ACCA welcomes the opportunity to respond to the above consultation.
ACCA is a global body for professional accountants, supporting 131,500 members and 362,000 students throughout their careers, and providing services through a network of 82 offices and centres.
ACCA has been actively involved in the unfolding debate on sustainability and corporate social responsibility (CSR) since 1990, helping businesses and organisations realise the growing importance of sustainability to them. In particular, we have promoted transparency and best practice by championing the extension of corporate reporting to include the social and environmental aspects of a business.
Our position is outlined in the policy document published in August 2008: Going Concern? A Sustainability Agenda for Action. We also produce a quarterly e-newsletter covering international climate change news, Accounting & Climate Change. In 2002 ACCA became the first professional body to be awarded the prestigious Queen's Award for Sustainable Development. We are also members of the advisory group of the Climate Disclosure Standards Board and of the Executive Board of the 'Accounting for Sustainability' project launched by HRH the Prince of Wales.
Specific comments
Do you agree with HM Treasury's proposal to amend the FREM as described in the exposure draft? If not, why not, and what alternative do you propose?
ACCA welcomes the proposed requirement for public sector entities to include within their annual report and accounts a sustainability report, which reports performance against their sustainability targets by 2010-11. As well as promoting transparency it will also allow performance comparisons to be made between individual organisations and cross-sector e.g. health and local government.
We agree that performance information should be quantitative as well as qualitative. It should also convey a minimum level of meaningful information to stakeholders.
Whilst the new reporting guidance is welcomed we have noted that it excludes guidance on the setting of targets. Public sector organisations already have sustainability targets set by Government against which they must report. However, a number of organisations also set local targets. It is in this respect that further guidance is required.
Do you agree with the proposed effective date, and any proposed transition provisions, for the issue as described in the exposure draft? If not, why not, and what alternative do you propose?
The paper proposes to adopt Option 3 (a staged approach with dry run reporting by central government in 2010-11 and mandatory reporting from 2011-12. This will be followed by the rest of the public sector with dry run reporting from 2011-12 and mandatory reporting from 2012-13.
We are mindful of other key projects taking place in 2009-10 and 2010-11 such as the move to IFRS, the alignment project and other changes across the public sector and their impact on public service capacity. Therefore, we agree with your preferred option (Option 3) .
Do you agree with the proposed (minimum) sustainability reporting scope? If not, why not, and what alternatives do you propose?
Yes, we agree with the proposed minimum reporting scope and financial and non-financial reporting requirement for the three areas: emissions, waste, and finite resource consumption. Although we would like to see more information on indirect emissions (scope 3) over an above business travel. At the very least we would like to see a set of proposals which set out how these will be reported in the future.
Do you agree with the proposed model sustainability report? If not, why not, and what alternatives do you propose?
Yes, but with the caveat set out above.
Do you agree with the preferred option for introducing sustainability reports in Annual Reports, i.e. option 3? If not, please state your reasons and any alternative option you support or propose.
We agree with the option to include sustainability reporting in the annual reports of all public sector entities. This should help to improve transparency and accountability on sustainability reporting.
Do you agree with the proposed content and coverage of the draft sustainability reporting guidance? If not, why not, and what changes do you propose?
Yes, we agree with the proposed content and format set out, but would like to see more consideration of reporting on scope 3 emissions.
Does the proposed draft sustainability reporting guidance provide you with sufficient information to facilitate your completion of a sustainability report for inclusion within your Annual Report? If not, what additional information would you require?
Yes, the examples provided are clear. The graphical analysis works well alongside the financial data.
Do you agree the proposal that external assurance be required on sustainability reports included within Annual Reports? If you agree do you have a view on the level of assurance required? If you do not agree, please state your reasons.
We would support the proposal that external assurance is required, particularly as it will form part of the Annual Report. We believe that public sector stakeholders will have more confidence in performance reporting if it is independently assured. Also, previous experience has shown that in the reporting of progress against PSA targets material misstatements had been found by the NAO. This is not to say that there are likely to be the same levels of inaccuracies in sustainability performance data, but an independent check will make it more likely that the standard of performance reporting would be higher.
Although we agree that progress against targets should be validated we strongly believe that a risk based approach to assessment/audit should be implemented to ensure to that the burden of regulation on organisations is minimised. Any proposals for external assurance must also consider the capacity and skills within the regulatory environment to undertake the assessment together with the additional costs it would impose on public sector organisations.
Do you have any further comments or suggestions related to the proposals?
We would encourage public sector organisations when commissioning or procuring services to challenge their providers in terms of their own approach to sustainability and disclosure.
Focusing on energy, waste, water, materials is a positive development, but sustainability reporting should be seen in its widest sense. Public services should also be reporting on social, health and economic outcomes for communities, citizens and service users. Whilst this information is reported in other documents such as strategic plans, equality and diversity strategies and community strategies etc, there is considerable variability.
We would suggest that the reporting of sustainability outcomes in Annual Reports would help improve the quality and transparency of information. At the very least Annual Reports should provide a signpost to the relevant information. This would be helpful to the reader.