Reporting on environmental, social and governance (ESG) factors may not yet be mandatory, but boards, auditors and accountants should be considering their means of reporting now, according to a partner at BDO.
Fiona Davis, partner in risk and advisory services at BDO in London, was addressing an audience at the latest event hosted by the Guernsey Society of Chartered and Certified Accountants (GSCCA).
“ESG is here to stay and is going to become an increasingly prominent part of reporting requirements for businesses of all shapes and sizes,” said Mrs Davis. “It’s not going away so the best thing to do is start having the conversation now about which ESG factors are important to your business, and how you can report on them.”
Mrs Davis was speaking as part of a panel convened to discuss ESG and sustainability reporting. Also on the panel were Dr Andy Sloan of We Are Guernsey, Ben Snook of TISE and Henry Freeman of Liberum Wealth. Moderating the discussion was managing partner of BDO in Guernsey, Richard Searle.
Mr Searle said: “What the discussion today has highlighted is that this is a pressing issue for industry and we, as auditors and accountants, need to be encouraging our clients to consider which ESG factors are important to them and advising them on how to report those to regulators, shareholders and other stakeholders.”
There is no universally agreed standard for reporting on ESG but Mrs Davis warned that mandatory disclosures will not be too far away.
“In the UK, and around the world, we’ve seen a trend of reporting factors that were previously considered ‘nice-to-have’ becoming mandatory,” she said. “This started with the gender pay gap and the Modern Slavery Act and more recently includes the new Streamlined Energy Carbon Reporting (SECR) legislation which will drive enhanced disclosures around carbon reporting. Continuing the ESG trend is undoubtedly the next step in this evolution so businesses can get ahead of the trend by thinking about tomorrow’s need today.”
Local businesses who want to know more about ESG reporting should speak to a business advisory service provider to understand the factors they can, and should, be reporting on.
Mrs Davis said that Guernsey was clearly well positioned to help local businesses with their requirements. “The panel today were all in agreement and that’s a good sign for Guernsey,” she said. “In a jurisdiction of this size it’s easier to collaborate and have contact with the right people and the island’s commitment to this issue has been made plain today.”
In his summary, Mr Searle added that while it may be easier to hold back and wait for the standards to become uniform, Guernsey has an opportunity to set the bar with existing commercial businesses and funds operating in the island, without needing to wait for the eagerly anticipated flood of new green funds launching in the island.
Boards who engage with the issue and take the lead in reporting and changing behaviours will set the standard for others to follow. With its well-regulated expertise in managing global capital flows, Guernsey has a significant role in driving the ESG and sustainable finance agenda on a worldwide basis.
The ‘ESG and sustainability reporting’ event took place on Friday 28 February at Les Cotils.