To continue the dialogue on corporate reporting and value creation, IFAC has posted a summary of its feedback on the recent World Economic Forum (WEF) consultation “Toward Common Metrics and Consistent Reporting of Sustainable Value Creation.”
It is well acknowledged by investors, business leaders, and other stakeholders that, in addition to financials, effective corporate reporting must also measure value creation, sustainability and environmental, social, and governance factors. Such enhanced corporate reporting is needed to maintain confidence in companies and financial markets, to better meet stakeholder needs, and to inform business planning for long-term success.
The WEF consultation makes a valuable contribution in the dialogue amongst all stakeholders who share a common interest in relevant, reliable, and comparable reporting of this information.
In its consultation response, IFAC focuses on six takeaways to keep the global conversation moving forward:
- Rationalization efforts must work toward a global system. IFAC strongly supports a global approach to ESG metrics and disclosures.
- Timeliness is key. Alignment, harmonization, and convergence must take place before regional or jurisdiction-specific initiatives become standard practice.
- Take a modular approach. Build upon existing high-quality metrics and disclosures.
- There is a role for both standards and frameworks. For example, the Integrated Reporting Framework.
- Assurance is needed to deliver confidence in corporate reporting. Assurance is most effective when applied against metrics and disclosures that follow clear best practices or standards.
- The accounting profession must remain engaged in the conversation. The profession is critical to evidence-based decision making, reliable information gathering, and consistent, comparable corporate reporting—be it ESG-focused or otherwise.
IFAC stands ready, as a global voice and convener of the accountancy profession, to facilitate coordination, assimilation, and convergence in sustainable reporting approaches. IFAC supports the WEF consultation as a catalyst to challenge policy makers, regulators, and ESG metric providers to get the job done, now.
Ongoing and active engagement by the profession—through this initiative and by assisting companies in the implementation of its metrics and disclosures—is an enormous opportunity for the profession to embrace.