Berita IAI

Green light for sustainability reporting - Accountants and business leaders support introduction of a global baseline to disclose sustainability information

11 Agustus 2022 - Lainnya


Despite the impact of COVID-19, Morningstar reported that global sustainable funds drew $96.6 billion in net new deposits in the first quarter of 2022, with significant increase from US$34 million in net flows for Q4 2021 to US$911 million for Q1 2022 reported for Asia-Pacific (excluding China and Japan). The pandemic has amplified ESG awareness and expectations among investors, policy makers, and businesses, leading to growing importance of and demand for sustainable governance and standardized sustainability reporting.

There is no better time than now, for the accountancy profession to showcase its commitment towards sustainability.

A global baseline: An oasis or a mirage?

The IFRS Foundation Trustee Chair Erkki Liikanen’s announcement of the formation of the International Sustainability Standards Board (ISSB) at the COP26 signifies a key milestone in our global sustainability journey. Under the leadership of Chair Emmanuel Faber and Vice-Chair Sue Lloyd, the Board represents a new hope for a consolidated approach towards a global baseline of high-quality sustainability disclosure standards.

Early comments to the ISSB’s consultation of the general sustainability-related disclosure requirements and climate-related disclosure requirements indicate overall support towards the proposed standards. The approach to leverage on existing frameworks is certainly appreciated, emphasizing on the importance of “internationalizing” requirements in existing standards such as those based on the SASB Standards.

Despite the support, many have highlighted the importance of ensuring that the baseline is globally acceptable and scalable. Learning from our collective experience in adopting and implementing the IFRS Accounting Standards, it is crucial for the Board to consider potential implementation and capacity challenges. Stakeholders in emerging economies in particular would be significantly affected, as we deal with scarcity in sustainability talents.

Jurisdictional action: Taking the first step, now

Countries such as Japan and India have taken the first step towards building their sustainability capacity by establishing local standard-setting bodies for sustainability reporting. Many others would certainly appreciate the opportunity to learn from their journey. For Indonesia, one of the largest markets in the world and the only G20 country in the ASEAN region, sustainability is an important driver of change and a potential game changer for its reporting ecosystem.

The Institute of Indonesia Chartered Accountants (IAI) as the recognized Professional Accountancy Organization in the jurisdiction is taking a leadership role by organizing the Task Force for Comprehensive Corporate Reporting. Recognizing the challenges ahead, IAI understands the importance of collaboration with and getting the buy in from key stakeholders from the get-go, to ensure successful implementation of the IFRS Sustainability Disclosure Standards. Membership of the Task Force reflects this aspiration, including experts from the Ministry of State-Owned Enterprises, Central Bank, Financial Service Authority, Centre For Financial Profession Supervisory of the Ministry of Finance, Indonesian Stock Exchange, Indonesian Chamber of Commerce & Industry, Indonesia Institute of Certified Public Accountant, Indonesia Institute of Management Accountant, and the CFO Club.

Recover together, recover stronger

The theme for Indonesia’s G20 presidency in 2022 carries a collective aspiration of the G20 Leaders to recover together from the adverse impact of the pandemic. As a group representing the world’s major political and economic power, the G20 can be the catalyst for sustainable and inclusive global recovery efforts.

The presidency presents an opportunity for the G20 Leaders to reemphasize their commitment towards supporting the development of a global baseline for sustainability disclosures. Building on the G20 Italy Leaders’ Declaration, sustainable finance is crucial for promoting orderly and just transitions towards green and more sustainable economies and inclusive societies, in line with the 2030 Agenda for Sustainable Development and the Paris Agreement.

“Indonesia’s exposure, strategic position, and increasingly important global role with the G20 Presidency in 2021 further affirming the confidence of the global climate change action community towards Indonesia. This will further motivate the profession to make a greater contribution to Indonesia’s G20 Presidency” said Professor Mardiasmo (President, IAI) in his address at one of the four B20 side events organized by IAI together with IFAC and the B20. He also emphasized the importance for the accountancy profession to leverage its skill set to connect financial and sustainability-related information with integrated mindset.

This integrated mindset approach will create the sustainable business which also emphasized by David Madon (IFAC) in the same event “As we turn our attention jurisdiction by jurisdiction to the adoption and implementation of future ISSB disclosure requirements, this integrated mindset approach can drive company reporting, again, not as a compliance exercise, but as reporting transformation that helps deliver sustainable businesses.“

IAI together with IFAC through the B20 Indonesia Integrity & Compliance Task Force is pushing for the sustainability agenda to be recognized as part of this year’s G20 recommendations. Under the umbrella of sustainable governance, IAI highlighted the importance of a global baseline for disclosure of sustainability-related information to provide stakeholders with an important tool to support achievement of ESG objectives.

“Consistent and comparable standards will bring greater transparency and clarity and thus build stakeholder confidence in the businesses itself and in decision making. This year, B20 Indonesia has a strategic chance to lead the global sustainable governance efforts, where we focus on delivering actionable and sustainable policy recommendations that tackles critical sustainable governance issues across the globe.” said Shinta Kamdani (Chairwoman, B20 Indonesia and Vice-Chairwoman, Indonesian Chamber of Commerce and Industry). In line with this message, Arsjad Rasjid (Chairman, Indonesian Chamber of Commerce and Industry) also emphasized on how investment in ESG is no longer optional or voluntary. The changing behavior of consumers, markets, and investors requires businesses to implement an ESG mindset, embedding stronger management transparency and integrity.

The message is clear—Accountants and business leaders support the introduction of a global baseline of sustainability disclosures. Now more than ever, it is important for the accountancy profession to take lead, as we move with our sustainability agenda, together.