Participants of the Corporate Reporting Dialogue – an initiative bringing together the major standard setters and framework providers globally – announced the findings of their global market consultation on building better alignment via a webinar this week.
Through an online survey and a series of global roundtables held in 11 countries – Australia, Colombia, France, Germany, Italy, Japan, Malaysia, Poland, South Africa, US and UK – from March until June 2019, around 250 stakeholders, including businesses and investors, were consulted on how to support effective disclosures, addressing the Task Force for Climate-related Financial Disclosures (TCFD) recommendations, and identifying how non-financial metrics relate to financial outcomes and how this can be integrated in mainstream reports.
The consultation findings reaffirmed an urgent call from the market to unravel and solve inconsistencies in metrics for climate change reporting. Further consultation findings included calls for the relationships, interconnections and alignment between participants’ frameworks and standards to be better articulated to the market as well as confusion over the differing definitions of materiality between the frameworks and standards.
Stakeholders also asked for better sector-specific reporting and a greater focus on SMEs. There was wide concern regarding the financial impact of ESG risks and opportunities, with calls for more comprehensive and financially aligned indicators.
Delegates showed clear appreciation for the importance of the TCFD recommendations, however many struggled to report against the recommendations, especially scenario analysis.
On the wider reporting landscape, many stakeholders found the proliferation of indexes, questionnaires, surveys and frameworks for the disclosure of ESG information and data overwhelming. Voluntary frameworks and standards were also viewed as a temporary fix to problems that require a more comprehensive regulatory solution.
Information gathered from the consultation period will inform an initial report due for publication in September 2019, which will also show the linkages of the TCFD recommendations with the respective frameworks and the commonalities between the frameworks.
Regarding future work, the consultation will inform potential areas for the Corporate Reporting Dialogue participants, including CDP, the Climate Disclosure Standards Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB), to focus on going forwards as they drive better alignment.
The webinar recording is available to view on the Corporate Reporting Dialogue website.