A group of sustainability accounting academics have told the IFRS Foundation that its recent consultation on the subject has taken an investor-oriented approach that lacks “adequate evidence-based justification” and ignores the UN Sustainable Development Goals (SDGs).
In an open letter published today, the scholars said they are “concerned that there has been little or no engagement” with the vast academic research published on sustainability reporting during the last 30 years.
“Your proposals not only fail to be cognisant of this body of research evidence, but overall will exacerbate the lack of corporate and investor responsiveness to sustainable development issues and accountability thereon.”
It comes on the back of the ongoing consultation launched by the Trustees of the IFRS Foundation, which is debating whether it should play a role beyond setting strictly financial accounting standards.
The consultation seeks views on the creation of a Sustainability Standards Board (SSS), which would operate in parallel to the International Accounting Standards Board (IASB).
The letter authored by Carol Adams, Professor of Accounting at Durham University Business School, stated: “Your proposals not only fail to be cognisant of this body of research evidence, but overall will exacerbate the lack of corporate and investor responsiveness to sustainable development issues and accountability thereon.”
The letter challenges a number of “assumptions” observed in the consultation paper. For example, the academics take issue with the idea that the SSS would reduce the total number of global standard setting bodies.
They also opposed the IFRS Foundation’s view that stakeholders “speak with one mind on the desired outcomes of sustainability reporting”. The academics argued: “They do not. Stakeholder expectations are diverse and sometimes conflicting.”
The letter opposes the investor-centric tone of the consultation, saying there is no evidence that “anything other than an investor-oriented approach to materiality would increase complexity and delay standard adoption.”
The academics said those concerns apply to the recent white paper of the World Economic Forum with the Big Four accountancy firms: Measuring Stakeholder Capitalism. Towards Common Metrics and Consistent Reporting of Sustainable Value Creation.
Adams, who argues that achieving the SDGs must inform reporting practice, told RI:
“The point is that none of these reports are informed by research into what drives corporate change aligned with sustainable development. There are various myths that seem to be perpetuated to support a goal to make things simpler for companies and investors. Yet sustainable development issues are complex and must be considered in decision making.”
A spokesperson for the IFRS Foundation told RI: “This is a public consultation and we welcome all feedback. Whilst we are not discussing individual responses during the consultation period, the Trustees will consider all feedback received and decide upon the next steps in the first quarter of 2021.”