Increased Focus on Sustainability Standards

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The inclusion of sustainability information in financial reports has been getting additional interest in recent months as the International Integrated Reporting Council (IIRC) announced its plans to merge with the Sustainability Accounting Standards Board (SASB) to become the Value Reporting Foundation in mid-2021. Their goal is to have an integrated reporting framework with sustainability disclosure standards.

AICPA and CIMA in November released a statement: “We will ensure that the journey towards the development of global standardized comparable ESG [environmental, social and governance] metrics and non-financial reporting is not at the expense of closing any future sustainability debate and innovation. Our aim is to achieve a balance of sustainability reporting and assurance alongside data-driven insights so that resilient organizations and finance professionals can address prosperity, planet and people challenges.”

Reporting on sustainability was predicted in the International Federation of Accountants’ December statement: “Sustainability and other non-financial information will play an increasing role in corporate reporting because this information improves the relevance of communication between companies and their stakeholders. It also increases the relevance of the assurance and non-audit services that the profession provides.”

Picking up on the campaign pledge of President Joe Biden to make climate disclosure mandatory for companies reporting to the SEC, the SASB has said that they “plan to work with the relevant agencies and lawmakers in the US to offer the Framework and SASB Standards as resources for achieving their sustainability-related policy goals.”

Former PCAOB Board Member J. Robert Brown, Jr., had advocated for the “PCAOB to commit to the reevaluation of an auditor’s responsibilities and obligations with regard to quality of information disclosed by public companies outside of the financial statements (sometimes referred to as ‘other information’), including environmental, social and governance (ESG) sustainability and non-GAAP disclosures.”