The Livery Climate Action Group (LCAG) engages with Livery Companies and encourages interest in the topic of Climate Action.
LCAG is working towards providing practical guidance and information that will help the Livery Companies adopt measures and behaviours. A workstream is preparing for the Livery’s alignment with COP26 including addressing the commitment of the Livery to climate action and the Livery’s wider influence in promoting change.
WCCAEW is involved with LCAG, and we can make the Group and the wider Livery aware of initiatives concerning reporting and assurance, as well as encouraging awareness and engagement among our membership and our profession with the development and delivery of these initiatives. Corporate reporting of activity towards achieving net zero carbon, as well as reporting of other Environmental, Social and Governance (ESG) action is increasing rapidly and being encouraged by investors and other stakeholders. Corporate valuations are being influenced by climate action and broader ESG, as these are risks to the business and “good corporate behaviour” supports the reputation of the business and its sustainable future. The variable standard of disclosures means that claims of “greenwashing” have been made about some reports leading to a desire for a robust set of reporting standards and effective assurance of the reports.
Reporting and assurance in this area is emerging, creating a challenge as there are currently multiple frameworks with support from different interested stakeholders. The Value Reporting Foundation has brought together the largely UK led International Integrated Reporting Framework and the largely US led Sustainability Accounting Standards Board (SASB). The IFRS Foundation Trustees are working towards creating an International Sustainability Standards Board to work along the International Accounting Standards Board. A third initiative is the proposed development of EU Sustainability Reporting Standards by the European Financial Reporting Advisory Group (EFRAG). In addition to these initiatives, there are other reporting frameworks, whether international or national. Stakeholders require consistent and comparable information, and as a profession we ought to encourage an alignment of reporting frameworks, and ideally, as with IFRS for financial reporting, one accepted global standard. The supporters of the various initiatives recognise the need for alignment and co-ordination, but there is a real risk that competing frameworks will evolve that result in confusion and waste of resources.
Standards on assurance are also emerging. The International Audit & Assurance Standards Board (IAASB) is addressing what it terms Extended External Assurance (EER), developing standards for giving assurance on non-financial information such as climate reporting. Again, there is the possibility of assurance initiatives being led by bodies other than the accepted global audit standard setter. Auditors are not the only profession that is interested in giving assurance on climate and sustainability, and some countries have given other professions, such as engineers, the right to present assurance reports, as alternative providers to auditors.
As experts in reporting and assurance we must contribute to the discussion, both to encourage climate and broader ESG reporting, and to call for common internationally accepted reporting and assurance standards that give confidence in reported information. These developments are also positive for our profession, creating new opportunities for accountants and auditors to use and develop their skills, and giving a positive message to young people to join our profession.
David Chitty, Worshipful Company of Chartered Accountants.
2 October 2021