Climate-related reporting is here to stay, but what does it involve? Lorraine McCann and Natalia Carvalho outline the TCFD framework and how it can help Irish organisations prepare for financial risks related to climate change in the long-term. The far-reaching implications of climate change are undeniable. The most recent IPCC Report calls out the grim fact that humanity is “unequivocally” responsible for climate change, and without urgent action, the world’s 1.5 ºC goal will slip beyond reach. However, what is less well understood is the impact and risk it can pose to businesses, now and in the long-term. With pressure coming from governments across the globe, not to mention Ireland’s green agenda, the private sector needs to stand up and take note. While we have seen some momentum in Irish businesses over the past 18 months, especially in making commitments to meet or exceed their own emission targets, there is still more that needs attention, including the increased reporting requirements required by new climate-led regulation.  Task Force on Climate-related Financial Disclosures The Task Force on Climate-related Financial Disclosures (TCFD), which provides recommendations and guidance to organisations on disclosing climate-related topics in their financial reporting, has driven much of the change in reporting for many years. By being among the first to guide organisations on how best to report their impact on climate change, the TCFD framework is widely becoming recognised as the global industry standard and the basis of much-needed regulation in this space. Comprising 32 task force members across the G20, the TCFD framework provides climate-related financial disclosures across four key pillars: governance, strategy, risk management, and metrics and targets. The framework also acts as a means of providing transparency about a company’s climate-related risk exposures to key business stakeholders, such as investors, lenders and insurance underwriters. This is becoming increasingly important, especially as investors seek to support organisations with strong ESG agendas. In an attempt to assess how global organisations, including Ireland, are faring when it comes to following the guidelines laid out by the TCFD, EY recently commissioned the EY Global Climate Risk Disclosure Barometer to provide a global snapshot of the increasing corporate focus on climate risks and opportunities. The research, drawing on public disclosures of 1,100 companies across 42 countries, found that companies have continued to make progress in addressing the quality and coverage of climate-related financial disclosures, largely due to the fact that more regulators are making TCFD reporting mandatory as well as increased pressure from investors. Furthermore, the response from CPD, the not-for-profit organisation that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, now incorporates TCFD recommendations. The research also found that companies tended to score better on governance, metrics and targets than climate-related strategy and risk management. The results suggest that companies feel more comfortable sharing their carbon emissions targets than their carbon reduction pathways to get there.  The benefits of the TCFD framework There is no question that the way Irish organisations report key financial and non-financial data is changing, and the benefit is two-fold. First, more Irish organisations embrace sustainable business practices and operations due to the need to be more transparent about climate-related data. And second, by adopting the TCFD recommendations and including climate-related issues in mainstream annual financial reports, Irish organisations will be better equipped to quantify and prepare for the financial risks associated with climate change into the future.  Transparency is needed to educate organisations and their stakeholders about climate change’s far-reaching financial and macroeconomic impacts. Early preparation and transparency will result in market leadership, improved stakeholder relationships, and reduced risks.  Lorraine McCann is the Director of Climate Change and Sustainability Services at EY. Natalia Carvalho is a Senior Manager of Climate Change and Sustainability Services at EY.

