2.7 ACCOUNTABILITY

The most important issue in financial and business reporting is to define the boundaries. For instance, what does the entity report on? How is that done? At this point, consider Table 2.4, which summarises the challenges that exist for anyone involved with business reporting, as might be apparent from preceding sections.

TABLE 2.4 External reporting challenges.

Financial	Non-financial
Complexity	Lack of standards
Meaningful narrative information	Lack of common terminology
Reporting on risk	Definition of ‘materiality'
Reporting on executive compensation	Underdeveloped audit methodologies
Reporting on corporate governance	Controversial role of the Global Reporting Initiative
Auditing for fraud	Competing standard setters
Source: Adapted from Integrated Reporting for a Sustainable Strategy, a presentation by Robert G. Eccles and Michael P. Krzus, Rotman School of Management, University of Toronto, 12 May 2010.

As the table shows, there are two aspects to the prevailing information flow associated with business reporting, these being financial and non-financial. In the first instance, and as is generally understood, are the challenges of increasingly complex audits, whereby evidence of fraud and assorted other risks are sought, in addition to compliance with IFRS. The associated results are reported, as are details related to executive compensation, and, increasingly, corporate governance. Generally speaking, these elements of financial reporting can be considered to be derived from IFRS.

The non-financial elements of business reporting are more problematic. For a start, there is so much duplication of data reporting because everybody is chasing objects and non-financial details differently, due to a lack of any consistency in describing the objects, and so forth. This particular issue is paid further attention in Part IV: Tracking Objects – A Paradigm Shift in Business Reporting. Underlying the added consideration, herein and in the business reporting community, are a few too many problems from which stems a further flood of information to be digested by decision makers. Plus, there is inadequate clarity. For instance, a lack of standards, and no common lexicon, adds to issues of relevance and interpretation, as does a poor appreciation in this domain about materiality. In this mix is the further issue of standard setters competing to set trends, and gain headway in that market space, if not dominate entirely.

In that latter regard, it is hard not to know something about the Global Reporting Initiative. In effect, among other things, it has become the global de facto standard in sustainability, although there is a great deal of focus on people-based information, such as relates to, for example, the usage of child labour. (For more on this, see www.globalreporting.org, as well as the related section in Part III of this book.) Consider, then, Triple Bottom Line Reporting, and all that this now entails when many requirements must be considered to satisfy a wide, if not vague, set of non-financial requirements.

This morass in non-financial corporate reporting has opened up opportunities for necessary guidance by standard setters, as is the case with AccountAbility. See www.accountability.org (Figure 2.6).

This is a leading global organisation that sets the standard for corporate responsibility and sustainable development. It does so by providing innovative solutions to the most critical challenges in corporate responsibility and sustainable development. Since 1995 it has helped corporations, non-profits and governments embed ethical, environmental, social and governance accountability into their organisational so-called DNA. The unique value proposition of AccountAbility brings together leading-edge research, widely recognised standards and strategic advisory services to deliver practical solutions for clients.

AccountAbility works to:

• help its clients and members improve business performance and build sustainable competitive advantage;
• enable open, fair and effective approaches to stakeholder engagement;
• develop and recognise responsible competitiveness in companies, sectors, countries and regions;
• create effective collaborative governance strategies for partnerships and multilateral organisations that are delivering innovation and value;
• set and influence sustainability standards;
• help corporations, non-profits and governments embed ethical, environmental, social and governance accountability into their organisational DNA.

The vision of AccountAbility is of a world where people have a say in the decisions that have an impact on them, and where organisations act on and are transparent about the issues that matter. At the core of its work is the AA1000 Series of Standards based on the principles of:

• inclusivity – people should have a say in the decisions that impact on them;
• materiality – decision makers should identify and be clear about the issues that matter;
• responsiveness – organisations should be transparent about their actions.

AccountAbility's AA1000 series are principles-based standards to help organisations become more accountable, responsible and sustainable. They address issues affecting governance, business models and organisational strategy, as well as providing operational guidance on sustainability assurance and stakeholder engagement. The AA1000 standards are designed for the integrated thinking required by the low carbon and green economy, and support integrated reporting and assurance.

The standards are developed through a multi-stakeholder consultation process which ensures they are written for those they impact, not just those who may gain from them. They are used by a broad spectrum of organisations –multinational businesses, small and medium enterprises, governments and civil societies.

