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Kenneth Witt, CPA, CGMAAICPA Technical Manager, Management Accounting
More than “Green Initiatives”:
Developing the future of sustainability accounting and reporting Beta Alpha Psi
Dallas Regional Meeting March 7, 2014
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Kenneth W. Witt, CPA, CGMA Technical Manager, Management Accounting in the Business
Industry and Government team at the AICPA.
Staff liaison to the Business & Industry Executive Committee which provides insight and guidance on professional issues and trends
Involved in thought leadership and professional development activities for the Chartered Global Management Accountant (CGMA) designation.
Managed the development of a portfolio of guidelines on strategy, risk and performance management topics
Launched the AICPA Sustainability Initiative
Created and manages the AICPA Business & Industry Economic Outlook Survey
Member of the task force for the COSO Internal Control over Financial Reporting – Guidance for Smaller Public Companies
BBA in accounting from the University of Iowa; Started career with Touche Ross & Co.
333
Agenda
Sustainability and sustainable business
Sustainability accounting and reportingClimate Disclosure Standards Board (CDSB)Global Reporting Initiative (GRI) Integrated Reporting (IR)
Sustainability Accounting and AssuranceSustainability Accounting Standards Board (SASB)Sustainability assurance standards
777
Davos 2015 – The Circular Economy
Cradle to Cradle
Endless Resourcefulness
Waste-less Supply Chains
Endless is More
William McDonough - Moderator
New Term
s
888
Redesigning with the whole lifecycle in mind – Levi Strauss & Co.
Paul Dillinger, Head of Global Product Innovation
SustainableBrands.com
111111
More than Green Initiatives
“CORPORATE SUSTAINABILITY IS A COMPANY’S DELIVERY OF LONG-TERM VALUE IN FINANCIAL, ENVIRONMENTAL, SOCIAL AND ETHICAL TERMS.”
121212
5 Things Sustainable Businesses Do
1.Principled BusinessHuman rightsLaborEnvironment Anti Corruption
2.Strengthening Society
3.Leadership Commitment
4.Reporting to Stakeholders
5.Local Action
141414
Sustainability Accounting and Reporting
Triple
Bottom Line
• Economic Viability• Social Responsibility• Environmental
Responsibility
161616
Data and Reporting Considerations
• Relevant• Consistent• Comparable• Clear and
understandable• Inter-connected • Forward-looking
Data
• Materiality• Reporting
boundary• Reporting period• Faithful
representation• Assurance
Reporting
171717
Climate Disclosure Standards Board
CDSB is an international consortium of business and environmental organizations committed to the integration of climate change-related information into mainstream corporate reporting.
“CDSB connects corporate non-financial reporting approaches”
181818
Global Reporting Initiative – New GRI G4 Guidelines
Designed to be a universally recognized standard
Compatible with other frameworks including Integrated Reporting
G4 Focus on -MaterialityKey stakeholder viewsLink between business strategy, operations and sustainability impacts
191919
GRI Content – Aspects and Boundaries
Boundaries
Assess whether inside or outside of organization
Own operations, suppliers, distributors, etc.
AspectsSignificant economic,
environmental and social impacts, that
Substantively influence assessments and decisions
of stakeholders
202020
GRI – Types of disclosures
• Overall context• Reporting process• Seven types of GSDs
General Standard
Disclosures
• Why material• How managed• How evaluated
Management Approach
(DMA)
• Comparable information• Primarily quantitative • Indicators in G4
Indicators
212121
GRI – Scoping Decision
Core
Essential elements -
DMA
+ One indicator for all material
Aspects
Comprehensive
Additional Disclosures
+ All indicators for all material
Aspects
222222
G4 Economic and Environmental Aspects
Economic Aspects• Performance• Market Presence• Indirect Impacts• Procurement Practices
Environmental Aspects
• Materials• Energy• Water• Effluents and Waste• Biodiversity • Emissions• Other
232323
G4 Social- Sub-categories and Aspects
Labor Practices and Decent Work • Labor relations• Occupational health and safety• Diversity and equal opportunity
Human Rights• Child labor• Freedom of association and collective bargaining• Non-discrimination
Society• Local communities• Anti-corruption• Compliance
Product Responsibility• Customer health and safety• Privacy • Product and service labeling
242424
What is Integrated Reporting
The primary purpose of an integrated report is to
explain to providers of financial capital how an
organization creates value over time.
International Integrated Reporting Committee
252525
Key Concepts of Integrated Reporting
The creation of value The use of “capitals” The definition of the organization’s
business model Integrated thinking
262626
What is Integrated Thinking?
Integrated thinking begins with a thorough understanding of the
business model within the context of the external environment.
This understanding creates a more robust basis for identifying risks and
opportunities.
Integrated thinking helps companies develop a better understanding of
financial and non-financial factors and how they impact their businesses.
IIRC and PwC
292929
Integrated Report Content Elements
Organizational overview and external environment
Governance
Business model
Risks and opportunities
Strategy and resource allocation
Performance
Outlook
303030
IIRC Vision Integrated Thinking
Integrated Reporting
Capital Allocation
Financial Stability
Sustainability
343434
Sustainability Assurance Standards
AA1000, Assurance Standard (2008) - an open-source set of principles that focuses on addressing CSR issues developed by AccountAbility
ISAE 3000 (2003) - Assurance Engagements Other Than Audits or Reviews of Historical Financial Information, a set of basic principles and procedures for nonfinancial assurance engagements
ISAE 3410 (2012) - Assurance Engagements on Greenhouse Gas Statements
AICPA SOP 13-1 (2013) - Attest Engagements on Greenhouse Gas Emissions Information
353535
Sustainability Accounting Standards Board (SASB)
The Sustainability Accounting Standards Board (SASB) provides sustainability accounting standards for use by publicly-listed corporations in the U.S. in disclosing material sustainability issues for the benefit of investors and the public.
SASB Unique focus:U.S. public equities Industry-specific issues Disclosure of minimum performance standards
393939
The CGMA program covers the following competencies
Internal Controls
Risk Evaluation
Performance Measurement
Strategic Financial Risk
Leading Change
Strategy Implementation
Corporate FinanceBusiness Valuation
Mergers & Acquisitions
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