As the United Nations Climate Change Conference continues in Copenhagen, accounting bodies around the world agreed that a single set of global reporting standards on climate change was needed.
Thirteen accounting bodies, including the South African Institute of Chartered Accountants (Saica), as well as The Prince's Accounting for Sustainability Project and the Climate Disclosure Standards Board, co-signed an open letter to political leaders attending the Copenhagen climate change meetings.
The signatories believe that an 80% reduction in greenhouse gas (GHG) emissions by 2050 (as supported by the G8 summit in July 2009) could only be achieved by aligning the actions of governments and businesses so that they were mutually reinforcing.
To facilitate this alignment, they urged political leaders to encourage disclosure of climate change-related information in mainstream financial reporting according to a single set of universally accepted standards.
To develop these universally accepted standards an independent stakeholder-led standard-setting body, with appropriate accountability to public authorities, should be established.
Global standards would promote provision of more accurate, trusted and reliable information to investors and other stakeholders, and drive the scale of behavioural change necessary to achieve a low-carbon economy.
The universally accepted standards should build on and refine existing climate change initiatives, specifically: adopting existing standards on aspects of climate change-related information, including the Greenhouse Gas Corporate Standard (the GHG Protocol), which should be used for the purposes of making disclosures relating to GHG emissions; and adopting principles from financial reporting to elicit disclosures that are useful to investors in their decision-making, and that reflect climate change as one of the crucial factors likely to affect the development, performance and condition of a company's business.
The letter noted that developing a global standard for climate change-related disclosures was only part of a process that should, over time, seek to include the disclosure of all sustainability issues that affect business and decision-making by shareholders.
"Climate change, while probably the single most important issue we face today, cannot be viewed in isolation from, nor eclipse other aspects of disclosure essential to the achievement of a sustainable economy and society," said Saica.
The business and investor response required to support delivery of reduction targets would be enabled by an appropriate climate change disclosure framework.
"Chartered Accountants will play a pivotal role in this new era of business that South Africa and the world is entering. They have a unique ability to identify and present relevant, accurate financial information and are well positioned to utilise these skills in presenting non-financial information," said Saica standards senior executive Ewald Müller.
"It is important for business to know the context and the rules and then focus on the task ahead - doing business with a smaller footprint. If we can reach more certainty on the mechanisms, the targets and the commitments that are being made, it will unleash more of the innovative and creative energy that only business can bring to finding the solutions the world needs," said Standard Bank Group Sustainability Management director Karen Ireton.
Global reporting initiative chairperson Mervyn King said that the governments meeting in Copenhagen should agree to legislate that all corporations in their countries have to report or explain the impacts that their operations have on society and the environment.
"The stakeholders linked to these corporations will support or flee them according to how the corporation has incorporated sustainability into the strategy and rhythm of the business. This would drive corporations to undertake business as unusual and to make more with less," he stated.
"Many stakeholders are still reluctant to venture a guess as to what to expect from Copenhagen. The business community in particular is holding its breath in anticipation as the Conference is set to impact on them severely," concluded Müller.