The AA1000 Series of Standards are as follows:

• The AA1000 AccountAbility Principles Standard (AA1000APS) provides a framework for an organisation to identify, prioritise and respond to its sustainability challenges.
• The AA1000 Assurance Standard (AA1000AS) provides a methodology for assurance practitioners to evaluate the nature and extent to which an organisation adheres to the AccountAbility Principles.
• The AA1000 Stakeholder Engagement Standard (AA1000SES) provides a framework to help organisations ensure stakeholder engagement processes are purpose driven, robust and deliver results.

AA1000 AccountAbility Principles Standard

The first of these standards, AA1000 AccountAbility Principles Standard (AA1000APS), can be obtained at www.accountability.org/standards/aa1000aps.html.

The APS principles are based on the premise that an accountable organisation will take action to:

• establish a strategy based on a comprehensive determination of all issues that are material to the organisation and its stakeholder;
• establish goals and standards against which the organisation's strategy and performance can be judged;
• disclose credible information about strategy, issues and performance to stakeholders.

Adherence to the AA1000APS principles, which have been developed using a multi-stakeholder consultation process, enables the development of a sustainable business model and strategy. The principles have been used by leading companies since 2008 and are compatible with other sets of principles in the marketplace, such as the UN Global Compact, GRI and ISO 26000.

The AA1000 Principles are summarised below.

Inclusivity

For an organisation that accepts its accountability to those on whom it has an impact and who have an impact on it, inclusivity is the participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.

Materiality

Materiality is determining the relevance and significance of an issue to an organisation and its stakeholders. A material issue is an issue that will influence the decisions, actions and performance of an organisation or its stakeholders.

Responsiveness

Responsiveness is an organisation's response to stakeholder issues that affect its sustainability performance and is realised through decisions, actions and performance, as well as communication with stakeholders.

The value of these principles lies in their comprehensive coverage and the flexibility of their application. They demand that an organisation actively engages with its stakeholders, fully identifies and understands sustainability issues that will have an impact on its performance, including economic, environmental, social and longer-term financial performance, and then uses this understanding to develop responsible business strategies and performance objectives. Being principles rather than prescriptive rules, they allow the organisation to focus on what is material to its own vision and provide a framework for identifying and acting on real opportunities as well as managing non-financial risk and compliance.

The contents of this 21-page document are as follows:

• Foreword
  • Evolution of the AA1000 AccountAbility Principles
  • Development process
  • Introduction
  • Aims and benefits of the AA1000 AccountAbility Principles
  • Scope of the standard
• Purpose of the AA1000APS
• The AccountAbility Principles
  • 2.1. The Foundation Principle of Inclusivity
  • 2.2. The Principle of Materiality
  • 2.3. The Principle of Responsiveness
  • References to the AA1000 AccountAbility Principles
• Annexes

AA1000 Assurance Standard

The second of these standards, AA1000 Assurance Standard (AA1000AS), can be obtained at www.accountability.org/standards/aa1000as/index.html.

The first edition of the AA1000 Assurance Standard was published in 2003 as the world's first sustainability assurance standard. It was developed to assure the credibility and quality of sustainability performance and reporting, and was the result of an extensive, two-year, worldwide consultation involving hundreds of organisations from the professions, the investment community, non-governmental organisations (NGOs), labour and business.

The AA1000AS (2003) superseded the information on sustainability assurance provided in the AA1000 Framework Standard published in 1999. The 2003 edition was supported by a Guidance Note on the application of the principles; and a User Note including five case studies on the application of the principles during assurance engagements.

The latest edition of the AA1000 Assurance Standard, AA1000AS, is the second edition of AccountAbility's assurance standard. It draws on the growing body of practice and experience in sustainability assurance and supersedes all previous versions published by AccountAbility.

The AA1000 Assurance Standard supports the AA1000APS principle of responsiveness, which requires public disclosure. Assurance provides an independent view on the credibility of public disclosure. The AA1000AS is compatible with the methodology of ISAE 3000, the financial accounting body standard for providing assurance on non-financial matters.

The AA1000 Assurance Standard is supported by:

• a mandatory licensing process for Assurance Providers to maintain quality control;
• the Certified Sustainability Assurance Provider (CSAP) Programme for the certification of assurance providers;
• certified global training programmes in corporate responsibility;
• CorporateRegister.com's list of AA1000AS assured reports, as well as guidance documents and free pre-check service for assurance statements using AA1000AS;
• a wide range of guidance publications.

