Effective governance and sustainability are increasingly important considerations for governments, organizations, business leaders, investors, consumers, and many other stakeholders throughout the world. The accountancy profession supports the move to a model of sustainable economies and corporate responsibility, where organizations pursue a more sustainable path and are better governed. IFAC and its member organizations support professional accountants by providing the tools for incorporating environmental, social, and governance (ESG) or sustainability factors into how organizations manage themselves from a strategic, operational, and reporting perspective.
IFAC contributes to the governance and sustainability movement through guidance and support tools, and information papers as well as representing the profession on various committees, tasks forces, and international initiatives.
Although IFAC has been focused on governance for some time, the issue took on increased importance in the wake of the global financial crisis. Consequently, IFAC has worked with many organizations and leaders to analyze what went wrong and what should be done to further enhance governance, including:
- Co-hosting a conference with the United Nations Conference on Trade and Development (UNCTAD), Corporate Governance in the Wake of the Financial Crisis: Linking Governance, Strategy and Sustainability: A Conference on the Role of the Accountancy Profession, and contributing to the resulting book, Corporate Governance in the Wake of the Financial Crisis, which looks at the links between governance, strategy, and sustainability.
- Publishing Integrating the Business Reporting Supply Chain (2011), which provides a summary of recommendations from 25 prominent business leaders and experts on improving governance, the financial reporting process, the audit, and the usefulness of business reports.
Governance is also one of the key interest areas of the Professional Accountants in Business (PAIB) Committee, which has issued Evaluating and Improving Internal Control in Organizations, which provides a framework and principles-based guidance on how professional accountants in business can support their organization’s governance, risk management, and internal control systems, and Evaluating and Improving Governance in Organizations, which helps professional accountants in business guide their organizations toward more effective systems of governance.
The PAIB Committee is currently finalizing an information paper on how professional accountants can support their organizations in integrating governance into their drivers of sustainable success.
The IFAC Sustainability Framework 2.0 highlights those areas in which sustainability needs to be embedded or integrated within an organization’s processes in order for relevant sustainability issues and factors to be effectively managed and reported within organizations.
The IFAC Professional Accountants in Business (PAIB) Committee recently issued Investor Demand for Environmental, Social, and Governance Disclosures: Implications for Professional Accountants in Business, which considers trends in investor demand for and use of environmental, social, and governance information.
IFAC also works closely with His Royal Highness the Prince of Wales’ Accounting for Sustainability Project and is a participant in the International Integrated Reporting Council, which is starting on a journey to develop an international framework for integrated reporting.