The legitimacy of sustainability reporting has been questioned with ongoing claims about greenwashing. Can better non-financial reporting repair trust and amid fragmentation across jurisdictions? The IFRS Foundation’s International Sustainability Standards Board brings promise, but what’s next? Can companies forge ahead with responsible capitalism while faced with deteriorating economic conditions? Divided investor bases? A highly charged political environment on the issue?
Speaking on the topic are panelists: Erke Leikinen, Chair of IFRS Foundation United Kingdom. Brian Moynihan, Chairman and Chief Executive Officer, Bank of America USA, Chair of the World Economic Forum International Business Council. Geraldine Machette, Co-Chief Executive Officer and Chief Financial Officer of Royal DSM Netherlands. Anish Shah, Managing Director and Chief Executive Officer of Mahindra Group India.
The global standards give investors, consumers certainty that the claims they’re reading from companies about social impact, sustainability, governance, are more than just marketing campaigns highlighting the good, bearing the bad, but importantly also allowing the companies apples for apples comparisons on company disclosures. The demand for these standards started three years ago which are comparable and transparent. There is also a need to consolidate the multiplicity of the standard setting organizations in the area to avoid the alphabet soup. There is a global standard coming in June on non-financial reporting on two issues, on general requirements which will be the standard, model standard and then on climate. The next step is then to get assurance so that when companies are audited, auditors are able to give assurance that they have been following the standards, that should also follow.
A company is effectively part of the economy and of society. It is important to seek convergence at speed. The activities companies do have also broader implications. How do companies in an efficient way make sure that they communicate on this as much as a financial part? The hardest thing right now is actually finding the right pace. And the other big challenge is actually having the people who can do this. So there’s a huge lack of talent, of qualified individuals who can join companies to help the preparers to provide more and more of that disclosure, but also in the audit firms are struggling to have enough resources.
The metrics by which to measure the progress of the private sector and stakeholder capitalism were never defined. The metrics were standardized so that an investment manager, a consumer, society, others can sit there and say here’s a line which is acceptable, and you’re either above it or below it. If you’re above it, tell us how you’re making progress along these important things, which in the end of the day will align capitalism with what society wants from it, and then will get us going faster.
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