With many of us preparing to go back to the office in some capacity, it’s important to be aware of the new work etiquette, especially when it comes to in-person meetings. Orla McAuliffe explains. Since March 2020, we’ve adjusted to masks, social distancing, hand sanitising, and working from home. Now, it’s time to readjust to public transport, social outings and in-house meetings. The changes in office life extend beyond the meeting room walls. Before you even enter a professional space – whether your own or someone else’s – you should take time to familiarise yourself with their interpretation of the guidelines. Wearing a mask in shared areas, sanitising at the appropriate place and time, maintaining distance, adhering to queues or one-way pathways, and ensuring you don’t overcrowd escalators or elevators are all now necessary basics of office etiquette. Helping people adjust to the new norm When scheduling a meeting in person, it’s important to remember that this will be a big adjustment for many. To cater for this, you must provide plenty of notice and make sure the meeting is necessary for everyone involved. Be clear about the running time so all parties can prepare accordingly. If it’s a longer meeting and refreshments are required, flag this in advance. People may want to bring their own or just not feel comfortable partaking straight away, as it inevitably involves removing one’s mask. Rules on the day On the day itself, your main responsibility as a host is to ensure that your guests are provided for, instructions are clear, and adaptations are made in a safe and non-judgmental way. As host, stand to greet people and let them know immediately what your preferred greeting is. Handshakes are still out, so whether you use a head nod or eye contact, clearly announce your intentions and give your guests time to respond. Make sure the room chosen is large enough for people to maintain distance, has been thoroughly cleaned, has visible sanitisation options and, ideally, can provide enough space so participants do not have to sit directly across from one another. If supplies are being provided, make sure they are clean and provide instructions as to whether guests are expected to dispose of them or keep them for repeated use. Guest etiquette As a guest, your responsibility is to follow the host’s guidelines and prioritise your own safety. Communicate your boundaries clearly and be aware that health and safety really do come first in the current climate. Nobody wants to be seen to cancel or postpone a meeting, but if you are sick, then that is absolutely what you need to do. Polite and prompt notice will always be appreciated, and people will be reassured that you are taking this seriously and respectfully. In general, many people are excited to see the return of in-person meetings. They are excited to see their colleagues again. Of course, this new frontier will be difficult – we won’t be sharing birthday cakes in the break room anytime soon, for instance – but well-managed meetings will be an important reassuring factor in a potential return to office life. Orla McAuliffe is the Founder and CEO of the Professional Training Centre.

To be prepared for this new legislation, eligible employers need to start analysing their data and planning accordingly. Aoife Newton tells us what needs to be done before 2022. Gender pay gap reporting legislation was recently signed into law in the Gender Pay Gap Information Act 2021 (the Act). However, when and how the information will need to be reported is as yet unknown. In this regard, the regulations to give effect to the Act are eagerly awaited. The Act amends the Employment Equality Act 1998 by requiring regulations to be made by the Minister for Children, Equality, Disability, Integration and Youth as soon as reasonably practicable after the commencement of the legislation. The regulations will place reporting and publication obligations on private and public sector employers regarding their gender pay gap. They will contain much of the detail on the practicalities of the legislation. Which employers are affected? The legislation will not apply to all employers. Only employers that satisfy certain employee thresholds will be in the scope of the legislation. Where an applicable employer reports that a gender pay gap exists, the employer will be required to explain why the gender pay gap exists and detail the measures being implemented by the employer to reduce or eliminate the gap. Both private and public employers will be affected by the mandatory reporting obligations, but they will initially only apply to employers with 250 or more employees for up to two years after the commencement of the regulations. The scope of the mandatory reporting obligations will widen further to include employers with 150 or more employees on or after the second anniversary of the regulations and those with 50 or more employees on or after the third anniversary. Employers with less than 50 employees will not be required to report on their gender pay gap. What is required? Applicable employers will be required to report on the difference in remuneration between male and female employees, as set out below: the difference between both the mean and median hourly pay of male and female employees; the difference between both the mean and median bonus pay of male and female employees; the difference between both the mean and median hourly pay of part-time male and female employees; and the percentage of male and female employees who received bonuses and benefits-in-kind. Employers will also be required to simultaneously publish the reasons for differences in pay in the context of the above and the measures being taken or proposed to eliminate or reduce such disparities. In addition to the mandatory reporting requirements, other requirements may be contained in the regulations once published, including: the class of employer, employee and pay to which the regulations apply; how the number of employees and remuneration is to be calculated; and the form, manner and frequency with which information is to be published. The information will not be required to be published more than once per year. Enforcement An aggrieved employee can make a complaint to the Workplace Relations Commission (WRC) if an employer is not reporting on its gender pay gap. On receipt of a complaint, the WRC will investigate the complaint’s merits and may order the employer to take a specified course of action to ensure compliance with its reporting obligations. However, the WRC does not have the jurisdiction to order the employer to pay compensation to an employee or impose a fine on an employer. The Act provides for the Irish Human Rights and Equality Commission (IHREC) to apply to the Circuit Court or High Court seeking an order forcing an employer to comply with its reporting obligations. Employers that do not comply with such a court order may be held in contempt of court. The Act also provides that the IHREC, on receipt of a request from the Minister, can carry out (or invite a particular undertaking, group of undertakings, or the undertakings making up a particular industry or sector to carry out) an equality review or create and action an equality action plan. What to do now Minister Roderic O’Gorman has confirmed his intention to have the regulations in force by the end of 2021. He has also indicated that employers may be required to submit their information through a central website. Given that the regulations will likely be in force by the end of 2021, the legislation will probably apply to applicable employers from some date in 2022. Employers can prepare by collating and analysing their remuneration data to assess the extent to which gender pay gaps exist. This will help plan how to remove or reduce any such gaps before they are publicly obliged to report, the reasons for them, and what they are going to do about them. Aoife Newton is the Head of the Corporate Immigration and Employment Law team at KPMG.

