LONDON (Reuters) - Setting up a new international standards board for sustainability could make it easier for investors to compare climate-friendly companies, a global accounting body said on Wednesday.
The International Financial Reporting Standards (IFRS) Foundation, which sets accounting rules used in over 140 countries, raised the idea in a consultation paper on such standards.
“Calls for standardisation and comparability of reporting on sustainability and climate-change issues continue to grow as these matters become increasingly important to capital markets,” said Erkki Liikanen, chair of the IFRS Foundation Trust.
The consultation will assess whether there is demand for global sustainability standards and whether the IFRS Foundation should play a role in developing them, he added. The public consultation is open until Dec. 31.
The foundation said such a new board could sit under the foundation’s umbrella, but would need sufficient public support to reduce complexity in company reporting and have the right level of funding.
United Nations climate envoy Mark Carney has called for companies to more accurately reflect climate-related risks in their financial accounts.
A commonly applied rulebook could also help stymie ‘greenwashing’, or where firms talk a good game on responding to climate change but fail to follow through with concrete actions.
Investor groups representing more than $103 trillion in assets have called on companies and auditors to follow guidance from the foundation’s accounting standards setting body released last year.
That guidance made clear that factoring climate risks into company accounts is already required within the existing rules, if relevant and material, even though most companies have yet to do so.
The foundation’s announcement on Wednesday signalled a willingness to play a stronger role in creating more coherent and global sustainability standards.
Additional reporting by Simon Jessop; editing by Maiya Keidan and Kim Coghill
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