Advantages of Using the AA1000AS (2008) In Assurance Provision are expressed below.

The AA1000AS is unique as it requires the assurance provider to evaluate the extent of adherence to a set of principles rather than simply assessing the reliability of the data. The AA1000AS requires the assurance provider to look at underlying management approaches, systems and processes and how stakeholders have participated. Using the AA1000AS, the assurance provider evaluates the nature and extent to which an organisation adheres to the AccountAbility Principles in the AA1000APS.

The AA1000AS delivers a rigorous process that adds value to both the company and external stakeholders. The AA100AS is a principles-based standard that provides a rigorous framework for sustainability assurance while at the same time providing enough flexibility to adapt to the context of the individual organisation. It provides findings and conclusions on the current status of an organisation's sustainability performance and provides recommendations to encourage continuous improvement. It is not a certification standard which leads to a pass or fail, and so can be used by organisations at all stages of maturity.

The contents of this 28-page document are as follows:

• Foreword
  • Evolution of the AA1000 Assurance Standard
  • Development process
• Introduction
  • Aims and benefits of AA1000AS sustainability assurance
  • Scope of the standard
• Purpose of the AA1000AS
• Using the AA1000AS
  • Types of AA1000AS engagement
  • Levels of AA1000AS assurance
  • References to the use of the standard
  • Relationship to other standards and guidance
• Accepting an AA1000AS Engagement
  • Scope of the engagement
    • Disclosures covered
    • Suitable criteria
    • Level of assurance
  • Independence and impartiality
  • Competence
    • Assurance practitioner competence
    • Assurance provider competence
  • Due care
  • Engagement Agreement (contract)
• Conducting an AA1000AS Engagement
  • Planning the engagement
  • Performing the engagement
    • Evaluation of adherence to the AA1000 AccountAbility Principles
    • Evaluation of specified sustainability performance information
    • Limitations
    • Documentation
  • Reporting by the assurance provider
    • Assurance statement
    • Report to management
• Definitions
• Annexes

AA1000 Stakeholder Engagement Standard

The third of these standards, AA1000 Stakeholder Engagement Standard (AA1000SES), can be obtained at www.accountability.org/standards/aa1000ses/index.html.

The AA1000 Stakeholder Engagement Standard has been designed to be multi-purpose, not just for sustainable development, and can be used by businesses, civil society, public bodies and multi-stakeholder networks and partnerships. A comprehensive, hands-on manual for practitioners is currently under development.

Professor Oren Perez of Bar Ilan University, Israel, recently published a discussion paper into the Wiki Process that is used to manage the revision of the AA1000SES. The paper entitled ‘Innovation and Disillusionment in E-Democracy Projects: AccountAbility's Second Wiki-Based Consultation Process', is available at www.accountability.org/standards/aa1000ses/index.html

The contents of this 52-page document are as follows:

• Foreword
• Introduction
• Purpose and Scope of the AA1000SES
• Commitment and Integration
  • Commit to the AA1000 AccountAbility Principles
  • Integrate with governance
  • Integrate with organisational strategy and operations management
• Purpose, Scope and Stakeholders
  • Establish the purpose of the engagement
  • Establish the scope of the engagement associated with the purpose
  • Determine the mandate, ownership and stakeholders of the engagement
• Engagement Process
  • Plan
    • Profile and map stakeholders
    • Determine engagement level(s) and method(s)
    • Identify boundaries of disclosure
    • Draft engagement plan
    • Establish indicators
  • Prepare
    • Mobilise resources
    • Build Capacity
    • Identify and prepare for engagement risks
  • Implement the engagement plan
    • Invite stakeholders to engage
    • Brief Stakeholders
    • Engage
    • Document the engagement and its outputs
    • Develop an action plan
    • Communicate engagement outputs and action plan
  • Review and improve
    • Monitor and evaluate the engagement
    • Learn and improve
    • Follow up on action plan
    • Report on engagement
• Annexes
  • Definitions
  • The AA1000 Series
  • The AccountAbility Stakeholder Engagement Technical Committee
  • About AccountAbility

The issue of proper stakeholder management, to which this standard refers, is made quite clear in Figure 2.8, which highlights the need for clarity as to the definition of boundaries related to business reporting entities. By so doing, the significant risks or impact of improper boundaries and resultant, poor reporting are reduced, or negated entirely.