While we’ve all suffered from ‘Zoom fatigue’, it’s still important to know when to turn on your camera. Susan Moylan explains. From the onset of the pandemic, our ways of working have changed dramatically. Some of us are working from bedrooms and dining rooms, with some being lucky enough to have dedicated home offices. Remote working has impacted the nature of our interactions, and this is common to us all. As human beings, we are social creatures, and we need interaction with others in some form or another. But what form that communication takes, or should take, is the question. Even though we have had access to a range of technological channels to communicate for some time now, up until 18 months ago, most thought that face-to-face interaction was the most effective form of communication. Once face-to-face was no longer an option, we were all challenged with the same choice: embrace the technology or get left behind. And that’s what we did – from family Zoom quizzes to virtual escape rooms with work colleagues. Most of us have embraced it all. As the pandemic has continued, though, ‘Zoom fatigue’ has set in. The extra concentration and focus required to communicate effectively in a virtual world has affected us all. This has had an interesting impact on our behaviours. Instead of reaching out to colleagues using technology to enrich the interaction (i.e. using video conferencing tools with cameras turned on), many tend to avoid this whenever possible, instead choosing to send emails or send a message via Teams or Slack. Are these methods the best way to communicate? No. Are they the easiest way to communicate? Quite possibly. Body language is key For communication to be effective, a message that has been transmitted must be understood as the sender intended it. We can check understanding by picking up on all verbal and non-verbal clues. Body language is critical in this process. In an environment where face-to-face contact is not an option, video conferencing can enable this process. And if you are reading this thinking, “of course”, I ask you to cast your mind back to last Friday. What was your most-used channel for communication? I would guess the most popular response is email followed by instant message. While I am not suggesting that these aren’t appropriate to use, seeing someone’s body language is key to ensuring that your effort to communicate has been effective. And, yes, being on camera in every call can be exhausting. But again, consider the message you are trying to get across and the recipient – sometimes, a call with cameras off is just fine. Tone of voice can do a lot of the heavy lifting. However, when the message is important and you aren’t very familiar with the person on the other side of the call, turning on your video can help get that message across. So, for every email or message you are about to send, ask yourself if it is the best way to get your message across. Sometimes it will be, but sometimes you will find that your interactions with others could be much richer by turning on your camera. Susan Moylan is an Associate Director of People & Change Consulting at Grant Thornton.

