ESG knowledge gap must be bridged quickly by accountants ahead of IFRS Standards

Accountants must quickly close an existing ESG knowledge gap to be well-positioned to respond to the IFRS Sustainability Disclosure standards, says Jessica Fries, executive chair for Accounting for Sustainability (A4S).   

A4S recently announced its collaboration with the International Financial Reporting Standards (IFRS) foundation to build capacity in finance teams globally and equip them to provide high-quality sustainability reporting.   

The partnership will look to supply professionals with the knowledge to understand the upcoming reporting requirements, with the first standards to be issued by the end of June. 

The first two standards, named IFRS S1 and IFRS S2 will look to focus on climate-related reporting. 

Fries said: “our education activities, including our A4S Academy and dedicated reporting workshops, are designed to upskill and empower finance and accounting professionals.” 

“Working with the International Sustainability Standards Board (ISSB), A4S will be supporting capacity building to enable effective, efficient, and impactful sustainability reporting.“  

A4S’s extensive global networks with the CFO, investor and wider finance and accounting community will aim play a key role in increasing awareness and addressing practical obstacles that companies encounter when adopting the standards.  

In the first instance, adoption of the IFRS standards in the first instance will be voluntary, but a number of jurisdictions around the globe are considering making it mandatory.       

“Through this partnership, A4S will use our extensive experience working within the finance and accounting community to accelerate the adoption and implementation of the IFRS Sustainability Disclosure Standards, so that the whole community can focus on delivering ambitious targets and action,” Fries adds.   

ESG knowledge gap   

Fries says the knowledge gap within accounting and finance professionals is not just related to the standards but also the comprehension of social and environmental issues.    

 A4S Finance Leaders’ Sustainability Barometer in 2022 found a gap between sustainability ambitions and the work needed to make them a reality. 

“Less than half of the CFOs surveyed believed their finance team had the skills and competencies for supporting the achievement of their corporate sustainability objectives,” Fries adds.   

IFRS Global baseline  

The ISSB was created by the IFRS at COP26 to deliver a global baseline of sustainability disclosures to meet capital market needs.  

Jingdong Hua, Vice Chair of the ISSB said it is critical to “ensure that the finance and accounting profession is ready to support their implementation” of the standards.    

Fries echoes this view and believes it is vital that companies get started and assess their readiness as soon as possible.    

Finance teams will be critical to ensure robust systems and processes are established so investors will be satisfied, notes Fries.