Sustainability disclosure from beyond the G20 highlighted in new IFAC study
The International Federation of Accountants (IFAC) has published a broad examination of sustainability disclosure and assurance practices beyond the G20, showing a need for alignment and assurance. In its latest report, “The State of Play: Beyond the G20,” IFAC, along with the American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), extends its benchmarking analysis to 20 additional jurisdictions from across the world.
The report reveals that sustainability disclosure and assurance are showing marked improvements in these jurisdictions, with disclosure rates growing by 5% and assurance 11% from 2019-2021. However, compared to G20 nations, reporting by companies in these new jurisdictions still lags by 6%, while assurance rates lag by 16%.
Integrated reporting is on the rise, with sustainability information increasingly integrated with financial disclosures in annual reports rather than presented in standalone sustainability reports.
Sustainability standards and frameworks remain an ‘alphabet soup’ with 84% of reviewed companies using a mix of standards and frameworks. Commonly used standards include the Sustainable Development Goals and GRI Standards, with growing references to the TCFD Framework and the SASB Standards.
While assurance rates have increased, the range of topics covered is narrowing, with broad assurance, covering a wide range of environmental, social, and governance (ESG) issues decreasing by 10%.
To solve the challenges, IFAC’s report underscores the need for a global baseline of disclosure requirements, as envisioned by the International Sustainability Standards Board (ISSB), to enhance comparability and usefulness of non-financial information internationally.
It advocates for high-quality sustainability standards, equivalent to financial reporting standards. This would include the adoption of assurance standards to ensure independent, quality audit.
Ultimately, the report urges regulators to establish requirements for obtaining a reasonable level of assurance over company sustainability disclosures, aligning reporting and assurance to support investor and societal needs.
For a detailed look at the findings, read the full report.