Greater than 80 CFOs push again on sustainability reporting

Good morning,

CFOs need to have a say within the creation of standardized reporting guidelines on sustainability. So, with the assistance of the Prince of Wales, 86 finance chiefs throughout the globe signed a letter despatched to the Worldwide Sustainability Requirements Board (ISSB) insisting on the development of its proposed reporting requirements.

“It’s a primary precept that you may’t handle what you don’t measure,” Mars Inc. CFO Claus Aagaard, one of many finance chiefs who signed the letter, informed Fortune in an announcement. “However within the race to create acceptable measurement frameworks, we have now a very complicated set of requirements that are making the problem of sustainability reporting even more durable than it must be. This dangers obscuring the concentrate on what these numbers inform us and the way we’re going to make progress.”

Aagaard is among the many CFOs at corporations headquartered within the U.S. who signed the letter. Listed here are just a few extra: Amy Weaver, president and CFO at Salesforce; Andrew Bonfield, CFO, Caterpillar; Scott Herren, EVP and CFO, Cisco; Harmit Singh, CFO, Levi Strauss & Co; Matt Ellis, EVP and CFO, Verizon; and David Zinsner, CFO, Intel.

Traders with world funding portfolios have been calling for clear ESG reporting by corporations. Because of this, the ISSB was established in November to set local weather reporting necessities that may be largely used worldwide. ISSB is a department of the Worldwide Monetary Reporting Requirements Basis (IFRS), which has developed financial reporting standards for greater than 100 nations, together with the European Union and the G20.

The ISSB launched two drafts of a proposed algorithm: IFRS S1 (Basic Necessities for Disclosure of Sustainability-Associated Monetary Data) and IFRS S2 (Local weather-related Disclosures). On July 29, the final day for feedback on the proposals, the Accounting for Sustainability (A4S), a company created by Prince Charles to get finance leaders concerned in constructing a sustainable economic system, submitted the letter signed by CFOs.

Right here’s a abstract of the six areas the place CFOs need the ISSB to enhance upon its proposed guidelines:

-Alignment with related present sustainability reporting requirements “to the best extent potential.”

-Readability on what constitutes enterprise worth, recognizing that traders may have disclosures on broader social and environmental impacts to evaluate danger and make funding selections.

-Clear definitions and tips for preparers.

-Disclosure necessities ought to allow a “continued concentrate on setting science-based, bold targets and the actions wanted to attain them.”

-Promote built-in considering by frameworks such because the Built-in Reporting Framework.

-Handle the environmental, social, and financial points that influence decision-making.

 ISSB will evaluate suggestions and goals to concern new requirements by the tip of the yr.

In March, the U.S. Securities and Change Fee’s (SEC) proposal on thorough environmental reporting by American public corporations additionally got here in response to a shift in investor curiosity and public opinion. The feedback interval closed in June. And the proposed guidelines are nonetheless underneath evaluate.  

The SEC received hundreds of feedback, and there was some pushback from company America.

For instance, Wells Fargo wrote, partially: “Effort and time spent on granular, prescriptive disclosures for local weather metrics and targets would require us, and different filers, to prioritize danger administration assets on dangers that don’t influence agency’s security, soundness, and resilience. The overly prescriptive metrics and targets are more likely to transcend materials danger as we handle climate-related monetary danger.”

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Fast be aware: For the remainder of the week, you’ll be listening to from Kevin Kelleher who will likely be retaining you within the know. See you subsequent week. Take care.

Sheryl Estrada
sheryl.estrada@fortune.com