A new chapter in accounting: Understanding and implementing integrated Sustainability Reporting
In a recent article by the International Federation of Accountants (IFAC), the spotlight is on the burgeoning field of sustainability reporting in accounting. This article aims to demystify this concept for those new to it
The evolving landscape of accounting
Traditionally, accounting has vocused on financial numbers. However, there’s a growing need to include sustainability in our accounting narratives. Sustainability reporting involves disclosing a company’s environmental and social impact alongside its financial performance.
Integrated reporting. A holistic approach
Integrated reporting means combining financial data with sustainability information. For example, a factory’s financial report might show profits, but integrated reporting would also consider the environmental cost of emissions from that factory.
The role of internal controls
Internal controls are systems and procedures that ensure the accuracy and relaibility of financial reporting. In the context of sustainability, these controls extend to environmental and social data. For instance, a company might implement controls to verify the accuracy of its carbon footprint data.
Practical steps for Accountants
Educate yourself: Start with the basics of sustainability - understand concepts like carbon footprint, social responsibility, and how they affect business.
Assess impact: Evaluate how sustainability issues can financially impact the company. For instance, how might a new recycling policy reduce costs?
Implementing integrated controls: Ensure that systems for checking financial data also cover sustainability data. For example, if a company claims to reduce waste, this should be verifiable just like financial expenses.
Conclusion
Embracing integrated reporting is a significant shift in accounting. By including sustainability in our financial narratives, accountants play a crucial role in painting a complete picture of a company’s performance and impact on a world.
Sources:
https://www.ifac.org/news-events/2023-12/integrated-internal-control-needed-build-trust-sustainability-reporting https://ifacweb.blob.core.windows.net/publicfiles/2023-12/Sustainability-Reporting-Internal-Control_0.pdf
