In a previous piece, we’ve showed why sustainability matters to finance professionals — as gatekeepers and analysts of business data, we possess information and resources that can help our organisations adopt more sustainable practices.
But if like many organisations, you’ve just started to work in sustainability practice, it can feel overwhelming — where to start? We’ve highlighted several guidelines that can help you find your feet in this area.
The call to action for finance professionals
In February 2020, Barry Melancon, along with 12 other accounting body chief executives and Accounting for Sustainability (A4S), signed a call-to-action statement in response to climate change. The statement highlights the professional accountants’ role in ushering sustainable organisations:
- Provide sound advice and services as organisations, capital markets and governments develop and execute sustainability mitigation and adaptation plans.
- Use and implement existing and developing reporting frameworks, such as those from the International Integrated Reporting Council and the Task Force on Climate-related Financial Disclosures (TCFD).
- Contribute to the efforts of the organisations they work with to integrate sustainability risk into organisational strategy, finance, operations and communications.
- Support sustainable decision-making within the organisations they work for by providing budgets and resources. They also can develop high-quality information and insights through measurement and disclosure, which are built on robust and transparent accounting systems.
This statement is one of many demands that reflect the increasing need for sustainable thinking, sustainability metrics and non-financial reporting by investors, regulators and businesses. Organisations should focus on providing long-term value to their stakeholders that meet present needs without compromising future generations’ ability to meet their needs.
Working towards unified sustainability reporting standards
We recognise that the sustainability landscape is confusing, with many standards and frameworks options when providing a focus for your organisation. There needs to be greater cooperation and alignment across the existing frameworks and standards, and eventually a move towards a generally accepted set of international standards of sustainability and non-financial reporting.
The Corporate Reporting Dialogue (CRD) identifies the TCFD framework as valuable for evaluating and reporting climate-related risks. Even if you take out the specific climate references from their recommendations, it still provides a broad framework for working with any of the core elements of sustainability, whether environmental protection, social inclusion or governance.
When thinking about business resilience and sustainability, a great place to start is the four lenses of governance, strategy, risk management, and metrics and targets.
- Governance — What is the organisation’s governance around the sustainability risks and opportunities?
- Strategy — What are the actual and potential effects of sustainability risks and opportunities on the organisation’s business model, strategy and financial planning?
- Risk management — How does the organisation identify, assess and manage sustainability risks?
- Metrics and targets — How are metrics and targets used to assess and manage sustainability risks and opportunities?
It is important to stress that sustainability is not a reporting and assurance endgame. Generic sustainability metrics should not come at the expense of genuine organisational insight. There needs to be a balance. Finance professionals must take a holistic view and ensure sustainability is embedded into strategy and becomes a business process across the entire organisation.
We will continue to watch the sustainability space and play a central role in its development. We aim to achieve a balance of sustainability reporting and assurance alongside data-driven insights so that resilient organisations and finance professionals can address future prosperity, planet and people challenges.
This post is an excerpt from our report, Sustainability and business — the call to action: build back better. Read the full report to learn more about how you can understand and implement sustainability measures in your organisation.