Ep. 36: WBCSD & IMA - Enhancing the Quality and Value of Corporate Sustainable Business Information (with Mario Abela and Shari Littan)

WBCSD resources:


WBCSD COSO Applying Enterprise Risk Management to
Environmental, Social and Governance-related Risks 

Guidance on improving the quality of ESG info

Enhancing the credibility of non-financial information: the
investor perspective

How to respond to assurance needs on non-financial
information



IMA resources:



https://www.imanet.org/insights-and-trends/external-reporting-and-disclosure-management/coso-framework-and-sustainability


https://www.cpajournal.com/2019/07/29/the-coso-internal-control-framework-and-sustainability-reporting/


https://www.imanet.org/insights-and-trends/external-reporting-and-disclosure-management/sustainability-cfo-the-cfo-of-the-future


https://blogs.thomsonreuters.com/sustainability/2018/08/09/executive-perspective-the-reasonable-millennial-investor/



Contact our guests:Shari Littan -
https://www.linkedin.com/in/shari-littan-58bb40114/
Mario Abela - https://www.linkedin.com/in/mario-abela-75a95957/



FULL EPISODE TRANSCRIPT
Adam: (00:00)


Hello again and welcome back to Count Me In, IMA's podcast about
all things affecting the accounting and finance world. We have a
unique episode for you today as both Mitch and I facilitated a
conversation with two guests to provide multiple perspectives on
the topic of sustainability. We spoke with Shari Litton, IMA's
manager of corporate reporting and technical activities and Mario
Abela, a director for redefining value at the world business
council for sustainable development. Let's head over to the in
depth conversation held about topics relating to sustainability
such as ESG and integrated reporting. 


 


Mitch: (00:36)


There have been many articles and publications for guidance on
sustainability. So to start things off, what is sustainability
and why are organizations so concerned about it? 


 


Mario: (00:53)


Thanks. There are many definitions of sustainability from the
very narrow, it's just about the environment through to the
inter-generational legacy that we leave for future generations to
be able to kind of enjoy the same, lifestyles and the same
resources that we've been at today. So the term doesn't really
have any fixed meaning and it continues to evolve at the WBCSD
when we talk about sustainability, we really looking at the
sustainability of the business model. Can the business continue
to operate as it's currently doing? Can it sustain those
operations into the future? 


 


Shari: (01:47)


No, I just want to recall that for me, when I first became
fascinated by what we'll call accounting for sustainability or
sustainability or integrated reporting. I always recall my
reaction to the first photos that the astronauts sent back. One
of the famous photos is called Earthrise and you can actually see
the earth rising from the surface of the moon. And many people
say that the modern environmental movement started with that
photo because all of humanity reflected back on what a small
planet that we have. And to me, coming with an accounting
background, I think of one of the primary goals of why we have
accounting to begin with, which is we have limited resources. And
that picture coming back is a stark reminder that limb resources
here on earth are limited. So we have to be a little bit broader
or maybe evolve what account for how we're using those resources.
How are we all allocating our precious resources, what are we
doing with them? So for me, that one photo ties back to
accounting. And when I am thinking about sustainability and
business, for me personally, that's where I come. 


 


Adam: (03:23)


So then what kind of relevant data is available for
sustainability and how are businesses reporting this information?
In other words, what is the current challenge? 


 


Mario: (03:33)


The problem is that the, the relevant data is a really good so
there's been a number of surveys done by the CFA Institute and
other investor bodies that have demonstrated that there is
actually no shortage of data and to some extent information, but
that information is not particularly relevant to the sorts of
decisions that investors and other stakeholders need to make. So
if a board would ask management about the reliability, a lot of
sustainability metrics reported today a lot of CEOs would
struggle to really put their hand on their heart and commit to
the credibility of the data. And in fact, PWC in its CEO survey
looked at what are the sort of key decisions that CEOs, Nate,
about their company, what sort of information are they getting
and to what extent do I have confidence in that information? And
for a number of data points where these things are absolutely
critical to the business and its value creation, in fact, they
either don't get very data or the data that I get I have very
little confidence in and we have to remember that a lot of this
data is not subject internal assurance. So often it's not, there
are reviews done by internal audit and it's also not subject to
external verification either. And, and the other point is that
companies now report as you know in many different through many
different channels. So the 10K is just one form of reporting that
companies report, you know, every minute through social media.and
then there are news outlets and others who are also providing
information about companies. And we did some work last year where
we went around the world and, and spoke to investors about ESG
information. And one of the things that I told us was that at the
moment, because there's the lack of standards or at least a
single standard because there are, many frameworks, many
standards of sorts of we've identified at the WBCSD. In fact, we
have countered at least 200 frameworks with over 5,000
indicators. The problem for investors is comparability. They've,
they've got no idea how to compare one number against another
number because the basis upon which those numbers are calculated
are often very different. And so what happens in practice is that
companies use a mix of measures from existing frameworks and then
often adapt them to their own requirements. So we have the
entities spe...