Second edition of IFAC's Sustainability Framework incorporates integrated reporting

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21 Mar, 2011

The Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants (IFAC) has released the second edition of the IFAC Sustainability Framework.

The IFAC Sustainability Framework provides guidance on embedding sustainability into an organisation and can be applied to entities of all sizes and complexities. IFAC considers the accountancy profession and professional accountants as an essential part of ensuring organisations better integrate and account for sustainability.

The second edition of the Framework extends the first edition's theme of integration from a business strategy and operational perspective to that of an integrated reporting perspective. The reporting perspective has been updated to provide guidance on how to improve stakeholder communications, based on sustainability reporting and providing an integrated view of environmental, social, and financial performance. (See also our earlier story on IFAC's report highlighting significant changes to financial reporting.)

An extract from the Framework in relation to financial reporting is outlined below:

How professional accountants and their organizations can facilitate improved reporting

  • Developing a reporting strategy to enable high-quality reporting and disclosure that provides a complete picture of an organization's performance for a range of stakeholders
  • Reflecting sustainability impacts in financial statements, particularly focusing on environmental impacts on assets, liabilities, income, and expenditure [includes a discussion on IFRSs relevant to environmental issues]
  • Narrative reporting for enhanced transparency and closing the reporting gap that occurs when information that is important in running an organization is not captured in financial statements
  • Understanding and reconciling approaches to applying materiality to sustainability reporting
  • Establishing an approach to external assurance and review that adds credibility to an organization's reporting, and provides internal benefits such as helping to improve underlying reporting processes.

The G20 is expected to consider a call for integrated reporting later in the year. IFAC's Sustainability Framework 2.0 can be accessed through the IFAC website. Click for IFAC press release (link to IFAC website).

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