Pick of the crop
The first scheme of its kind in the world, IRCA's groundbreaking new sustainability assurance certification programme - in partnership with AccountAbility - has just been completed by its first practitioners: Claire Rainsford and Doug Johnston from Ernst and Young’s corporate responsibility (CR) team tell INform how they got on
A burgeoning industry
In the last few years, there has been a massive growth in the number of CR/sustainability reports that are being assured in UK-listed companies and also the practitioners in this field. The level of the sophistication of assurance has risen with regards to the data that is included in the sustainability reports, and whether the sustainability reports are actually dealing with the issues that are important to people.
The operating and financial review (OFR) is partly responsible for this recent upsurge in non-financial reporting. Beginning on 1 April 2005, the OFR is a new mandatory reporting requirement for every listed UK-listed company. It covers all aspects of business performance that underpin an organization’s ability to deliver its strategies. It specifically requires companies to disclose a range of non-financial issues, or at least consider them, as whether they are relevant to their ability to delivery its strategies. There is a new attitude now about company reporting: it is no longer just about the financial aspects, it is now also about getting a similar amount of rigour around non-financial reporting.
Regulatory requirements are not necessarily the main drivers for further disclosure. It’s primarily just a greater demand for more information from an organization’s stakeholders. The growth in assurance is basically providing a confidence that you’re giving information to stakeholders which is of a sufficient quality that it can stand up to external challenge.
Unfortunately, many organizations still see reporting as a PR tool. It’s important to maintain the quality of the reports - they should be balanced and credible reports which address the challenges and successes the organization is facing. Having the report assured, especially to standards like AccountAbility’s AA1000 assurance standard, should give the reader more comfort.
Crystal ball
There are going to be two key areas of change in the sector. There will be a greater convergence between financial and non-financial reporting. Sustainability reports are becoming broader, and dealing with some core business issues which have been covered in the annual report.
Nova Nordisk, for example, a Danish pharmaceutical company, is one of the best reporters in the world. For the first time it has fully combined its sustainability reporting with its financial reporting into one report, which is probably something we will see more of and will, in the UK, probably be driven by the OFR anyway. This is likely to be supplemented by additional information on sustainability matters on the web. There are likely to be more targeted communications – for certain user groups - as opposed to broad, bland reports that attempt to appeal to everybody.
Becoming a certified sustainability assurance practitioner (CSAP)
To achieve our certification, we had to go through two interviews and explain why we felt we had enough experience in the area to meet the requirements of the certification. As the area of sustainability assurance work is quite new and there are not many standards out there, getting a qualification in the sector is valuable.
It’s an important certification, because at the end of the day if we’re making public statements there has to be some basis on which you can determine whether the people making those public statements are qualified to do so. You wouldn’t expect a non-qualified accountant to be producing a statement about an annual report of accounts.
It is vital that the stakeholders looking at these reports really value the fact that reporters (or, better, assurance practitioners) are formally certified to do the work. It is vital to win these people over and persuade them that actually in order to do this work you have to have certain standards, balance, independence and credibility.
What’s required?
There is a range of skills that are needed for a CSAP. Sustainability and CSR reports are very broad in their nature, and deal with social, environmental and economic issues combined together. Sometimes people think we’re just accountants, which we aren’t. Members of the team have diverse academic backgrounds: economy, environmental science, chemical engineering, chemistry, geography or law as well as accounting. With this there is ongoing technical development and training: we give papers at conferences, send our people on targeted training courses and run our own internal workshops to share knowledge across the team.
This profession requires a working knowledge of a much broader range of areas than any other formal qualification. Anybody who goes through this practitioner programme will probably have a depth of knowledge in one particular aspect of sustainability but must be able to demonstrate a good working knowledge across all aspects.
Ernst and Young is a corporate member of AccountAbility, which is an international, not-for-profit professional institute for organizations which aim to develop the competences of individuals working in social and ethical accountability for sustainable development. To become CSAPs we had to join as individual members which means that we get monthly newsletters, a quarterly professional journal, invites to various conferences, including teleconference seminars, and technical briefings.
Membership is very useful for getting updates on key issues, and we’ve also been involved in specific activities which coincided with those of AccountAbility, so together we ran a workshop on the OFR and its impact on sustainability. We also have meetings where practitioners can come together under the umbrella of AccountAbility to talk about progressing in the field, or the methodology of AA1000 etc. It’s a great opportunity to share ideas and develop the subject and consolidate a profession together.
Below: New Ernst and Young CSAPs, Doug Johnston (left) and Claire Rainsford (right), with IRCA director Simon Feary.
IRCA
For more information about IRCA’s sustainability assurance practitioner program click here
AccountAbility
AccountAbility’s CR, stakeholder engagement and AA1000 training courses aim to raise awareness and build individual practitioner competences in the use of the standard and explore current best practice and future trends in sustainability assurance more generally. Participants in training are likely to include: CR managers, internal auditors and external assurance providers. Attendance at training is a pathway towards professional certification as a sustainability assurance practitioner (by AccountAbility and IRCA) of people in the application of the AA1000 assurance standard. For more information click here or contact on e: Giulia Cosulich at giulia@accountability.org.uk
AccountAbility anticipates that the certified austainability assurance practitioner programme will continuously develop as a result of an ongoing stakeholder dialogue and feedback from applicants. AccountAbility welcomes feedback: get involved in an ongoing consultation forum online.
About the authors: Claire Rainsford, senior manager, and Doug Johnston, director, are from Ernst and Young’s CSR team.
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