On February 23rd and 24th, the Contemporary Issues in Sustainability Reporting Symposium brought together thought leaders from academia and business to explore and discuss contemporary issues in sustainability reporting.
The symposium was co-organized by Professors Liz Demers and Mingyue Zhang on behalf of the CPA Ontario Centre for Sustainability and Performance Management (CSPM) and held at The School of Accounting and Finance (SAF), University of Waterloo.
Liz Demers, conference co-organizer and the Deloitte Professor at SAF, chose to include both academics and industry practitioners because “it’s critical that academics and practitioners converse on emerging issues in this space. We academics appreciate their perspectives and insights from practice, but we also have a lot to share from the large sample research that we do that can help to inform practicing sustainability professionals”
Dr. Shirley Lu, Assistant Professor at Harvard Business School, presented her practical and insightful research related to corporate carbon emissions targets. She finds that there is positive media sentiment about the firms when they announce carbon reduction targets. Although many firms ultimately fail to live up to their targets, there is no apparent stock market reaction, media coverage or environmental ratings implications when this happens, highlighting the need for greater transparency and accountability.
During a keynote presentation from Zacharias Sautner from the University of Zurich, Sautner took a deep dive into the methodology and lack of transparency in the Environmental, Social, and Governance (ESG) ratings industry, and discussed potential challenges and opportunities when relying on ESG ratings to assess a firm’s sustainability performance.
Interesting insights were given into the intersectionality of sustainability and business and how the two do not have to be mutually exclusive. As demonstrated by Noel Davison from Tony’s Chocolonely, it’s possible for a business to operate sustainably in a socially responsible way while still remaining profitable.
Davison's presentation shed light on exploitation and child labour within the cocoa industry and the little progress that has been made. However, initiatives like Tony's three-step plan, which focuses on traceable cocoa beans, supporting farmers and combating child labour, broadly encompasses the holistic purpose of ESG ratings: Considering the environmental, social and governance impacts of businesses while remaining profitable.
Practitioners also discussed how ESG information disclosed by firms and ESG ratings are used in their decision-making process. It was noted that although the ESG market is flawed and lacks transparency, as well as standardized metrics — which leads to inconsistent evaluation and potential greenwashing by companies — ratings provide valuable insights and highlight areas for further investigation. It was emphasized that more reliable data is needed in order to reward companies for adopting sustainable practices and for more innovative products to be developed; such as climate action funds.
Additionally, the significance of conducting materiality assessments and meeting international standards were underscored as two critical factors in promoting corporate sustainability and aiding in investor confidence.
During the practitioner panel discussion on Corporate Sustainability Practices and Disclosures, industry experts emphasized the importance of transparency in disclosing material climate risks and mitigation plans for investors.
Pictured left to right: Liz Demers, moderator, Jon Gilligan, Liberty Gold, Alyson Slater, Manulife Investment Management, Kyra Bell-Pasht, Investors for Paris Compliance, Alison Joutsi, ESG Global Advisors.
Keynote speaker Richard Sloan, Professor of accounting, finance and business economics at the University of Southern California showcased how to bring sustainability into the classroom with a view to educating the next generation to get them prepared for this new area of practice.
Jeff Hales, ISSB Member and Chair in Global Sustainability Leadership, Professor of Accounting and Executive Director of the Global Sustainability Leadership Institute at the University of Texas at Austin, reiterated the complexity and importance of sustainability reporting as well as the history and recent development of sustainability reporting standards.
While various organizations have developed sustainability reporting standards, the multiple frameworks and voluntary nature of sustainability reporting poses challenges for both preparers and users of corporate sustainability disclosures. Some standards have recently become mandatory in Europe, while Canada and other jurisdictions are expected to mandate sustainability reporting in the future, reflecting a global shift towards sustainability in business practices.
The key takeaways from the symposium were clear:
- There is tremendous potential for accountants and performance measurement experts to contribute to a sustainable future.
- There are many risks and opportunities in the ESG market.
- Sustainability reporting is often subjective, complex and requires more regulation.
Overall, the symposium highlighted the need for greater transparency, accountability and alignment between financial and sustainability reporting to effectively address systemic challenges and promote sustainable business practices.
Learn more about the CPA Ontario Centre for Sustainability Reporting and Performance Management and the work they do to create a more sustainable future.