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The Time is Now: How the Accountancy Profession is Enabling Sustainability through Standard-Setting
14 April 2023 - Lainnya
"The greatest threat to our planet is the belief that someone else will save it." – Robert Swan
The case for a global baseline for sustainability disclosures
According to a survey by the United Nations Global Compact1, 93% of CEOs believe that sustainability is important for the future success of their companies, and 69% have incorporated sustainability into their business strategies. This highlights the growing recognition of the importance of sustainability in the corporate world.
As the world's economies continue to grow, so does the need for sustainability practices. From climate change to social inequality, businesses are increasingly expected to take responsibility for their impact on the world. Accountants play a critical role in this process, as they are responsible for measuring and reporting on sustainability issues. One of the most effective ways the accountancy profession is enabling sustainability is through standard-setting.
Accounting standards have traditionally focused on financial performance, but there is a growing recognition that non-financial factors are equally important. The International Sustainability Standards Board (ISSB) is developing standards to provide guidance on how companies should disclose their environmental, social, and governance (ESG) performance. These standards are expected to be widely adopted by companies around the world, helping to create a consistent and transparent baseline for disclosure of sustainability information.
The Indonesian Task Force on Comprehensive Corporate Reporting in its sixth publication2 highlighted the key decisions taken by the ISSB on the upcoming disclosure standards based on feedback to its consultation on the proposed sustainability disclosure standards. After receiving more than 1,400++ global responses on its proposed sustainability disclosure standards, the Board took some decisions to redeliberate the proposed standards, in relation to their key concepts, global baseline, future priorities, and industry-specific disclosures.
The Task Force was established by IAI in 2020 to lead in the development and implementation of sustainability reporting standards in Indonesia. With a comprehensive membership that incudes prominent experts representing public practitioners, academicians, key stakeholders such as the Ministry of Finance, Ministry of State-Owned Enterprises, Central Bank of Indonesia, Financial Services Authority, Indonesia Stock Exchange, the Indonesian Chamber of Commerce and Industry, CFO Club Indonesia, and those with experience in financial report standard-setting, it is leading the way in ensuring that stakeholders of the accountancy profession in Indonesia is well in-tuned with the latest developments in sustainability reporting. This further highlight the important role of the profession, through IAI as the recognized Professional Accountancy Organization in leading the standard-setting effort in Indonesia.
As discussion for the global disclosure standards continue to accelerate, IAI is pushing for establishment of a Sustainability Standards Board for Indonesia. Approval for its establishment at the Institute’s Congress in December 2022 signifies the aspiration for the Indonesia accountancy profession to align its effort with those of the global stakeholders in responding to demand for standardized sustainability disclosures.
A global baseline for disclosure of sustainability information is essential for ensuring that organizations across the world are held to the same standards of environmental, social, and governance (ESG) performance. Sustainability reporting helps organizations to identify areas of impact and opportunities for improvement, while also providing stakeholders with valuable information about the organization's sustainability practices. Without a global baseline, there would be fragmentations of sustainability reporting, making it difficult to compare and evaluate ESG performance. Consolidation of the Value Reporting Foundation (VRF) and the Climate Disclosure Standards Board (CDSB) into the ISSB, as well as the Board’s MOU with the Global Reporting Initiative (GRI) signifies the intent towards ensure that the baseline will be applicable, and more importantly embraced by the global stakeholders.
A standardized disclosure framework is also expected to drive change. By requiring companies to disclose their sustainability performance, the standards encourage them to take action to improve their sustainability practices.
Accountants to the rescue
‘Accountants will save the world.” – Peter Bakker
When Peter Bakker, CEO of the World Business Council for Sustainable Development made this statement during his messages at the Rio+20 UN Conference, many did not see how the profession would indeed play an even greater role towards our survival. Recent developments in reporting of sustainability information clearly emphasized how the profession is taking charge in bridging the gap between financial and non-financial information, including those on sustainability.
The accountancy profession is playing a critical role in enabling sustainability. The International Federation of Accountants (IFAC) in its latest Call to Action3 highlights the clear way forward for the profession to take lead on climate reporting and other material environmental, social and governance disclosures and their assurance.
IAI together with IFAC and other stakeholders of the global accountancy profession is committed to put the spotlight on sustainability and ensure that our accountants are well equipped with the latest know-how on sustainability. Both organizations collaborated on a series of side events to the B20 Indonesia 2022 Integrity & Compliance activities, as part of Indonesia’s G20 Presidency in 2022. The push for sustainability was successfully recognized in the G20 Communique:
Globally consistent data are needed in order to effectively address climate-related financial risks. We look forward to the finalization of standards by the International Sustainability Standards Board (ISSB) in support of globally consistent, comparable and reliable climate-related financial disclosures, and its work beyond climate, and we welcome the efforts to achieve interoperability across disclosure frameworks.
In conclusion, the accountancy profession is playing a vital role in enabling sustainability through standard-setting. Sustainability disclosure standards provide a consistent and transparent disclosure framework, creating a level playing field for companies and driving change. As the world continues to face sustainability challenges, it is clear that the accountancy profession will continue to play a critical role in helping businesses to report on their sustainability performance. The time for action is now, and accountants are leading the way.
About IAI
The Institute of Indonesia Chartered Accountants or Ikatan Akuntan Indonesia (IAI) is the recognized Professional Accountancy Organization (PAO) in Indonesia. Established on December 23, 1957, IAI continues to serve and develop the accountancy profession in the country through among others, establishment of the Chartered Accountant (CA) Indonesia qualification and other professional accountancy certifications, continuous education and training, and standard-setting activities.
IAI is home to more than 33,000 Indonesian accountants from different backgrounds; public accountants, educators, private (management) and public (government) sector accountants, tax, and forensic accountants. The Institute is recognized as a co-founding member of both the International Federation of Accountants (IFAC) and the ASEAN Federation of Accountants (AFA). IAI is also an associate member of Chartered Accountants Worldwide. IAI is committed to implement IFAC’s standards as the best practice in improving the quality of the accountancy profession in Indonesia.
IAI through the Dewan Standar Akuntansi Keuangan/Indonesian Financial Accounting Standards Board (DSAK) as the independent accounting standard setting body in Indonesia is tasked with the issuance of the Standar Akuntansi Keuangan/Indonesian Financial Accounting Standards (SAK) that is applied in Indonesia.
1 The 2021 United Nations Global Compact–Accenture CEO Sustainability Study, https://unglobalcompact.org/library/5976
2 IAI COMPREHENSIVE CORPORATE REPORTING TASK FORCE PUBLICATION – ISSUE NO. 06/I/2023, https://web.iaiglobal.or.id/Berita-IAI/detail/iai_comprehensive_corporate_reporting_task_force_publication_issue_no_06i2023
3 Time for Action on Sustainability, https://www.ifac.org/knowledge-gateway/contributing-global-economy/publications/time-action-sustainability-next-steps-accountancy-profession
