Plethora of standards and frameworks results in “wild variation” in consistency and reliability of information  Global standards for sustainability reporting critical for sustainable corporate governance and to avoid “greenwashing”  Institute hosts all-island conference with An Taoiseach and Minister Diane Dodds on how boards can embed sustainability within their organisations 22 April 2021 - Chartered Accountants Ireland has reacted to European Commission proposals to amend the current EU Non-Financial Reporting Requirements Directive (NFRD). The proposals form part of a package of measures announced by the Commission to improve the flow of money towards sustainable activities, with a view to making Europe climate neutral by 2050. They are an important step in the EU’s objectives for sustainable corporate governance. Certain companies are required under current EU Non-Financial Reporting Requirements Directive to report how sustainability issues influence the performance, position and development of the company and certain information about the company’s impact on society and the environment.  Commenting, Níall Fitzgerald, Head of Ethics & Governance in Chartered Accountants Ireland, said “Existing EU guidelines have not led to a fundamental improvement in the quality of disclosures by companies. The desire to act is there among company directors and stakeholders, who are committing investment and resources to embed sustainable practices across their organisations.  “Right now, there is a plethora of standards and frameworks that companies can apply for sustainable reporting. The lack of unified global standards means that the availability, consistency, and reliability of information varies wildly across jurisdictions, some more onerous than others. This leaves organisations open to the charge of ‘greenwashing’.  In 2020, Chartered Accountants Ireland, in response to public consultations on the European Commission’s review of NFRD, and on sustainability reporting from the International Financial Reporting Standards Foundation, noted that a common standard would resolve many of the problems with the comparability, reliability and relevance of information being reported by companies. Fitzgerald continued  “It is encouraging to see steps being taken towards more comparable and consistent global sustainability reporting standards. The Commission have stated that the development of EU sustainability reporting standards will also contribute to the global standards development process. However, we need clarity as to who the Commission will engage to develop these standards, as they have to date only suggested this may be the European Financial Reporting Advisory Group (EFRAG). “We also welcome the proposal to digitally ‘tag’ reported sustainability information. This will ensure information is more readily identifiable, providing greater transparency and confidence. A social contract exists between business and the public, and with more companies making public sustainability pledges, these standards will ensure they are held to account for commitments and that empty promises are exposed.”   ENDS  For more information:  Jill Farrelly  PR & Communications Manager  Chartered Accountants Ireland   jill.farrelly@charteredaccountants.ie     Tel: 087 738 6608 Notes to Editor     About Chartered Accountants Ireland     Chartered Accountants Ireland is Ireland’s leading professional accountancy body, representing 29,500 influential members around the world and educating 7,000 students. The Institute aims to create opportunities for members and students, and ethical, sustainable prosperity for society. An all-island body, Chartered Accountants Ireland was established by Royal Charter in 1888 and now has members in more than 90 countries. It is a founding member of Chartered Accountants Worldwide, the international network of over one million chartered accountants. It also plays key roles in the Global Accounting Alliance, Accountancy Europe and the International Federation of Accountants.          

It is clear why sustainability matters. Added to its obvious importance are the climate action plans rolled out by governments, the global sustainability initiatives lead by agencies such as the UN and NGOs like the World Economic Forum. There is also the increased emphasis on sustainability among deciders of capital allocation, including investors, financiers, grant providers and donors, and the rising environmental awareness in society, which expects higher standards of ethics and governance from institutions. If, as a director, you occasionally feel overwhelmed by the volume of information regarding sustainability, then you are not alone. If you wonder how sustainability is relevant to your role and what difference you can make, take assurance from Socrates that “wonder is the beginning of wisdom”. How Sustainability is Relevant to Your Organisation Whatever an organisation does, regardless of its size, sustainability will impact: its legal and regulatory requirements, how it provides a service or produces a product, whether it retains or attracts talent, whether it is attractive to customers, or whether it is perceived as a viable prospect for banks or investors. The fiduciary duties of directors require them to act in the best interests of the organisation and have regard to other stakeholders. Addressing sustainability issues and looking after the organisation’s business are clearly relevant to these duties. Sustainability may be the ultimate disrupter for businesses. Even if an organisation does nothing to address sustainability issues it will still be impacted by them. For example; What is the risk of a change in regulations challenging current business models? What is the risk of more sustainable technological advancements displacing current products, service offerings or production processes? To what extent can carbon tax increases be passed on to the consumer? What impact will phasing out of oil and gas have on residual values of assets or cost of replacement in the future? Standing still is not an option if an organisation wants to manage the impact of sustainability. Directors, acting as the mind and will of an organisation, have a key role to ensure it is appropriately identifying and responding to relevant sustainability risks. How You Can Make a Difference If you are a director or a member of a board sub-committee wanting to raise the issue of sustainability (even if this is not currently seen as a priority), consider the following approach: Get informed: Find out more about the type of sustainability issues that impact your industry. Sustainability will affect regulatory requirements, consumer demand, availability of resources and all the necessary components of the ability to do business. You do not have to become an expert on sustainability, but a little knowledge or awareness can prompt the right questions. Find Allies: Engage with other board members. Discuss how sustainability impacts the business and how the board might address the issues. You may find that you have more support than you expect. Be Honest: It is important to be pragmatic and constructive as to the reasons why the organisation should address sustainability and how it does so. There may be some immediate measures the organisation can take (‘quick wins’), but more substantive measures may be required to be taken to achieve lasting long-term benefits. Collaborate: Lasting change cannot be achieved alone. If your organisation is not clear on what to do or what direction to take in relation to sustainability, consider collaborating with other organisations on similar journeys. Be curious: Ask questions about sustainability, explore alternatives and respectfully challenge traditional assumptions. Invite others to discuss the issues and embed sustainability objectives in the organisation’s strategy. Questions beginning with ‘What if?’, ‘How?’ or ‘Could we?’ will spark curiosity and give rise to more possibilities and sustainable solutions. Sustainability cannot be achieved alone.  Strategy and know-how shared among organisations and individuals will inform, create awareness and provide confidence for the journey ahead. Directors must be confident to ask advice and seek help from others. If we agree that we all have a stake in sustainability, then we all have a stake in finding solutions to the key risks of our time.   Chartered Accountants Ireland’s Governance Conference 2021 focuses on how boards can embed sustainability in organisations and takes place online on 22 April 2021 from 9:30am. Niall Fitzgerald Head of Corporate Governance & Ethics at Chartered Accountants Ireland