ACCOUNTING & SUSTAINABILITY
Sustainability Frameworks
In response to the growing demand for reporting on “non-financial” information, various organizations have formed (see list below) to provide guidance and standards for measuring and reporting on relevant sustainability/ESG information.
One of the most important developments has been the International Sustainability Standards Board (ISSB) to help meet this demand from investors calling for “high quality, transparent, reliable and comparable reporting by companies on climate and other environmental, social and governance (ESG) matters.” ISSB includes:
- Sustainability Accounting Standards Board (SASB) Standards – platform with standards by industry aimed to provide investor guidance
- The <IR> Framework – set of tools for “principles-based, multi-capital” corporate reporting
- Integrated Thinking Principles – mental models to ensure board and management alignment around core principles for integrative planning and decision-making
All major accounting firms are tracking the development of international sustainability standards. It is constantly evolving part of the accounting, assurance and reporting market that should we watched closely.
KPMG has created the graphic below to help visualize the various sustainability reporting frameworks and the role envisioned for ISSB.
Other Popular and Influential Sustainability Frameworks
UN Sustainable Development Goals (SDGs)
The UN SDGs are a part of the UN’s 2030 Agenda for Sustainable Development. The SDGs are 17 global goals to accomplish by 2030 that the UN developed with member countries so that all stakeholders (individuals, businesses, governments, etc) can adopt common, actionable goals on how to ensure “prosperity and peace for people and the planet, now and into the future.”
Global Reporting Initiative (GRI)
GRI is an international, independent organization with multi-stakeholder governance that creates and updates common standards for sustainability reporting that organizations can use. Their GRI Standards are the most widely used sustainability reporting framework in the world.
CDP (formerly known as the “Carbon Disclosure Project”)
The CDP is a global environmental disclosure platform aims to require and encourage investors, companies, cities, states and regions to be transparent and accountable on their sustainability data. CDP claims to be the “gold standard of environmental reporting” with the “most comprehensive dataset on corporate and city action.”
Dow Jones Sustainability Index (DJSI)
Index selecting the top performing sustainable companies from across 61 industries in terms of market cap for the use of investors who value sustainability.
Task Force on Climate-Related Financial Disclosures (TCFD)
The TFCD’s goal is for more companies to disclose and incorporate climate risks into business plans and financial disclosures. TCFD develops “recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions.”
Certified B-Corporation (B Corps)
B-corp companies commit to balancing profit and purpose as their core strategy in order to benefit all stakeholders, not just shareholders. The B-Corporation Certification is administered by a third-party, the non-profit B Lab.
ISO 14000 Environmental Management & 26000 Social Responsibility
International Standards Board (ISO) sets of a wide range of standards particularly for manufacturers. ISO 14000 and 26000 in particular provide guidance for companies to fulfill compliance obligations and achieve environmental and social impact objectives.
Learn about more sustainability concepts within this major.
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