Attendees watch a video message from Britain's Queen Elizabeth II during an evening reception to mark the opening day of the COP26 UN Climate Change Conference in Glasgow, Scotland, on Nov. 1, 2021.ALBERTO PEZZALI/AFP/Getty Images
It has all of the drama of a bid to be host city for the Olympics. Okay, maybe not all of the drama, but more than what’s normally associated with the accounting world.
One of the agenda items at the climate talks in Glasgow, Scotland, this week is the unveiling of a new global organization dedicated to making sure company claims of sustainability are presented in ways that make for easy and accurate analysis and comparison.
Our country’s business and political leaders will be watching closely, as Ottawa has made a pitch for a Canadian city to be the headquarters of the new International Sustainability Standards Board.
It’s not clear if the home base of the new ISSB will be announced along with its other details on Wednesday, which is finance day at the COP26 summit in Glasgow. But if it isn’t, the event gives the hopefuls opportunities to make their cases with the International Financial Reporting Standards Foundation in person. Finance Minister Chrystia Freeland is expected to attend the proceedings on Wednesday.
In the environmental, social and governance world, the ISSB a big deal – disclosure is seen as key to confirming emissions reduction and climate risk, and the organization will have clout.
COP26 is under way – here’s what’s at stake
Being selected would put Canada and its accountants in league with major global financial centres that are home to important bodies such as the Financial Accounting Standards Board in the United States, Financial Stability Board in Switzerland and the British-based IFRS. The latter is in charge of forming the new sustainability board.
Other countries said to be angling to be the board’s home include Germany, Switzerland and England.
Its formation, first announced a year ago, responds to complaints by investors and companies around the world that sustainability issues, such as climate risks and work force diversity, get reported using an array of multiple frameworks, which makes for confusion and uncertainty. This is in contrast with financial reporting, where standardization of accounting principles has long been, well, standard.
Sustainability reporting has quickly risen in importance as more investors weigh ESG-related risks and benefits, and use the data to help direct capital to targets that look prepared to deal with future economic and environmental changes.
The first set of sustainability standards is scheduled for next year, with climate considerations expected to be an initial focus. The world is gradually coalescing around the framework developed by the Task Force on Climate-Related Financial Disclosures. Canada’s securities commissions have begun the process for making TCFD reporting mandatory for public companies.
Ms. Freeland made Canada’s pitch to be the ISSB host in July. She did not name a specific city, but Calgary, Mississauga, Toronto, Montreal, Ottawa and Vancouver were all listed as supporters of the effort. As part of the bid, she said a coalition of Canadian public and private institutions would pony up a “significant welcome fund” to support the ISSB’s operations for an initial period.
An early backer of the effort, CPA Canada, the country’s accounting organization, offered interim office space in addition to support for logistics and operations.
In her letter to the IFRS chair, Ms. Freeland touted Canada’s commitment to working against climate change, through such measures as carbon pricing and investments in clean technology. She said Canada has well-respected accounting, auditing and assurance professions, with deep expertise in law, capital markets and sustainable finance.
She also said the country is an old hand at playing host to international organizations, citing the International Civil Aviation Organization, the Secretariat of the Convention on Biological Diversity and the World Anti-Doping Agency as examples.
The bid is backed by dozens of financial supporters, including banks, insurance companies, pension funds and major corporations such as Bell Canada and Suncor Energy Inc.
Ottawa has been working to counteract an international perception that Canada is very good at setting environmental targets, and poor at meeting them. This year, Prime Minister Justin Trudeau toughened the country’s emissions reduction target, setting a new goal of at least a 40-per-cent cut from 2005 levels by 2030.
Winning the bid for the ISSB headquarters would give his government a little extra bit of authority when it comes to showing Canada belongs in the big leagues of sustainable finance, and can play a bigger role in setting the rules.
Tens of thousands of people from world leaders to climate protesters are in Glasgow for COP26. Adam Radwanski, The Globe's climate change columnist, says the size and attention around the summit makes it harder to leave without meaningful agreements on climate action.
The Globe and Mail
Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.
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Jeffrey Jones