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Dr Lowe’s support for the ISSB is a welcome step towards consistent environmental standards, says CPA Australia.
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RBA Governor backs global standard for sustainability reporting
19 September 2022
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RBA governor Dr Philip Lowe has backed a push to develop international sustainability standards as crucial for Australian business to keep attracting capital.
He said investors would baulk at local businesses if they failed to embrace the global standards, and his comments were quickly welcomed by CPA Australia as a helpful step towards consistency in environmental reporting.
Dr Lowe told a House of Representatives Standing Committee late last week that climate disclosure, with global standards being developed by the ISSB, would soon go hand in hand with availability of capital.
“There are standards being developed internationally. The intention is they sit alongside the international accounting standards,” he said.
“Australia is going to need to find a way to implement those here and I think the government has a role to play there and businesses also have a role to play.
“If we don’t do that we’ll fall behind what international investors expect. So, regardless of whether you think this is a good or a bad thing, the investors want it. If we don’t do it then they will be reluctant to invest in Australian businesses, so it’s important that we keep pace with what’s going on internationally.
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“We’re working with the Council of Financial Regulators and with the government to make sure that happens.”
CPA Australia media chief Dr Jane Rennie said Australia needed cohesive standards on sustainability and that the ISSB is pointing the way.
“We were delighted to hear Dr Lowe highlight the importance of implementing the ISSB standards,” she said.
“CPA Australia agrees with Dr Lowe that without these standards, Australia will fall behind what global investors expect from business disclosures. It’s time for action.”
The ISSB – International Sustainability Standards Board – was set up a year ago in the wake of the COP26 environmental conference to “deliver a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions”.
Dr Rennie said the ISSB would elevate sustainability reporting to the same level of rigour and acceptance as financial reporting.
“Historically, there’s been a spaghetti bowl of global sustainability initiatives, frameworks and institutions. Sustainability reporting has suffered as result, so we all need to get on board to make sure this happens.”
“The ISSB standards will provide transparency for investors by enabling domestic and international consistency and comparability of reporting.”
“We can ensure sustainability and financial reporting frameworks will be consistent, compatible and complimentary by building on existing frameworks and embedding institutional connectivity.”
“Australian organisations are already reporting on sustainability-related issues. These standards would be an additional string in the bow for transparency, pulling together legacy frameworks and providing clarity to reporting.”
However, she said there was a general shortage of accounting professionals and especially those with sustainability expertise.
“There’s a global shortage of accounting professionals, not just those with sustainability capabilities. This may hamper ESG skills development within the profession.”
“The accounting profession is building its capability to measure, report and assure climate risks but much more is required.
“We need to make sure the accounting profession is ready to handle the additional workload of any new standards both in terms of reporting and assurance.”
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