Working together for corporate reporting to achieve the Sustainable Development Goals: UNCTAD wokshop

hands joining shutterstock_123739879The UNCTAD (United Nations Conference on Trade and Development) ISAR (International Standards of Accounting and Reporting) Workshop in Geneva on 13th October brought together representatives of standard setters and expert panelists to facilitate the promotion of cohesive reporting to enhance sustainable development.

UNCTAD ISAR was the first global organisation to make comprehensive recommendations on non-financial reporting on social and environmental issues.  I recall publications in the 1980s recommending reporting indicators for multinational corporations operating in lesser developed countries covering issues such as employment pay and conditions for local staff, environmental pollution and economic contribution to local economies.  These reports were mindful of the limited power of governments of lesser development countries to both develop and enforce mandatory reporting requirements.  In this context, the role of Stock Exchanges in requiring change to facilitate sustainable development, such as the the Johannesburg Stock Exchange requiring integrated reporting, is an exciting development.

Petko Draganov  (Deputy Secretary-General, UNCTAD) opened the workshop calling for companies to adopt sustainability practices and integrate sustainability into corporate reporting.  He stated that currently corporate reports do not meet the requirements of either sustainable development or investors.  Tatiana Krylova (Head, Enterprise Branch, Division on Investment and Enterprise, UNCTAD) outlined the pioneering work that UNCTAD, which is not a standard-setter, had done in drawing attention to these issues.

Nelson Carvalho (member IIRC and Brazilian Accounting Standards Board) chaired the first panel on the role of business and corporate reporting in addressing major challenges of the global development agenda.  He argued that we are using 19th Century reporting models, not fit to address contemporary issues.

Yuki Yasui (Deputy-Director, UNEP Finance Initiative) argued that GHG emissions are one of the most important global risk drivers for the financial sector and outlined the worldwide increase in mandatory disclosure on carbon emissions, the need to measure carbon risk exposure and the increasing demand from investors and lenders for carbon footprint analysis.

Vania Maria da Costa Borgerth (Advisor to the CEO, Brazilian Development Bank, BNDES) spoke of the need for greater comparability in reporting and reporting on strategy and materiality arguing that integrated reporting is the future of corporate reporting.

Vincent Kaufmann (CEO, Ethos Foundation) emphasised the role of pensions funds and Socially Responsible Investment funds in encouraging sustainable development.

Robin Edme  (President, The Group of Friends of Paragraph 47) spoke of their work complementing other initiatives in focusing reporting on moving us to a low carbon economy, a socially just society as well as achievement of the Sustainable Development Goals.

The second panel chaired by Yoseph Asmelash (Economic Affairs Officer, Enterprise Branch, Division on Investment and Enterprise, UNCTAD) discussed major trends and initiatives in corporate reporting models to address sustainable development issues.

Peter Clark (Technical Director, International Accounting Standards Board, IASB) spoke of the limitations of financial reporting, arguing that it should not be the sole influence of some decisions.  He pointed to types of assets which are not recognised in financial reporting such as know-how not recognised by a patent or contractual assets with customers, suppliers and employees. Teresa Fogelberg (Deputy Chief Executive, Global Reporting Initiative, GRI) spoke of the achievements of GRI and the need to tailor data to stakeholder needs.

Lois Guthrie (CEO, Climate Disclosure Standards Board) spoke of their collaborative work to link environmental and financial information in company reports arguing that financial reporting is not enough to assess a company’s performance.  She presented six steps in developing the coporate reporting landscape i) consolidate, ii) standardise (to the highest common denomiator), iii) involve (scientists, lawyers, systems thinkers and others),  iv) review what’s working and what’s not, v) mechanise, and iv) she invited the audience to imagine what reporting could be like argued that if we can imagine it, we can do it.

Carol Adams & Nancy Kamp-Roelands, UN Geneva

Carol Adams & Nancy Kamp-Roelands, UN Geneva

Nancy Kamp-Roelands (Deputy Director, International Auditing and Assurance Standards Board, IAASB) spoke of the benefits to reporting organisations of assurance of non-financial reporting.  She argued there is a need for assurance of reporting on the value creation process and strategy component of integrated reports and noted that the IAASB has established working groups to look at assurance for integrated reporting and data analytics.

The third panel chaired by Jim Obazee (Chief Executive, Financial Reporting Council, Nigeria) and considered the main challenges and best practice in preparing reports on sustainable development issues.

Peter Bakker (President, WBCSD) spoke of the urgency for change and action on climate change, the need for a decision making tool box for companies and called for support to make integrated reporting mandatory.

Doug Johnston (Partner, EY) argued the need to reconsider how we define and approach materiality.  Richard Martin (Head, Financial Reporting, Association of Chartered Certified Accountants, ACCA) highlighted the inadequacy of current reporting by extractive companies, the possibility of unburnable carbon and he emphasised the urgency of re-evaluating how we value stranded assets including assessing future energy demands and prices

I started moderation of the final discussion before inviting input from the floor by urging standard setters to engage in what is missing from standards (rather than just talking about their successes in terms of guideline uptake) and to work out how to make innovations in individual companies more widespread.  I urged both participants and speakers to go beyond talking about the problems and work together on solutions.

In summary, key issues raised by speakers during the day and participants in the session I moderated at the end of the day for corporate reporting to address were:

  • sustainable development and the Sustainable Development Goals
  • reporting on the sustainability context
  • incorporation of social and environmental issues into (capital investment/infrastructure) decision making
  • providing better information for Socially Responsible Investment funds and other investors
  • valuation of stranded assets
  • identifying what underpins value creation and how we measure it
  • the assurance of reporting on the value creation process and strategy
  • increasing the level of mandatory disclosures
  • focusing on material sustainability issues
  • changing behaviour, developing integrated thinking and integrated management
  • finding a cost for externalities
  • enhancing product reporting
  • enhancing supply chain reporting
  • facilitating (social and environmental) performance improvements
  • a need for guidance on integrated reporting

All of these are important issues and the sense of urgency across contributors, from a diverse range of backgrounds, was strongly felt.

Photos of the workshop are available here

Workshop presentations are available here

 

UNTAD workshop DSC_84271panel DSC_84091

Source of photos http://isar.unctad.org/isar31/workshop-gallery/

Related articles on this website:

Corporate reporting for sustainable development – and innovation from Germany

Europe focusses on the role of corporate reporting in the transition towards sustainable development

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