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“Accountants will save the world,” said Peter Bakker, president and CEO of the World Business Council for Sustainable Development (WBCSD), almost ten years ago. He was speaking at a UN conference on sustainable development, lamenting that companies are required only to report how much money they have made, but not how they have made it.

The world developed standards for accounting for financial capital and the value of manufactured capital, but not for the other forms of capital that are also required, and which are even more fundamental than financial – namely social, human and natural capital.

This partial and unbalanced approach to accounting must change; and companies, through their accountants, need to find ways in which they produce useful, faithful, and reliable information on all forms of capital. Investors are not only interested in financial results, but also asking about impacts – positive and negative – of organisations.

100 years of accounting

The stock market crash in 1929 brought on the Great Depression, and other crises and reforms over time resulted in two main financial accounting standards: the Financial Accountancy Standards Board (FASB), which issues the Generally Accepted Accounting Principles (GAAP); and the International Accounting Standards Board (IASB), which issues the International Financial Reporting Standards (IFRS).

The GAAP are mostly used in the US, while the IFRS are used by about 140 countries, including the Caribbean. Both standard boards are governed by their own foundations.

In recent decades, a number of climate and other "non-financial" disclosure frameworks have been developed – most notably the Global Reporting Initiative (GRI) in 2000; the Carbon Disclosure Standards Board (CDSB) in 2007; the Integrated Reporting Council (IIRC) in 2010; the Sustainability Accounting Board (SASB) in 2011; the Task-Force on Climate Related Disclosures (TCFD) in 2015; and the European Commission’s suite of legislation and directives over the years, which culminated in the "Fit for 55" measures that are part of the Green New Deal announced in 2019.

Many investors and reporting companies have been overwhelmed by the different reporting requirements, the lack of consistency and poor comparability.

What happened at COP26

Last week in Glasgow, accountants took a giant step forward. The IFRS Foundation announced three important measures aimed at improved governance and investment decision making:

(i) It has established a new International Sustainability Standards Board (ISSB) that will issue IFRS sustainability disclosure standards, which will sit alongside the International Accounting Standards Board (IASB), which issues IFRS financial accounting standards;

(ii) The IIRC and SASB, which merged earlier this year to form the Value Reporting Foundation (VRF), and the CDSB will consolidate and form part of the ISSB;

(iii) A Technical Readiness Working Group (TRWG) has prepared and published two proto