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.

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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

Sustainability and Sustainable Business

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What is Sustainability?

Image – Ethical Corporation

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Green Growth Indicators

The 3RsReduceReuseRecycle

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Davos 2015 – The Circular Economy

Cradle to Cradle

Endless Resourcefulness

Waste-less Supply Chains

Endless is More

William McDonough - Moderator

New Term

s

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Redesigning with the whole lifecycle in mind – Levi Strauss & Co.

Paul Dillinger, Head of Global Product Innovation

SustainableBrands.com

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Life Cycle of a Pair of Levi Jeans

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Puma– Monetizing its Impacts

Environmental P&L by Supplier

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More than Green Initiatives

“CORPORATE SUSTAINABILITY IS A COMPANY’S DELIVERY OF LONG-TERM VALUE IN FINANCIAL, ENVIRONMENTAL, SOCIAL AND ETHICAL TERMS.”

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5 Things Sustainable Businesses Do

1.Principled BusinessHuman rightsLaborEnvironment Anti Corruption

2.Strengthening Society

3.Leadership Commitment

4.Reporting to Stakeholders

5.Local Action

Sustainability Reporting Frameworks

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Sustainability Accounting and Reporting

Triple

Bottom Line

• Economic Viability• Social Responsibility• Environmental

Responsibility

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Major Sustainability Frameworks

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Data and Reporting Considerations

• Relevant• Consistent• Comparable• Clear and

understandable• Inter-connected • Forward-looking

Data

• Materiality• Reporting

boundary• Reporting period• Faithful

representation• Assurance

Reporting

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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”

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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

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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

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GRI – Scoping Decision

Core

Essential elements -

DMA

+ One indicator for all material

Aspects

Comprehensive

Additional Disclosures

+ All indicators for all material

Aspects

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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

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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

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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

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Key Concepts of Integrated Reporting

The creation of value The use of “capitals” The definition of the organization’s

business model Integrated thinking

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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

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Traditional Financial Statement Model

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Integrated Reporting Model

International Integrated Reporting Committee

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Integrated Report Content Elements

Organizational overview and external environment

Governance

Business model

Risks and opportunities

Strategy and resource allocation

Performance

Outlook

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IIRC Vision Integrated Thinking

Integrated Reporting

Capital Allocation

Financial Stability

Sustainability

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What companies are doing

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Assurance Report

Sustainability Accounting and Assurance Standards

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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

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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

Developing the future accountant

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What do employers need?

Pathways Commission

Education

Old School New School

Do you want better insight and decision making?On completion of the CGMA learning program

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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

Questions?

Thank You

CGMA. orgkwitt@aicpa.org