New sustainability disclosure requirements a good start, but don’t go far enough
ICAS today gave a tentative welcome to the UK Government’s proposed endorsement of the International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards due to be published at the end of Q2 2023. But it also said the plans don’t go far enough.
The Government published its revised Green Finance Strategy today (30 March) which sets out plans for a formal assessment mechanism of the International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards, once the first two standards are published in June/July.
This 12-month process aims to make sure that the standards endorsed by the UK Government are appropriate for UK companies and that a single set of standards can be applied across the UK regulatory framework. It’s likely that further standards will be assessed using this framework once they are published.
J Bruce Cartwright CA, Chief Executive of ICAS said today:
“We are encouraged that the UK government has today set out a 12-month assessment process to examine, and we hope endorse, the ISSB standards expected in the summer. This is a great starting point. But we have said for some time that we urgently need to make sustainability reporting standards mandatory, if we are really going to make businesses accountable for the impact they have on our environment and society. The process outlined today is very welcome, but it doesn’t go far enough. There is no clarity about whether companies will have to use these standards in their reporting, or whether they will simply be made available. These standards shouldn’t be there on a “nice to know about basis” but should be upheld, adopted and seen as part and parcel of how we account for business impact. We believe that there is clear evidence to support the case for mandatory and holistic sustainability reporting.
“We also think limiting these standards to only investor-focused reporting leaves them too narrow. We believe the UK needs to mandate the use of high-quality, consistent, sustainability reporting standards. We are confident that collaboration between the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) can deliver a set of international standards that will satisfy both investor needs and the growing public demand for action in this area.
“ICAS supports this ‘double materiality’ approach, where information is disclosed on the impact of organisations on the environment and society for the benefit of multiple stakeholders. We urge the UK Government to adopt a reporting approach which better aligns the ISSB and GRI standards, as their multi-stakeholder focus would make reporting more comprehensive and holistic.
“Sustainability reporting will also be strengthened where external assurance is secured from an independent professional who is subject to robust performance, quality management and ethical and independent standards.
“Establishing a level playing field in the assurance space, where all actors play by the same rules will help to prevent ‘greenwashing’. We need government action to make it happen.”
ICAS looks forward to engaging with government officials, experts, standards setters and users at our Sustainability Policy Summit in London on 26 April. We are bringing together some of the key decision makers in this field, including officials from the UK Government, the GSSB (Global Sustainability Standards Board), EFRAG (European Financial Reporting Advisory Group), business and the third sector.
The International Sustainability Standards Board (ISSB) Sustainability Disclosure Standards (IFRS (International Financial Reporting Standards) S1 General Sustainability-related Disclosures and IFRS S2 Climate-related Disclosures) are due to be published at the end of Q2 2023