12. Non-financial Reporting in Practice Flashcards
What is the link between sustainability reporting and sustainable development?
Sustainability reporting communicates information about an entity’s sustainability activities and approach.
Thus better reporting will lead to better sustainable development as sustainable development acknowledges that we need to meet the needs of now without compromising the ability of future generations to meet their needs.
What are the key types of environmental issues that businesses need to consider?
The key environmental issues facing businesses today include:
* Climate Change
* Resource Depletion and Sustainable Sourcing
* Embracing the Circular Economy - minimising waste and pollution
* Biodiversity Conservation
How do companies report the impact of environmental issues on the business and the impact of the business on the environment?
via Strategic report in the UK. Elsewhere they use EU SDS or GRI etc
What disclosures are required in reporting on environmental issues?
All UK companies (apart from small companies) must produce a strategic report. This is a requirement of the Companies Act 2006.
Strategic report must include information relating to environmental matters including The impact of the entity’s business on the environment, to the extent necessary for an understanding of the development, performance or position and impact of an entity’s activity.
What are the key social issues that businesses need to consider?
The key social issues facing businesses should consider:
* Diversity and Inclusion
* Equal Opportunity and Fair Wages
* Work-Life Balance and Wellbeing
* Ethical Supply Chain Practices
* Community Engagement and Philanthropy
How do companies report the impact of social issues on the business and the impact of the business on society?
In their annual reports via following guidance from UK FRC, GRI etc.
Guidelines from GRI include:
* what areas might be relevant to their business, ie which topics are likely to convey the most
meaningful information for a particular business
* what disclosures should be reported
What disclosures are required in reporting on social issues?
There is FRC guidance to help directors prepare the disclosures in the Strategic Report. This must include information on:
* the entity’s workforce
* issues relating to social responsibility and relations with the community
* human rights issues
* for Public Interest Entities: anti-corruption and anti-bribery matters
What is greenwashing?
Greenwashing involves making exaggerated, misleading and/or unsubstantiated claims about the sustainability of products or services.
How can the ICAS Code of Ethics be used to resolve ethical issues that might arise in a reporting context?
The ICAS Ethical principle of integrity states that an accountant cannot be associated with misleading information and thus helps reporting keep balanced and true and not mislead users of the FS when it comes to the sustainability of the entity.
What are common ethical issues related to non-financial reporting?
- Directors have some discretion in choosing what to report and how to report it and thus may not be fully transparent
- Accountants are required to use judgment in presenting these issues and thus must act in an ethical manner.
Explain mitigation, adaptation and finance that is detailed in the Paris Agreement
- Mitigation refers to avoiding or reducing activities that cause further climate change, specifically to limit the increase in the global average temperature.
- Adaptation refers to increasing the ability to adapt to the adverse impacts of climate change.
- Financing refers to providing finance for activities consistent with mitigation and adaptation.
What is the Scottish net zero date?
2045
