Responding to the UK Government’s updated Green Finance Strategy (GFS) Mobilising Green Investment, A4S has stated that it welcomes the focus on adoption of global standards, transition plans and nature, but noted the intention to incorporate impact reporting – signalled in the original launch of the Sustainable Reporting Requirements (SDR) and seen as key by asset owners – was absent in the update
Global alignment on sustainability reporting is vital, says A4S. There is a clear signal to adopt the incoming IFRS Sustainability Disclosure Standards within the strategy, which has been set as ‘subject to review’ when the standards are announced in the coming months. The GFS also underlines the importance for the TNFD recommendations to align with those being developed by the International Sustainability Standards Board (ISSB), critical to achieving common global standards.
A4S has further indicated that it welcomes a focus on transition plans and scope 3 data, stating that this aligns with their work with CFO’s and the wider finance community in highlighting these as essential to implementing net zero goals, but also presenting some of the biggest challenges. The integrity of transition finance is, according to A4S, critical to avoid greenwashing and drive ‘real’ action.
In last year’s A4S Finance Leaders’ Sustainability Barometer, A4S found that there is a gap between sustainability ambitions and the work needed to make them a reality. Less than half of the CFOs surveyed believed their finance team had the skills and competencies for supporting the achievement of their corporate sustainability objectives.
To help bridge this gap, A4S has worked with Group CFOs from large organisations across the world to develop the A4S Academy, which is a programme that empowers and equips senior finance professionals to develop and deliver an implementation plan to embed sustainability within their organisations.
In the initial Sustainable Reporting Requirements (SDR) announcement (October 2021), the UK Government underlined that their intention to ensure reporting for customers as well as investors and signalled an intent to include reporting on impact. However, this appears to have disappeared from the updated statement. It is critical that reporting on impact is part of the planned reporting review referenced in the GFS. An organisation’s impact on the world can quickly ‘bite back’ to hit financial performance, so this needs to be addressed in an organisation’s reports to provide important information to investors, customers, consumers, stakeholders and the public at large.
Greater clarity is needed on which parts of the economy will be covered. Information on roll out will be essential so that each sector can be prepared. This includes public sector reporting, as well as different financial actors such as pension funds. It is only through a whole economy decarbonisation that any individual organisation will be able to reach net zero without reliance on offsetting.
Finally, a greater focus on a joined up approach is welcome, with the incorporation of nature, adaptation and a just transition within the update. This echoes the inclusion of nature and social considerations within the Transition Plan Taskforce’s recommendations. A holistic approach is essential, as nature, climate and society cannot be thought of in isolation. The climate crisis cannot be solved without reversing nature loss, neither can environmental outcomes be achieved without thriving communities.