By 2030, stakeholders will be as interested in the ESG component as in financial results (Getty Images/Pixelfit)
At COP26 last November, the IFRS Foundation announced the creation of the International Sustainability Standards Board (ISSB). It also announced that it would be locating one of the board’s key centres in Montreal. Now, just eight short months later, a significant milestone has been marked with the inauguration ceremony for the Montreal centre in late June.
“[This event] demonstrates the comprehensive commitment to strong sustainability governance here in Canada,” said Pamela Steer, FCPA, CPA Canada president and CEO. The inauguration ceremony, and a later stakeholder celebration dinner, brought together Montreal delegates of the IFRS Foundation and the ISSB, dignitaries from the federal, Quebec and municipal governments, CPA Canada’s leadership team and representatives from the Canadian public and private sector organizations that offered vital support. “There is Canadian pride in the key supporting role the Montreal centre will provide to the ISSB as it carries out its meaningful work,” added Steer.
At an additional event, a roundtable organized by Finance Montreal, Steer joined with ISSB chair Emmanuel Faber and other participants to discuss the theme of developing a common language for sustainability disclosure standards to meet investors’ information needs. The roundtable also provided an opportunity to point to some of the achievements made by the board to date as well as a few of its upcoming plans.
A COMMON GOAL
As might be expected, there was broad agreement on the need for a common language for sustainability disclosure standards for the capital markets.
“ISSB’s success depends on the participation of all stakeholders and on the creation of a common language so that financial markets can allocate capital according to sustainability criteria,” said Faber. “That is impossible at the moment given the proliferation of private standards.”
Steer expressed a similar view. “As more jurisdictions and organizations around the world make net-zero pledges and other commitments to address societal challenges, the importance of having a global baseline of sustainability disclosure standards only grows.”
Guy Cormier, CEO of the Desjardins Group, pointed out that these new standards will make it possible to progress more quickly in tackling climate change. By 2030, Cormier anticipates that stakeholders will be as interested in the ESG component of an organization’s quarterly results as in its financial results.
Pamela Steer, FCPA, CPA Canada president and CEO, at the inauguration of the Montreal centre (Canadian Press)
A PRAGMATIC APPROACH
Cormier reminded the audience that while many large organizations have already taken steps to reduce their carbon footprint, SMEs will need to follow suit—they represent 99.8 per cent of businesses in Canada.
And in so doing, they will have three main challenges to face with regard to the future standards: how to collect the necessary data, how to ensure the data is of sufficiently high quality to allow for analysis and what kinds of disclosures the data will be used for.
While Faber agreed that SMEs must be part of the reporting equation, he stressed that a one-size-fits-all approach cannot work. That is why the recommendations provided by the ISSB will be industry-based, as industry-based disclosure reduces costs and minimizes noise by surfacing the most relevant information.
The ISSB chair said that within three to five years he would like to see a set of standards that are useful, effective and appropriate for decision making, so that companies that make profit warnings also make carbon performance warnings and there is greater accountability around commitments. “It’s not just about reducing GHG emissions but about embracing change, learning to speak a common language, which will take time, years perhaps, but not decades: we don’t have them.”
Steer agreed. She also quoted Mark Carney, United Nations special envoy for climate action and finance, who said during an interview with CPA Canada last year: “We cannot get to net zero without proper climate reporting. Full stop.’”
GIANT STEPS FORWARD
Already, the ISSB has made considerable progress toward its standard-setting goal. As Steer and Faber both pointed out, two exposure drafts have been released for comment and stakeholders are being asked to respond by July 29, 2022.
The IFRS Foundation has also signed a public sector memorandum of understanding (coordinated by Montreal International) to secure financial support from the Canadian and Quebec governments and has begun to build the ISSB’s presence in Montreal with the appointments of Jeffrey Hales and Michael Jantzi as board members based out of Montreal.
In addition, Charles-Antoine St-Jean, FCPA, CPA Canada’s former president and CEO, has been named regional director – Americas for the ISSB. He will be responsible for integrating the board’s work into the Canadian sustainability ecosystem. St-Jean played an important role in spearheading the formation of the Coalition of Canadian Champions for Global Sustainability Standards, which backed Canada’s bid to host the ISSB.
Faber also confirmed that there are ISSB meetings scheduled for October and December 2022 in Montreal, the latter of which aligns with the timing for the second part of the 15th meeting of the Conference of the Parties (COP) to the UN Convention on Biological Diversity also taking place in the city.
In her closing remarks, Steer noted that Canadians can be proud of the support the Montreal centre will provide to the ISSB in its work. “Our country brings to the table diverse and important knowledge gained over many decades, just as the Canadian CPA profession has a long history of working with international institutions, whether on sustainability or standard setting. Our profession looks forward to contributing its expertise to the development of international reporting standards that will provide the necessary comparability, transparency and consistency."
MORE ON CPAs AND SUSTAINABILITY
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