|Global Knowledge Gateway||
Another Reporting Framework? Yes, but a Valuable One
A wide range of mandatory and voluntary external drivers influence reporting on sustainability matters. For example, many organizations may prepare and publish a range of information requested by CDP, the Global Reporting Initiative (GRI)’s guidelines, International Organization for Standardization (ISO), guidelines for multinational enterprises from the Organisation for Economic Co-operation and Development (OECD), Principles for Responsible Investment, UN Global Compact, Water Accounting Standards Board (WASB) and International Integrated Reporting Council (IIRC)—and this list may soon include the CEO Water Mandate and Sustainability Accounting Standards Board (SASB). A legitimate question to ask is whether there is a need for yet another Framework?
The Climate Disclosure Standards Board (CDSB) is a consortium of business and environmental organizations formed at the World Economic Forum (WEF)’s annual meeting in Davos, Switzerland in 2007 and chaired by the managing director of WEF. What sets CDSB apart from the chorus is that we set out to specifically harmonize reporting of environmental and sustainability performance and risk by having it included in, or linked to, the organization’s mainstream financial reports.
CDSB is not just another reporting methodology, however. It has integrated itself in the reporting landscape in a unique way. Firstly, CDP (formerly the Carbon Disclosure Project) has kindly provided secretariat support to us since our inception and we have an aligned mission scope. Secondly, we are supported by a group of leading industrial and financial services companies together with non-governmental representatives, who act in an advisory capacity to CDSB. Thirdly, a Technical Working Group of representatives of the major accounting firms and professional bodies, including IFAC, coordinates CDSB’s work program with expert input from academics and specialist collaborators. Finally, we have been closely involved in other reporting developments, including the GRI’s fourth generation guidelines (G4) and the IIRC’s International Integrated Reporting Framework, and we are now working with the UN Environment Program Finance Initiative and SASB.
Our own work relates to the CDSB Framework, which is designed to allow investors to assess the relationship between environmental performance and risks and the organization’s strategy and prospects. Moreover, it encourages analysis and decisions that recognize the dependence of economic and financial stability on a healthy environment.
With the inclusion of this information in a mainstream report, the organization’s environmental performance and risk is subject to the same International Financial Reporting Standards and assurance requirements as financial information. This information is centrally deposited with the competent national authority in a timely fashion and is publically available. We are working with regulators, the CDP, and the Fujitsu Research Institute to develop an XBRL (eXtensible Business Reporting Language) taxonomy to enable digital, structured communication and exchange of this information as well as closer alignment with financials in mainstream reports.
To date, our focus has been on risks and opportunities climate change presents to an organization’s strategy, financial performance, and condition. The requirements set out in the updated CDSB Framework remain essentially the same as the previous version. However, they have been reorganized and elaborated to reflect relevant developments in corporate reporting. The main changes to the consultation draft we just launched expand the scope into forest risk commodities (i.e. the drivers of deforestation) and water. The structure has also been deliberately organized to allow the scope of the subject matter to be expanded over time.
In line with CDSB’s mission not to add requirements to the reporting landscape but to complement them for mainstream reporting as necessary and fill gaps where they exist, the content of the requirements and guidance has been influenced by the work of CDSB Board members and other organizations leading corporate reporting, including the CEO Water Mandate, GRI, International Accounting Standards Board, IFAC, IIRC, OECD, Principles for Responsible Investment, UN Global Compact, WASB, and others.
Regarded as being ahead of the curve in sustainability reporting, the latest expansion puts CDSB firmly on track to become a means for undertaking natural capital reporting as part of the International Integrated Reporting Framework.
We are using an innovative secure online platform to manage our consultation, which supports interactive and inclusive standard-setting activities. Users are invited to add their comments and can enter into dialogue on any part of the text. A conventional PDF is also available.
The public consultation for the updated CDSB Framework opened on February 17 and will close on May 19, 2014. We invite you to comment on the draft and tell us whether and how we can do more to address your needs and expectations. Visit www.cdsb.net/consultation for more information and to sign up for our consultation briefing webinars on March 19, 2014.
Like what you see here? Subscribe to The Latest, our customizable update sent every two weeks.
Do you have a perspective you'd like to share with the global profession? Email Gateway@ifac.org to inquire about becoming a Gateway contributing author.