Julia Rowan answers your management, leadership, and team development questions. Q. I get no feedback from my boss unless he’s unhappy about my work. I work hard and give the people on my team plenty of feedback, but I feel very unsure of myself. A. Of course, your boss should give you feedback. You could try to change him, but (and sorry for the cliché) the only person you can change is yourself. So, let’s look at what’s happening for you: your boss is not communicating with you and you are telling yourself a story (he doesn’t appreciate me, my work is sub-standard) that undermines your confidence. What if you trusted yourself and told yourself a different story? For example, ‘Isn’t it great that my busy boss can cut to the chase about my work?’ or ‘Isn’t it interesting that somebody that senior does not see the importance of giving feedback?’ These stories free you from feeling bad about your boss’s behaviour and allow you to be easier with the situation. Funnily enough, when we lose our anxiety, what we are searching for often manifests. As there is little communication, it could be an idea to write a short weekly email to your boss outlining, for example: Three main things your team progressed/achieved this week; Three main priorities for next week; and Issues impacting the team. That way, you build up a record of communication about progress centred on goals and priorities. Then, your boss will be aware of what’s going on and can respond if he chooses. On another note, it may be useful to pay special attention to your longer-term career development. Think about what you really want in the short- to medium-term (lead a team, manage a project, broaden your capabilities, specialise) and find someone who can be a listening ear. Also, focus on building relationships across your organisation to create a wider network of people who can support you. Q. I’ve just been appointed to lead the dream team. They’re hard-working and talented. But I can’t believe they gave me the job, and I wonder if I’m the right manager for them. A. If this team is experienced and motivated, they don’t need much direction – you could focus on coaching and facilitating the team, both individually and as a group. Here are a few things you could do: Develop your coaching skills. Coaching is a great way to build people’s competence and confidence through questioning and listening. It also helps the leader to work from a more strategic place. Help the team become more self-sufficient by locating and sharing resources and encouraging team members to share challenges and opportunities. Use your team meetings to challenge the team. Ask them where they want to get to – both individually and as a team – and start planning your way there. More importantly, you need to give that imposter syndrome the heave-ho. You got the job for a reason (if it helps, ask the interviewers why they chose you), but leaders need to develop a special blend of ‘confident humility’ – the confidence to acknowledge their strengths and the humility to keep learning. We do everyone a favour when we acknowledge our strengths; by acknowledging them, we make them available to others. Julia Rowan is Principal Consultant at Performance Matters, a leadership and team development consultancy. To send a question to Julia, email julia@performancematters.ie.

Bríd Heffernan provides an update one year after the Monitoring Group issued its proposed reforms to international standard-setting boards. In July 2020, the Monitoring Group issued its much-anticipated paper outlining reforms to the international standard-setting boards – namely, the International Auditing and Assurance Standards Board (IAASB) and the International Ethics Standards Board for Accountants (IESBA). This article will reflect on the reforms proposed in the July 2020 Monitoring Group paper and analyse where the reforms stand one year on. The journey so far The Monitoring Group is a group of international financial institutions and regulatory bodies committed to advancing the public interest in international audit standard-setting and audit quality. The last set of reforms faced by the standard-setting boards were agreed to in 2003 by the International Federation of Accountants (IFAC) and the Monitoring Group. These 2003 reforms created the Public Interest Oversight Board (PIOB), which was tasked with increasing investor and stakeholder confidence in the standard-setting boards and ensuring that standards are responsive to the public interest. The 2003 reforms put IESBA and IAASB under the oversight of the PIOB, thus making them independent of IFAC. This, in turn, led to IFAC providing support to the standard-setting boards. The proposed July 2020 reforms do not change this structure, but they do propose changes to address the Monitoring Group’s concerns. Effectiveness reviews were built into the 2003 reforms. Every five years or so, the Monitoring Group conducts an effectiveness review and makes recommendations to improve the system. In the early reviews, the recommendations were made and agreed upon, and enhancements were implemented. However, the most recent review in 2015 resulted in the 2017 Monitoring Group consultation paper. Since then, there has been extensive discussion between the Monitoring Group, IFAC and other stakeholders culminating in the issuance of the July 2020 Monitoring Group paper. Monitoring Group concerns The July 2020 Monitoring Group paper titled Strengthening the International Audit and Ethics Standard-Setting System set out recommendations for reforming the standard-setting process. Below is an overview of the Monitoring Group’s main concerns that led to the recommendations, which are also discussed later in this article. The public interest is not given sufficient weight throughout the standard-setting process. Stakeholder confidence in the standards is adversely affected as a result of the perception of undue influence of the accountancy profession on the following two grounds: IFAC’s role in funding and supporting the standard-setting boards and running the nominations process; and Audit firms and professional accountancy organisations providing the majority of standard-setting board members. Standards are not as timely and relevant as they need to be in a rapidly changing environment. IFAC’s response As IFAC operationally runs the standard-setting boards, the Monitoring Group’s concerns and recommendations directly impact IFAC. In an update to its members, IFAC’s Chief Executive, Kevin Dancey, stated that IFAC was focused on agreeing on a workable set of changes that would enhance stakeholders’ trust and confidence in the standard-setting process. These reforms also provide an opportunity for IFAC to address its own issues with the current process, which are: That PIOB members are almost exclusively from a regulatory background. IFAC believes that the PIOB should have a multi-stakeholder composition and perspective. That the PIOB must be more transparent, and there is a need for clarity on its role and the role of the standard-setting boards and how the PIOB carries out its mandate. 