Figure 2.8 illustrates the dimensions of significance on the vertical axis, and control along the horizontal axis. Thereby, reporting boundaries and the priority entities for monitoring can be situated. Business entities in the top right-hand quadrant, for example, having high risk/impact and high level of control, are priorities for proper consideration for reporting purposes. ­Typical examples of significant control or influence include a business subsidiary, where the reporting organisation has operational responsibility for a joint venture (regardless of the actual equity ownership), or a buying relationship where the company accounts for a substantial portion of total sales by the supplier.

While the definition of ‘control and influence' may be clear, in terms of legal and financial accounting rules, the determination of ‘significant impact' may involve more qualitative considerations, such as stakeholder perceptions of impacts, alongside scientific analysis of cause and effect relations. For more details, see TEEB For Business Report, 2010, Chapter 3, ‘­Measuring and reporting biodiversity and ecosystem impacts and dependence', as at www.teebweb.org.

Standards terrain – a comparative view

Given that standards, in effect, are tools that drive the performance of organisations, it is useful to see a comparative view of the standards terrain. This is presented in Figure 2.9, which is particularly instructive in making sense of how identifiable standards are placed.

As is evident from the preceding figures, various standards can be seen in relation to each other, and in particular, how these are situated in terms of being a focus that, as per the vertical scale, is:

• Social and Ethical;
• Environmental;
• Financial/Economic.

In addition, as per the horizontal scale representing aspects associated with business reporting, standards can be seen in relation to the associated focus on:

• Policy;
• Accounting;
• Assurance;
• Reporting.

Of particular interest is the overall reach of the AA1000 Stakeholder Engagement Standard, and the targeted AA1000 Assurance Standard, both of which are featured in preceding subsections.

2.8 OTHER STANDARDS

In addition to standards presented earlier, others are worthy of note:

• private and voluntary standards;
• environmental standards.

Private and voluntary standards

As opposed to public standards, such as those that appeared in earlier sections of this book, there are numerous private and voluntary standards that are developed by assorted non-government organisations, industry associations and companies. Consider the wide range of these additional standards:

• product or industry-specific (such as Fair trade, Forest Stewardship Council (FSC) and Marine Stewardship Council (MSC));
• generic/cross-sectoral (such as GlobalGap and Business Social Compliance Initiative (BSCI));
• corporate and retail (such as Wal-Mart and IKEA);
• licensing/labelling initiatives (such as Rainforest Alliance and Green Seal).

This scenario is presented in Figure 2.10.

A critical issue, of course, is that the voluntary nature of the so-called private standards is that these, unlike public standards, are not legally required by national governments, or by multilateral regulations. As might well be apparent at this point, there are many private and voluntary standards that have an influence on global business reporting. It is well worth knowing that such standards are tracked by Standards Map, which is the web-based portal of the International Trade Centre (ITC) Trade for Sustainable Development (T4SD) programme and a partnership-based effort to enhance transparency on voluntary standards, as well as to increase opportunities for sustainable production and trade. The T4SD programme is supported by BMZ (Bundesministerium für wirtschaftliche Zusammenarbeit), the German Federal Ministry for Economic Cooperation and Development, SECO, the Swiss State Secretariat for Economic Affairs and the European Commission – Directorate General Trade.

For the homepage of this fascinating entity, go to www.standardsmap.org.

Principally, Standards Map is an online tool that enables analyses and comparisons of private/voluntary standards. The Standards Map analysis tool can be accessed by all registered users. Registration is free of charge for all users from developing countries.

Standards Map aims to increase opportunities for sustainable production and trade. Understanding and adhering to private standards is increasingly important in the current competitive market place, and this tool will help you better understand how to optimise these developmental benefits. The T4SD portal is designed to enhance opportunities for sustainable production and trade and, therefore, in addition to Standards Map, also available are Trade Map, Investment Map and Market Access Map.

Information sources and availability

The Standards Database (SD) contains data sheets that are generated via the Standards Map Content Management System. Each data sheet corresponds to one standard system, it is quality controlled by external experts and then verified by the standard organisation itself.

