Sustainability reporting alone will not affect meaningful change, but new policies are also needed, the chair of the International Accounting Standards Board tells a Cambridge Judge conference.
The chair of the International Accounting Standards Board (IASB) told a Cambridge Judge Business School conference that sustainability reporting alone will not affect meaningful change among companies, but that policy measures to advance climate change are also necessary.
“As the effects of climate change become more prominent, they will become more and more visible in the financial statements,” Hans Hoogervorst told the Climate-Related Financial Reporting Conference on 2 April. “However, many sustainability issues may only emerge in the long run. In such cases they will tend to escape the financial statements, which are essentially backward-looking.”
The IASB chair was keynote speaker at the conference at St John’s College, organised by the Centre for Financial Reporting & Accountability at Cambridge Judge, along with partners the Cambridge Institute for Sustainability Leadership, ICAEW, and the University of Zurich. He was introduced by Alan Jagolinzer, Professor of Financial Accounting at Cambridge Judge and Director of the Centre for Financial Reporting & Accountability.
Hans Hoogervorst told the conference that there are “simply too many standards and initiatives” in sustainability reporting, and this leads to confusion among companies and users of such information.
“We should not have exaggerated expectations about sustainability reporting as an agent for change,” he said. “Let us not forget that full transparency did little to curb excess in corporate remuneration. Equally, we should not expect sustainability reporting to be very effective in inducing companies to prioritise planet over profit.
“Greenwashing is rampant. When news of the VW emissions scandal broke, VW was leading the Dow Jones sustainability index’s automotive sector.”
“Sustainability reporting requirements cannot get politicians off the hook in terms of the need for credible climate-change policies. It is good that the G20 is promoting climate-related disclosure; it would be a thousand times better if they could agree on the introduction of a kerosene tax.”
The conference looked at “frameworks, risks, implementation and opportunities” related to climate-related financial reporting. Other speakers and moderators included representatives of the Task Force for Climate Related Financial Disclosure, Financial Reporting Council, Financial Conduct Authority, McKinsey, Standard Chartered Bank, Zurich Insurance, the Cambridge Conservation Initiative, major accounting firms, and two non-financial disclosure standards boards.
This conference was the first of a series of Critical Issues in Accounting conferences, which form an integral part of the Master of Accounting programme.