Responding to COVID-19: insight, support and guidance

Sustainability reporting: Make mistakes now to protect us for the future

15-02-22

By Khalid Hamid, Director of International, CIPFA

Though the song and dance of COP26 is long over, the show must go on for sustainability reporting. Despite the fact that this practice is in its infancy in the public sector, one of the clear rising stars in the world of sustainability reporting is environmental audit.

When an organisation claims to represent public interests, accountability becomes even more important. CIPFA's recent research into sustainability reporting has shown how audit can play an essential part in improving organisations' environmental performance and data transparency.

The impartial oversight and assurance that an audit can provide has always been relevant to public sector organisations. Financial transactions are often spotlighted as a key area in need of transparency, but oversight is required throughout all areas of transaction and asset management for public bodies.

Work needs to be done on the current system as the field and scope of environmental reporting develops. Traditional income statements and balance sheets used in financial reporting often only provide an indication of inputs (such as the cost of salaries). This leads to outputs and outcomes being cast aside, creating problems for benchmarking environmental performance in terms of real-world impact.

This means non-financial information reporting, especially related to sustainability, is usually done on an ad-hoc basis. As it's still early days, common standards don't yet exist, meaning organisations can cherry pick the data they report. Without all the relevant information on a company or authority's assets and liabilities, we can't see the whole scale of its climate impact.

A common practice framework could foster consistency in this process and reduce the number of misleading reports. A standardised system would increase the credibility of the useful information which organisations do release. It's important to remember that making mistakes will be part of the journey to implement consistent practices and standards. Reporting, even of insufficient information, is a step we should encourage today so we don't run off course, potentially past the point of no return, in the future.

We must work as a community to address the transparency of information in sustainability reporting and auditing will have a central part in this process. Regular auditing is the first steppingstone to encouraging honesty and improving public sustainability reporting. With this in mind, we also mustn't demand too much too quickly. Over expectations set us all up for failure, and the environment is one area where we won't get a second chance.