One of CPA Canada’s less adroit recent moments was as follows:
- CPA Canada is deeply saddened by the passing of Her Majesty the Queen. Her grace and leadership inspired many in Britain and beyond. Our organization is a participant in the Accounting for Sustainability (A4S) initiative, and we join our colleagues in sending our deepest condolences to our Founder, His Majesty the King, and members of the Royal family at this sad time.
The first part of the message is just conventional platitude, but still of a kind that a rational, forward-looking Canadian organization should have been able to avoid. The second part is rather more damagingly revealing. A4S, its website reminds us, “was established by HM King Charles III in 2004, when he was The Prince of Wales, ‘to help ensure that we are not battling to meet 21st century challenges with, at best, 20th century decision making and reporting systems.’” It goes on:
- A4S aims to inspire action by finance leaders to drive a fundamental shift towards resilient business models and a sustainable economy. To do this, A4S has three core aims that underpin everything we do:
- Inspire finance leaders to adopt sustainable and resilient business models
- Transform financial decision making to enable an integrated approach, reflective of the opportunities and risks posed by environmental and social issues
- Scale up action across the global finance and accounting community
But whatever labels you might stick on the vastly prolonged and expensive spectacle that followed the death of the Queen, sustainability-friendly wouldn’t be among them, whether measured by the specific resources it consumed, or even more insidiously by the damaging distraction it provided from Britain’s profound and urgent energy-related and broader economic problems. It’s absurd to think that action on “21st century challenges” can possibly by achieved through aligning with the British Monarchy, given the tangled roots of its very existence and privilege, the distorting impact of the media and cultural attention it attracts, and the vast wealth controlled by its members. It’s a revealing notion though, in embodying the abiding myth that a sustainable economy can be attained while leaving the existing distribution of wealth and power largely unimpeded (the notion that the coronation still to come might take place on a “low carbon” basis can hardly be taken seriously).
CPA Canada was on safer and more productive ground with its recent publication A Closer Look at the GHG Protocol: Observations and Implications for Standards Setters and Regulators. As we summarized here, the most commonly cited standard for measuring greenhouse gas emissions is the GHG Protocol Corporate Standard first published in 2001 and periodically updated since then. It defines three scopes of GHG emissions from the perspective of the reporting entity: Scope 1 GHG emissions are direct emissions from owned or controlled sources; Scope 2 GHG emissions are indirect emissions from the generation of purchased energy; Scope 3 GHG emissions are all indirect emissions not included in Scope 2 that occur in the value chain of the reporting entity, including both upstream and downstream emissions. Scope 3 emissions are further divided into 15 categories, eight of which are upstream, and seven of which are downstream from the reporting entity. The ISSB’s exposure draft on climate-related disclosures proposed that entities disclose information about all three categories; as we summarized, many respondents thought this went too far for Scope 3 emissions in particular.
The CPA Canada publication, co-written with the Institute for Sustainable Finance, identified various areas in which the GHG Protocol is (among other things) insufficiently transparent and potentially confusing, possibly out of date, lacking in the capacity to generate comparability, misaligned with other relevant standards and guidance, and challenging from an assurance perspective. It concludes overall that “more work should be done on the GHG Protocol standards and guidance at a global level to ensure that they meet evolving stakeholder needs and expectations.” It follows that CPA Canada’s comment letter to the ISSB expressed the following view:
- …we consistently heard about the difficulty in gathering Scope 3 emissions data and concerns over the reliability and usefulness of this information. Significant diversity in Scope 3 measurement and reporting practices that are allowed in applying the GHG Protocol’s standards limits the usefulness of such information for investors. As a result, we do not believe that Scope 3 disclosures should be required at this time.
- … We encourage the ISSB to conduct further analysis on the GHG Protocol and work closely with the World Resources Institute and World Business Council for Sustainable Development to determine how the GHG Protocol’s standards and accompanying guidance may need to be updated and enhanced to support the disclosure of audited GHG emissions data in a regulatory filing.
As I’ve said before, notwithstanding those concerns, and noting that any mass adoption is several years away at best, my own view is that the ISSB is best advised to set a high bar, allowing local regulators to grant issuer-specific or broader exemptions from specific aspects of the requirements if they see fit. But of course, I could be wrong. Probably not about the monarchy though…
The opinions expressed are solely those of the author