James Barbour CA and Fiona Donnelly CA chart the progress on sustainability in 2024

We are only a quarter of the way through the year, but sustainability-related developments continue to move at pace. Regardless of the results of the many elections happening around the globe in 2024, this will remain a key theme and area of debate for governments. To get up to speed, here’s a summary of just some of the activity in the sustainability reporting and assurance landscape so far this year, as well as a taster of things to come.

January

In January, the International Ethics Standards Board for Accountants issued two important consultations of proposed revisions to its International Code of Ethics for Professional Accountants:

• Proposed International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting

• Using the work of an external expert

The ICAS Ethics Board and Sustainability Panels are considering our response to these revisions. While some of the proposed changes merely highlight that the Code of Ethics already deals with various ethics-related matters connected to the reporting of sustainability-related information, there are also some challenges in this area. For example, a key area of consideration is the independence of sustainability assurance practitioners in relation to entities that fall within the value chain of an assurance entity.

“In a nutshell, we believe that complete decarbonisation is urgently required throughout the economy”

February

In February, ICAS submitted comments to the Global Reporting Initiative (GRI)’s Climate Change exposure draft. The consultation incorporates new and revised disclosures from existing GRI standards – “GRI 305: Emissions” and “GRI 201: Economic performance”. The public comment period has now closed, and we expect the release of the final standard later this year.

With the help of the ICAS Sustainability Panel, we recently updated our sustainability policy positions to add a stance on offsetting. In a nutshell, we believe that complete decarbonisation is urgently required throughout the economy. The clearest way to incentivise that transition and communicate progress is to report gross carbon inventories. We acknowledge that not all emissions can be avoided, so the purchase of carbon credits will likely be required by organisations seeking to achieve a net-zero target. We consider such purchases to be a secondary priority, so maximum resources (both time and funding) should be channelled to decarbonisation activities first.

In the event of offsetting, entities should disclose gross emissions less gross offsets (ie not just the net result). Where offsets are used, we advocate full and transparent disclosure. This includes the policy for using offsets, the extent to which they concern avoidance/removal/storage, the nature of projects involved, whether offsets are verified, and by whom, and so on. 

March

March was a milestone month, with the first modules of the new ICAS syllabus going live. A key aspect of ICAS’ new curriculum is that sustainability matters have been integrated throughout the traditional CA subjects. This means that students who undertake the qualification will have a holistic understanding of all the topics in a CA’s world, including sustainability. For students who want to learn even more about the subject, they have the option to choose Sustainability for Accountants as an elective.

While in early March the US Securities and Exchange Commission finalised its rule on the reporting of sustainability-related information, later in the month several companies and organisations filed various challenges to the disclosure rules, effectively putting their adoption on hold. The impact of this change is uncertain since companies affected by the rule are required to provide the new disclosures in their annual reports and registration statements, beginning with those for the year ending 31 December 2025. Progressive companies are likely to continue with their disclosure plans to address stakeholder needs regardless of the compliance requirements.

The challenges to the rules covered a number of areas of concern, including disappointment at the dilution of content following the backlash towards the original proposal almost two years ago. For example, per the finalised rules now on hold, companies would not have to disclose their Scope 3 greenhouse gas emissions (which for many businesses account for more than 70% of their total carbon footprint), their financial statement disclosure requirements will be less extensive, and they would have more time to implement the disclosures and related assurance requirements. At this stage, the situation – including whether the SEC will need to revise the rules – is unclear.  

April

Last year, ICAS sent out the latest member survey. Through this, members have provided feedback on the sustainability topics in relation to business they think ICAS should prioritise in the next year or two. This feedback is invaluable, and we will be factoring it into sustainability plans and activities for the rest of 2024.

As part of these plans, we're looking forward to ICAS’ second Sustainability Summit, held in Scotland’s capital on 25 April. You can find out more about this event here.

Visit the ICAS sustainability hub for more resources