The scope and coverage of SD is continuously evolving, as new partnerships with standards organisations are initiated regularly. In addition, the research database currently includes information on over 250 research papers and studies, and a hyperlink at that site provides an overview of the scope and coverage of the Research Database broken down by standard system and product/sectors reviewed in each research paper or study. It is also interesting to note that the T4SD Technical Committee has developed a methodology to identify and select research papers and studies to be referenced in Standards Map. This methodology can be accessed, too.

Here is a list of all participating standard initiatives in relation to the Standards Database:

• 4C Association
• Associação Brasileira de Normas Técnicas (ABNT) Ecolabel
• Alliance for Responsible Mining — ARM
• Better Cotton Initiative — BCI
• Bonsucro — Better Sugar Cane Initiative
• BRC Global Standards — Food
• Business Social Compliance Initiative
• CanadaGAP
• Carbon Trust — Carbon Reduction Label
• China Environmental Labelling — CEL
• China Organic Product Certification Standard
• Clean Clothes — Code of Labour Practices
• Climate, Community & Biodiversity Standards — CCB Standards
• Cotton Made in Africa
• Council on Sustainable Biomass Production — CSBP
• CSC9000T
• Ekolabel Indonesia
• Ethical Tea Partnership — ETP
• Ethical Trading Initiative — ETI
• Fair Flowers Fair Plants — FFP
• Fair Labour Association — FLA
• Fair Wear Foundation
• Fairtrade — FLO
• FairWild
• Florverde
• Flower Label Programme — FLP
• Food Alliance
• Food Justice Certified
• Forest Stewardship Council — FSC
• Food Safety System Certification — FSSC22000
• Global Aquaculture Alliance — BAP Standards
• Global Food Safety Initiative — GFSI
• Global Organic Textile Standard — GOTS
• Global Red Meat Standard — GRMS
• Global Reporting Initiative — GRI
• Global G.A.P Standard (CPCC)
• The Gold Standard
• GoodWeave
• Green Choice Philippines
• Green Seal
• Green Label Thailand
• Green-e
• Hong Kong Green Label
• International Federation of Organic Agriculture Movements (IFOAM) Basic Standards
• Impact Reporting and Investment Standards — IRIS
• International Council of Toy Industries — ICTI
• International Council on Mining and Metals — ICMM
• International Featured Standards — IFS
• International Sustainability & Carbon Certification — ISCC
• KRAV
• LEAF Marque
• Marine Stewardship Council — MSC
• MPS ABC
• PEFC International
• People 4 Earth
• PrimusGFS
• ProTerra Standard
• Rainforest Alliance — Sustainable Agriculture Network (SAN)
• Responsible Jewellery Council — RJC
• Roundtable on Responsible Soy — RTRS
• Roundtable on Sustainable Biofuels — RSB
• Roundtable on Sustainable Palm Oil — RSPO
• Singapore Green Label Scheme
• Social Accountability International — SA8000
• SOCIALCARBON
• Soil Association Organic Standard — SA
• Safe Quality Food (SQF) Programme
• Sustainable Forestry Initiative — SFI
• TerraChoice — the EcoLogo Programme — UL Environment
• Union for Ethical BioTrade — UEBT
• UTZ Certified Good Inside
• Verified Carbon Standard — VCS
• World Fair Trade Organization — SFTMS
• Worldwide Responsible Accreditation Production — WRAP

This list is not exhaustive. For instance, additional standards that have an effect on business reporting are environmental standards, which are addressed in the next section.

Environmental standards

In much the same way as standards have evolved in a private and voluntary sense, as seen in the previous section, environmental standards have become fundamental to business operations and business reporting. In addition, as seen in public standards presented earlier, environmental considerations are not overlooked. For instance, environmental consideration, particularly in the event of an environmental catastrophe, exists in the preparation of disclosures and the System of National Accounts referring to environmental accounting, and accounting for environmental degradation. Furthermore, there are standards that most governments, and related agencies, now employ in managing the global biosphere in which we live. This is especially apparent in relation to the standards related to greenhouse gas emissions, a matter that is cross-border, transnational and intercontinental.

As mentioned previously, ISO Standards for products are designed, among other thing, to ensure environmental friendliness, such as greenhouse gas/carbon footprint measurements, verification and validation promoted in the ISO 14064 and 14065 series. In addition, there is guidance on social responsibility provided by ISO 26000.

