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As climate change makes our planet increasingly resemble an overheating air fryer that hasn’t been cleaned in awhile, it might seem like small (and smoky) potatoes that more of the world’s largest companies are improving how they report on sustainability.
Every little bit helps, though, so we’re happy to share that more companies are hiring accounting firms to vet their sustainability disclosures, reporting per international standards, and including the info in their main reports, according to the latest annual benchmark report on the topic, released Thursday by the International Federation of Accountants (IFAC), along with the American Institute of CPAs and the Chartered Institute of Management Accountants (AICPA & CIMA).
Based on ESG disclosures from the largest companies across 21 countries and Hong Kong, the report found that from 2019 to 2022, the share of companies disclosing any amount of sustainability information grew from 91% to 98%.
Fortunately, the share of companies getting “at least some” of those disclosures independently assured by accounting firms has also increased. Nearly seven in 10 companies studied hit that mark in 2022, up from just half in 2019, according to the accounting orgs.
More than half of companies are also using the framework from the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial Disclosures. That “should ease the transition” to the new standards, released in 2023 by the International Sustainability Standards Board, IFAC and AICPA & CIMA said in a news release.
A last bit of good news: In 2022, just 30% of companies put their sustainability information in a separate sustainability report, which typically gets less scrutiny than annual reports and other big disclosures. In 2019, 57% of them did.
Okay, time for caveats. Nearly nine in 10 companies are using a mix of standards and frameworks. “That leaves investors and lenders in a bind,” David Madon, IFAC’s lead on sustainability, policy, and regulatory affairs said in the press release. A mix of standards means they can’t count on its quality or compare companies, he explained.
Another challenge to holding companies accountable to the same goals: In the US (home of public companies worth $40.3 trillion in 2022), just 23% of the companies measured are using accounting firms to vet their sustainability disclosures, compared to 58% for the rest of the world.
“The level of confidence with and reliability on sustainability disclosure should be the same as financial information,” Susan Coffey, CEO of public accounting for AICPA & CIMA, said in the press release.