A group known as the Climate Disclosure Standards Board is readying an updated Climate Change Reporting Framework that aims to tie environmental information in with financial reporting for investors.
The CDSB is a consortium of business and environmental organizations that was formed at the World Economic Forum’s annual meeting in 2007. It is developing a global corporate reporting model that takes into account the environmental impacts of corporate activity.
The CDSB isn’t the only group that has been working on this kind of initiative. The International Integrated Reporting Council, the Global Reporting Initiative, the Sustainability Accounting Standards Board, Prince Charles’s Accounting for Sustainability Project, the CEO Water Mandate and others have been pursuing similar goals.
However, the CDSB is trying to tie in with some of the other initiatives in its latest draft of the framework, which was released Thursday. The new draft includes a table that cross-references a number of the others. The CDSB framework also adopts principles from some of the existing reporting standards and practices with which businesses are already familiar, in an effort to standardize reporting of environmental information through collaboration and by identifying and coalescing around the most widely shared and tested reporting approaches that are emerging around the world.
The CDSB released its original framework in 2010, focusing on the risks and opportunities that climate change presents to an organization’s strategy, financial performance and condition. In response to developments in environmental and corporate reporting, the CDSB is updating the framework to provide more guidance on reporting environmental information.
The CDSB hopes to launch the framework next March. It wants companies to prepare and present their environmental information in mainstream corporate reports in order to provide comparable information to their current and potential shareholders.
But first it is looking for feedback on the latest draft version of the framework. You can download the consultation draft from www.cdsb.net/consultation. The deadline for responses is Dec. 14, 2014.
Environmental and corporate sustainability reporting has been a growing trend for over a decade. But much of the reporting has been non-standardized and oftentimes has focused on corporate efforts to appear more socially responsible. The CDSB and other groups are trying to make these reports function as more than just public relations exercises, and not simply provide cover for egregious environmental lapses among corporate polluters.
Investors are increasingly demanding more information about the environmental and social records of the companies they invest in. So far, the trend has caught on more in Europe than in the U.S., but even here there has been some momentum, as groups like the Sustainability Accounting Standards Board and the International Integrated Reporting Council attract more corporate support. The extreme weather swings of recent years have been convincing more people about the reality of climate change, as more scientific studies demonstrate the increasing dangers facing the planet.
Accounting standard-setters and organization leaders are also starting to take notice. Bob Herz, the former chairman of the Financial Accounting Standards Board, joined the board of SASB last week, for example. The Big Four accounting firms have also built up their sustainability services practices, advising corporate clients on ways to go green.
While most accountants don’t yet have to deal with the requirements of examining and vetting their business clients’ environmental information, that may become part of the job description in the not too distant future.
Do you think accountants should get more involved in environmental and sustainability reporting?