Good-quality reporting should cover a wide range of value drivers for organisations - beyond financial performance and position, but also beyond environmental or social impact. It should, for example, include intangibles not recognised on the balance sheet, such as innovative processes, know-how and corporate culture.
So said ACCA in its recently released policy position document.
It pointed out that businesses, society and the planet depend on each other - and the way each organisation manages its key resources and relationships affects the value that it generates for societies and nature as well as economies. Conversely, an organisation's external impacts can ultimately affect its ability to create value for itself.
"Corporate reporting standards should highlight the interactions between the value that organisations create for themselves and the impact they have on society and planet," the paper stated.
The information needs of investors often correspond with those of other stakeholders such as customers, suppliers, communities and policymakers. Corporate reports that take a robust and forward-looking approach would naturally also address an organisation's most significant impacts on the economy, environment and people.
ACCA welcomes the IFRS Foundation's announcement about the creation of the new International Sustainability Standards Board (ISSB), and calls on the ISSB to develop global standards based on a multi-capitals approach.
On top of this, regional and national standard-setters may mandate additional disclosures and metrics about businesses' external impact on society and planet. These disclosure requirements should be precisely defined, focused and interoperable with global standards.
ACCA has called on the intergovernmental Organisation for Economic Co-operation and Development (OECD) to provide a mechanism for multilateral cooperation between jurisdictions on disclosure requirements. Such an approach is needed to ensure that countries and regions adopt the same mandatory metrics for each given topic.
Small and medium enterprises (SMEs) make up 99 per cent of the world's businesses and key supply chains. Given the important role they play in the global economy and their impact on society and planet, they should be supported to embrace wider connected corporate reporting. ACCA is therefore calling for a voluntary, simplified and reduced reporting standard for SMEs.
What is needed
ACCA is calling on policymakers, regulators and standards-setters to:
• develop requirements for high-quality reporting outside of the financial statements that is coherent and connects with financial reporting requirements.
• cooperate multilaterally to ensure that reporting requirements are consistent and interoperable across borders.
• align requirements with the global standards produced by the IFRS Foundation and the International IR Framework.
• base requirements on shared definitions for key terms, including "sustainability," "sustainability reporting" and "enterprise value."
• conside
