As companies become more aware of clients’ and customers’ desire for data on their environmental and social impacts, accounting and finance teams are being asked to conduct environmental, social and governance (ESG) reports.
ESG data in mainstream financial reports is accelerating, according to the American Institute of CPAs (AICPA), and many conversations about sustainability standards are taking place among standard setters. Here are a few key developments surrounding ESG:
- In 2018, the Sustainability Accounting Standards Board launched standards to help businesses manage and report on sustainability topics that matter most to their investors.
- In October 2020, the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures issued a status report that supports greater consistency in climate-related risk disclosures by companies.
- In November 2020, the AICPA & CIMA released a report exploring the finance professional’s key role in sustainability and business and explaining SASB standards.
- In February, the AICPA Center for Audit Quality released a roadmap for auditors on ESG reporting and attestation.
- Also in February, the acting chair of the U.S. Securities & Exchange Commission (SEC) directed the SEC’s Division of Corporation Finance to enhance its focus on climate-related disclosures in public company filings. Then in March, the SEC published a request for public comments about ESG disclosures.
- In June, SASB and the International Integrated Reporting Council announced a merger into the Value Reporting Foundation to institute consistency in ESG and sustainability reporting.
- In September, the International Financial Reporting Standards Foundation will release its proposal to create a new international global sustainability reporting standards board.