To help with efforts to combat the "existential threat" of climate change, accountants and the accounting profession globally must integrate non-financial and financial information to report on their clients' or businesses' climate impact and sustainability.
They should also develop ways of ensuring the accuracy and integrity of the data that informs organisations' approaches to climate change.
"In response to the global demand for sustainability-related reporting, investment, insurance and regulations, sustainability reporting is taking its rightful place in the corporate reporting ecosystem," said global body International Federation of Accountants (IFAC) president Alan Johnson during the South African Institute of Professional Accountants (SAIPA) conference on November 2.
"We know we are living in an unsustainable world. We must change course, and urgently."
"Many governments made pledges to reduce emissions and deforestation at the twenty-sixth Conference of the Parties (COP26) that also saw more emphasis placed on adaptation, which is critical for the world to survive climate change and to build a more equitable and inclusive society," said Johnson.
However, pledges are easy. What matters more is that they are delivered on, and that those who make the pledges are held accountable for their delivery.
"I believe sustainability reporting is even more important than financial reporting for ensuring we have sustainable development and for ending unsustainable development," Johnson noted.
To support sustainability-linked reporting, IFAC formed the International Sustainability Standards Board as an important step to meeting stakeholder demands in this regard and in supporting the attainment of the United Nations Sustainable Development Goals (SDGs).
"This initiative is welcome, and we must now maintain momentum to have it achieve a global reach and see its adoption and implementation within jurisdictions.
"The accounting and accountancy profession is well placed and prepared to champion sustainability strategies and reporting. IFAC encourages SAIPA and the South African Institute of Chartered Accountants to engage with policy makers to determine which mechanisms, new or existing, are required for sustainability-related reporting in South Africa," he emphasised.
INFORMATION ASSURANCE
Further, as sustainability reporting becomes standard practice, investors, regulators and policy makers are turning their attention to the assurance of the information. IFAC recommends that non-financial information must receive the same level of attention as financial information.
"I believe non-financial information requires greater attention. A true picture of enterprise value can only be complete and comprehensive if the financial and non-financial information is of consistent high-quality, trustworthy and contextualised," emphasised Johnson.
Notably, this is good news for the accountancy industry's stakeholders, given that the percentage of global companies seeking independent assurance on their environmental, social and governance (ESG) information grew from 51% in 2019 to 58% in 2020.
"There is pressure on the accountant to be equipped to action sustainability report and assurances that can lead the world from commitment to implementation," he stated.
Meanwhile, SAIPA CE Shahied Daniels emphasised that the industry needed to position itself to ensure sustainability in the economy.
"The pandemic has taught us that the environment is vital to the current and future success of our society. The SDGs emphasise the need for organisations to prioritise reducing the negative impacts of their work," he stated.
Accountants and the accounting profession are moving towards fulfilling a role of trusted advisers to a business, and professionals will need to leverage new technologies and methods to process data into contextualised, relevant information for their clients or businesses to make the correct decisions.
"SAIPA expects that and is designing its services and training curriculum in preparation for, the fact that accountants are becoming digital professionals, who use data and data analytics as the basis for creating value for their clients," said Daniels.
"The accountant in the present and future will need to perform new roles; often advisory rather than exclusively financial roles. This means practitioners will need new competencies, especially as ESG factors increasingly guide the decisions of organisations and stakeholders," concurred Johnson.
"Accounting and financial professionals must develop new competencies and become more multidisciplinary to seize opportunities to help climate and broader sustainability efforts through their roles supporting organisations' managers and decision makers with trusted information," he said.