Stock - UAE business / Economy / startups
The bigger corporate houses are tacking on their sustainability initiatives into their reporting. For more to join, create a single framework for non-financial accounting. Image Credit: Shutterstock

There is an urgent need to expedite the sustainable rebuilding of economies around the world. They must not lose sight of the wider challenges of the climate emergency, the massive biodiversity loss and increasing inequality.

For change to happen, businesses must respond. Improved reporting on environmental and social issues is central to efforts to encourage system change. Businesses need to better understand the strategic value nature and society have for them – and be accountable for the impact of their activities.

Enhanced non-financial reporting can play a critical role in the transition to more sustainable and resilient societies and economies. Even more so in the aftermath of the pandemic, businesses need to understand the implications of their activities and be accountable for their impact on nature, people and the economy.

Adding ESG to corporate reporting

Implications of activities and accountability are important indexes of long-term sustainability and capable future growth. Transparently sharing information on environmental, social, and governance (ESG) matters demonstrates a commitment to sustainability and builds trust within an organisation.

Understanding and addressing the risks and opportunities associated with ESG matters can support organisations to mitigate adverse effects and navigate towards sustainable growth.

Broadened non-financial disclosures also help to provide the information needed by shareholders, regulators and other stakeholders to assess the overall performance and impact of companies and other organisations. It is unsurprising that the demand for enhanced and more accessible corporate financial and non-financial information has continued to grow over the years, driven by investor needs, societal expectations and regulatory demands.

The result has been the emergence of a wide range of non-financial standards, guidelines and frameworks that can be applied by companies. This proliferation of initiatives has, over time, led to a confusing landscape that risks undermining the overall usefulness and credibility of non-financial reporting.

It is now time to find a solution to the demand for improved non-financial reporting. The IFRS experience indicates that a universal reporting language can offer many potential economic and social advantages. The same holds true for non-financial reporting.

Unified solution to make change happen faster The integration of existing standards, guidelines and frameworks to support the end goal of a global corporate reporting structure has already taken place. If formulated collaboratively, in an outward-looking and innovative way, it will significantly contribute to a global solution while addressing regulatory objectives.

A robust conceptual framework is vital for enabling a consistent approach to developing the application of detailed standards.

ICAEW has been a persistent champion of the creation of a single set of high-quality global accounting standards and their application by publicly traded and other companies around the world. When it comes to non-financial reporting, our ultimate goal is the development of a single set of authoritative standards that have international resonance.

Given the pressing urgency of the global challenges, such standards must be available in the mid-term, not the long term.