2020 recommendations  The July 2020 Monitoring Group paper proposals retain the two standard-setting boards with the same mandates, and they will be retained in a similar size (16 members, down from 18 members). The respective roles of the PIOB and the standard-setting boards are also clarified. The Monitoring Group’s proposals clarify that the standard-setting boards are responsible for developing, approving and issuing the standards. The role of the PIOB is oversight. Combined with making the workings of the PIOB more transparent, this is a step forward. Responsibility for ensuring that the standards were responsive to the public interest was a source of confusion in the past. Was this the responsibility of the standard-setting boards or the PIOB? The July 2020 Monitoring Group paper contains a public interest framework, which confirms that it is the standard-setting boards’ responsibility to certify that the standards are responsive to the public interest. The PIOB will also have to certify that the standards are responsive to the public interest as part of its oversight function. Both the PIOB and the standard-setting boards will have a multi-stakeholder composition. For the PIOB, this means that its members will not simply be representatives of the Monitoring Group members. And for the standard-setting boards, this will ensure a diversity of views at the standard-setting table. Recognition of the significant role of both IFAC and the accountancy profession is a key improvement over the 2017 consultation paper. Current practitioners can still become members of the standard-setting boards, up to a maximum of five practitioners. Impact of the changes on IFAC With respect to IFAC, its ongoing role has been acknowledged in the July 2020 Monitoring Group paper: IFAC will continue to provide operational support to the standard-setting boards, the only difference being that it will be set out in a formal service level agreement. IFAC’s role in adopting and implementing the standards, promoting the standards, and monitoring their adoption and implementation has been acknowledged as an important ongoing responsibility. There will be a change to the nominations process for IAASB and IESBA members, however. The process is currently run by the IFAC Nominating Committee, which is chaired by the IFAC president. To ensure adequate independence in the nominations process and ensure good governance, the July 2020 Monitoring Group paper recommends that the nominations process sit under the supervision of the PIOB. The legal structure will also change. Currently, the standard-setting boards are committees of IFAC. The July 2020 Monitoring Group paper calls for the standard-setting boards to sit under a separate legal entity, independent to IFAC. Furthermore, changes have been recommended to the staffing model for the standard-setting boards. The proposals call for an increased staff complement and for staff to have greater responsibility for drafting the standards with less responsibility in the hands of the standard-setting boards. Since IFAC provides operational support for the standard-setting boards, this request for an increased staff complement will impact IFAC. Transition planning phase It was assumed by many observers that, with the issuance of the July 2020 Monitoring Group paper, all would be known. However, five years after the initial review, the reform process is only at the end of the beginning, seeing as many of the details remain unresolved. According to IFAC, the July 2020 paper is a significant improvement on the proposals outlined in the 2017 consultation paper. It is evolutionary rather than revolutionary. It sets out several high-level recommendations and principles that can be worked with. Right now, IFAC and the Monitoring Group are in the transition planning phase of the reforms – but many outstanding items must yet be worked through. The transition planning phase consists of IFAC and the Monitoring Group developing an implementation plan by participating in 26 workstreams. The goal is to work through all outstanding issues and finalise the recommendations in 2021. The implementation of the recommendations will then take place over the next three years, up to 2024. The changes will be phased in to ensure a smooth transition and no disruption to the current standard-setting process. Funding of the reforms  It is clear from the July 2020 paper that there is no new funding model. The profession’s resources were stretched before COVID-19, and this limitation will be exacerbated post-pandemic. This represents a significant fiscal constraint on implementing the reforms. IFAC’s funding for 2021 is down 13.5% from 2018, and there is no improvement anticipated in the funding outlook beyond 2021. Therefore, a key challenge is to reconcile the cost of the Monitoring Group’s recommendations to the funding available. Next steps As noted, the process is currently in the transition planning phase. The goal is to resolve all outstanding issues in 2021 while reconciling the cost of the recommendations to the funding available and reaching a deal on the phased implementation of agreed changes by 2024. While there is a long way to go before the reforms are implemented, it is positive to see progress that ultimately serves the public interest. Bríd Heffernan is Associations & Institutions Leader at Chartered Accountants Ireland.