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Key infomation that sustainability governance disclosures must have
Africa is home to an unparalleled variety of flora and fauna and is also a global nature hotspot. Many of its ecosystems are under threat from deforestation, poaching, climate change, and urbanisation.
The IFRS sustainability disclosure standard, IFRS S1—‘General Requirements for Disclosure of Sustainability—related Financial Information’, requires organisations to provide governance disclosures on their sustainability risks and opportunities.
These disclosures aim to provide users of their sustainability reports with information on the roles and responsibilities of the board and management regarding the management of sustainability risks and opportunities.
Governance disclosures are one of the four core content elements of the standard, and organisations must understand the pertinent information that is required when preparing their sustainability reports.
While governance disclosures, in general, are not new for organisations, the context in which the IFRS sustainability disclosure standard requires them must be understood by preparers to ensure that organisations not only comply with the requirements but ensure their reports are relevant to their stakeholders.
Sustainability governance plays a critical role in how an organisation approaches sustainability and could impact its prospects and long-term competitiveness. Some of the fundamentals of sustainability governance disclosures for organisations include the following.
Organisations must provide information on the roles and responsibilities of the board on sustainability, including details on how these responsibilities are performed through oversight structures across the organisation.
The information should include details on how the board has ensured that sustainability is integrated into the strategy, risk management, business model and performance measurement.
The disclosures should include information on sustainability-related considerations made by the board during the reporting period, such as policies, transactions, performance reviews, resource allocation, target setting and other related decisions. The disclosures should also provide the board’s oversight role regarding sustainability.
This should detail the actual activities of the board and each of the committees regarding sustainability matters. In situations where the board has delegated these tasks to a specific committee, organisations should provide information on the specific activities of this dedicated committee.
Organisations should include information on the reporting lines across management and the board for accountability.
Another essential fundamental requirement is the provision of information on the role of management in sustainability governance.
Organisations are required to include disclosures on how management supports the board with the implementation, management, monitoring and reporting of the organisation’s sustainability risks and opportunities.
The writer is a Partner at Deloitte East Africa. He is an author who writes and speaks widely on corporate reporting topics.
