Sustainable Accounting and Finance Conference
Supported by a Connection Grant from the Social Sciences and Humanities Research Council of Canada, Sprott hosted its first-ever Accounting and Finance Sustainability Conference in 2022 to bridge gaps and share knowledge—new insights and improved outcomes emerged.
With the growing pressures for public and private industry to be both accountable and transparent with their social and environmental impact, there is an emerging response by experts in both industry and academia to rise to the challenge. Leanne Keddie, Assistant Professor, Accounting, Sprott School of Business, Carleton University, is certainly one of them who is making major leaps toward momentous change. Leanne has been an advocate for environmental issues for the majority of her career, championing sustainable accounting practices through her robust research in the area.
Winning a 2021 SSHRC Connection Grant with her Sprott colleagues, Kate Ruff, Associate Professor, Accounting, and Isaac Otchere, Professor, Finance, Leanne co-led the Sustainable Accounting and Finance Conference held April 27 and 28, 2022 at Carleton University. The event was a tremendous success, even with the challenges of hosting during the pandemic, due to the collaborative efforts among integral and committed Sprott and Carleton support staff, including Tessa Hebb, a leader in sustainable finance and member of the School of Public Policy and Administration. Bringing together over 120 leading industry and academic experts, the conference fostered substantive knowledge sharing and new awareness around effective and impactful reporting practices in the sustainable finance and accounting spheres.
An important topic that the event aimed to tackle was the problematic gap between sustainable finance and sustainable accounting analyses and reporting practices. This gap exists because while sustainable accounting standards exist, many organizations are just learning how to implement and measure them. Moreover, Environmental, Social, and Governance (ESG) ratings, used by many in the finance industry as metrics for stakeholder long-term investment decision-making are problematic because the underlying sustainability accounting information that contributes to the rating is difficult to measure and not as reliable as traditional accounting numbers.
“This means that a company’s true sustainability performance is difficult to accurately gauge. Because ESG disclosures are voluntary, businesses don’t have to divulge anything they don’t want to, and there are few consequences for grand, baseless claims or nondisclosure,” notes Leanne. “Right now, the current measurement systems are inconsistent and incomparable for investors and are often missing information stakeholders are interested in. Unlike the financial information for public companies that we can compare and rely upon, we do not have the same reliability (yet) for sustainability accounting information.”
How to bridge that problematic gap then? Sustainable finance and accounting professionals need to work together and gain the expertise needed to take the sustainability accounting standards, and the measures they report, and use them effectively to mitigate misinformation and improve efficacy of investor decision-making around environmental and social impact.
The establishment of the International Sustainability Standards Board has been a meaningful change to developing a common approach to reporting and disclosure; one of the critical tools underlying this is the Task Force on Climate-related Financial Disclosure (TCFD) framework—the tool that proved to be a major point of discussion at the conference. The TCFD brings forward four key elements under its framework: Governance, risk management, strategies, and metrics and targets. The goal of the reporting is to help stakeholders and decision-makers understand how organizations are responding to and disclosing information about climate-related risks and opportunities—thus providing the expertise needed to bridge that information gap. What is promising is that the TCFD framework allows both public and private organizations to understand their climate risks and opportunities and communicate them in ways that are comparable, reliable, and consistent to stakeholders so there is value and trust in the information.
“Climate is a priority for the City and stakeholders want to know we are addressing the climate risks we face and beyond that, continue to work to make a positive impact on the environment. Our green bond program, for example, has been very successful in the sustainable finance market, but I wanted to gain more knowledge of sustainable accounting because it’s important that we report sustainability information holistically.”
James Sabourin, CPA; Financial Planner, City of Ottawa
There are no sustainability standards for public sector entities yet, so for the City of Ottawa, the TCFD was a logical next step for two reasons: To show their climate leadership and to be proactive in sustainable reporting as they believe future standards are coming. It was the tool James needed to bridge that information gap between sustainable finance disclosures and sustainable accounting. “That was the unexpected magic—it’s not just the numbers looking back but looking at future risks and understanding how to effectively prepare for the future. The TCFD framework will help us respond to risks and be more cost effective,” noted James. The first integration of the TCFD into the City of Ottawa’s 2022 Annual Report was an exciting and impactful step for both James and the City’s management.
Sustainable finance and accounting are the next frontiers for business; projected market opportunities will reach $12T by 2030, proving it is no longer just an optics game. Both private and public sectors need to show their aspirations, responsibility, and accountability to corporate and social responsibility by prioritizing sustainable and climate-mitigating initiatives.
For Leanne and her colleagues, the conference was a way to inspire and create impact. The event proved just that, bringing together highly motivated experts from government, business, and academia alike, all driven to be agents of change. The work done by the City of Ottawa is one notable example of how, through collaborative work to share knowledge and bridge gaps, one can make a positive impact toward a sustainable future.