ISSB standards provide a ‘real purpose’ for young people to join accountancy profession
July 13, 2023
The standards will become effective for periods commencing on or after 1 January 2024
The issuance of the new IFRS Sustainability Disclosure Standards could spark an interest from younger generations to enter the accountancy profession, according to Dr Nigel Sleigh-Johnson, director of audit and corporate reporting at the Institute of Chartered Accountants in England and Wales (ICAEW).
In June 2023, the International Sustainability Standards Board (ISSB) published its first two standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
The standards aim to assert a global reporting baseline and fulfil the information requirements of investors when evaluating overall enterprise value.
“I think this will draw attention to the fact that accountants play a really major role in society, across the whole of the economy, in promoting good governance and trusted numbers,” says Sleigh-Johnson.
“Involvement in sustainability and its reporting does provide a very clear purpose for a greater number of younger people to get involved in the accountancy profession.”
In the UK and Republic of Ireland, there was a 2.1% decline in the growth of students pursuing accountancy in 2019-20, with an overall decline of 2.2% from 2016 to 2020, according to a recent FRC report.
If firms present their roles in a persuasive way, then it will mean those who did not view accountancy as a fulfilling and socially responsible career may change their opinions, states Sleigh-Johnson.
“The ISSB’s goal is to supply a widely-applied and high-quality global baseline and Sleigh-Johnson says that, while it is a hugely exciting prospect, it is a very challenging task to achieve this goal.”
ISSB motivated to solve ‘alphabet soup’
The complexities of ESG reporting has been referred to as an alphabet soup due to the various voluntary reporting frameworks available.
The aim of becoming the global baseline has resulted in the ISSB consolidating a number of existing standard setters such as the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF).
While this is “great progress” in distilling this complexity, the risks of nations adopting their own version of the standards still remain, Sleigh-Johnson argues.
“If only some jurisdictions adopt ISSB standards, you’re going to see a lot of complexity still, as will be the case if the outcome is different versions of the ISSB standards around the world as countries choose to amend them, as they would have the legal right to do,.”
He also suggests that, with the possibility of the US and Europe not adopting the standards, it is essential that the UK takes a leadership position in encouraging adoption in other jurisdictions.
“Otherwise, there’ll be a continued use of other standards and frameworks, nationally, regionally, globally, and we’ll still have something of an alphabet soup.”
This view is echoed by Veronica Poole, Deloitte Global IFRS and corporate reporting leader, who says regulators should keep the objective of a global baseline in mind.
“Alignment and interoperability are essential to avoid regulatory fragmentation. Fragmentation can create barriers to comparability, undermine the utility of sustainability information in decision-making, and lead to complex and extensive compliance exercises which could divert resources and investment from actions that support the achievement of climate objectives and sustainable development.”
Accountancy profession in a ‘great position’
While there is a variety of sustainability assurance providers available, Sleigh-Johnson believes accountants are placed very well to be a large player in the market.
“Chartered accountants are subject to strict ethical rules and are very aware of the need to be independent in various circumstances.
“They also have the skills and insights and professionalism needed, and auditors often have an intimate knowledge of the company seeking assurance.”
Helen Brand, chief executive at ACCA, agrees with Sleigh-Johnson, and said the accountancy industry “has a hugely important part to play” in driving sustainability efforts worldwide.
“Global standards are a key part of that picture, and we look forward to playing our role in driving their success,” she said.
[Accountancy Age]
