporting of sustainability data.
6. Engage with Stakeholders
Improve Communication: Guide clients on how to communicate effectively with stakeholders about their sustainability efforts.
Collect Feedback: Set up ways to gather stakeholder feedback to refine sustainability practices and assess impact.
7. Ongoing Monitoring and Updates
Track Performance: Establish systems to continuously monitor how well sustainability targets are being met.
Encourage Adaptability: Promote a mindset of continuous improvement, adjusting strategies based on new information and stakeholder input.
8. Professional Development and Networking
Encourage Learning: Support ongoing learning in sustainability accounting, including certifications and specialisations.
Build Networks: Help clients connect with sustainability experts to stay ahead of best practices and emerging trends.
By following these steps, accountants in South Africa can effectively support their clients in achieving and exceeding sustainability reporting standards, fostering compliance and promoting sustainable development.
Specialise in Climate and Sustainability Reporting and position yourself as a leader of the industry with CIBA’s Executive Education & License
About the Executive Education
Sustainability and climate change efforts are prominent compliance matters, and are currently viewed on corporate agendas as key for increasing efficiency and a source of competitive advantage. Leading finance executives understand that climate change efforts cannot be separated from business and there is an urgent need to involve key decision makers in reporting on progress as it relates to the climate change agenda.
Professional accountants and finance executives are pressured to play a key role in preparing their companies for a new regime and reporting progress made in reducing emissions, whether directly or indirectly.
The Executive Education and License in Climate and Sustainability Reporting, developed by CIBA and Regenesys School of Accounting Science, will equip finance leaders to confidently fulfil this role and will serve as proof of your competency in this field. The programme provides you with the knowledge, skills, professional direction and corporate strategy to assess changes in the environment, define a strategy to address them, identity opportunities of climate change and successfully report and disclose relevant climate matters.