Given the increasing significance of environmental issues, and the need for curtailing standards, it is worthwhile revisiting the ISO document, GHG schemes addressing climate change – How ISO standards help, released in January 2011, and available at www.iso.org/iso/ghg_climate-change.pdf.

Against the background of a proliferation of greenhouse gas (GHG) programmes launched to tackle climate change, ISO seeks to bring clarity by providing an overview of the different schemes and describing the practical role that GHG metrics standards, such as ISO 14064, can play. This is not a normative ISO document but provides perspectives on the use and application of leading ISO GHG standards.

The principal authors are Tom Baumann, CEO of ClimateCHECK and Co-founder of the Greenhouse Gas Management Institute, and Anja Kollmuss, Staff Scientist at the Stockholm Environment Institute. Their collective effort, as per the introduction, affirms:

• standards will play an increasingly important role in moving societies and economies to a more climate-safe development path;
• standards can provide clear guidelines, help structure processes and set quality norms for the rapidly developing field of GHG management.

In doing so, standards help to facilitate new green technology markets and more energy-efficient and profitable business practices.

ISO developed this publication to raise awareness and demonstrate the benefits of pro-active business and other stakeholder engagements in climate mitigation. ISO GHG standards, such as ISO 14064 and ISO 14065, were given coverage by international climate organisations, including the International Emissions Trading Association (IETA) and the United Nations Framework Convention on Climate Change (UNFCCC), as potential foundational standards for harmonising other standards and programmes.

The introduction to the publication also notes: ‘Vast new business opportunities will emerge to create low-carbon economies that are more energy efficient and profitable. It is time to prepare for this transition and take advantage of the new markets and industries that will shape the global economy in the coming decades.'

This document provides information to potential users of GHG standards and programmes, and covers the following issues:

• overview of the climate change context including a map of available GHG standards, as well as those currently in development;
• information on how GHG standards, such as ISO 14064, can provide the tools for implementing climate mitigation and adaptation strategies;
• the future of GHG standards and how they can promote a faster up-take of new green technologies and low-emission practices;
• opportunities to enhance current GHG standards and standards development;
• proposed changes that would address challenges and help maximise the effectiveness of GHG standards in moving the world to a more sustainable future.

The contents of this mere 50-plus-page publication are as follows:

• Introduction
• Climate change update
• Addressing climate change – Role of GHG standards
• ISO's contribution to environmental and climate change standards
  • Development of ISO standards
  • ISO's environmental standards
  • ISO's contribution to addressing climate change
  • ISO's greenhouse gas management standards
• Overview of GHG programmes and standards
  • Programmes for Nationwide GHG emission reporting
  • Organisation-/ entity-wide GHG emissions standards
  • Corporate disclosure standards
  • GHG offset project programmes and standards
  • Product-specific and supply chain GHG programmes and standards
  • Standards for validation and verification of GHG emissions and reduction assertions
• Standards and GHG practitioners
• Experience with the use of ISO GHG standards
• Meeting the demand for other GHG management standards
• The road ahead for GHG standards
• Glossary

What is of particular interest here are the last two sections, as precede the glossary. For instance, it is apparent that there is a real, and worthy, challenge in improving the standards when so many others exist, which must work together. Essentially, these must be streamlined and integrated, especially when international recognition is a laudable and necessary goal. Still, the development process has a number of obstacles, such as inadequate funding.

Also, with regard to emerging GHG standards, as the response to climate change evolves beyond the more traditional areas of GHG inventory and offset project verification, there will be a growing focus on developing GHG standards to address new areas, such as:

• product-level and supply chain accounting, for example, ISO 14067, WRI/WBCSD GHG Protocol for Product/Supply Chain Accounting;
• corporate disclosure, for example, the Carbon Disclosure Standards Board Reporting Framework in response to the needs of investors and the financial industry;
• professional and personnel standards, for example, ISO 14066, supplemented by additional competency requirements for practitioners in specific sectors (e.g. agriculture, energy efficiency) and function (e.g. accounting, auditing, management). Professional codes of conduct and supporting policies and requirements are also being developed by, for example, the Greenhouse Gas Management Institute;
• verification standards, for example, sector-specific verification standards to improve verification while reducing costs, and at the general level by the accounting profession.

As per the conclusion, human societies must learn to live within the boundaries of the Earth's resources. In aspiring for that practical and crucial outcome, standards will play an important part in helping to ensure a fast and efficient transition to a climate-safe and sustainable world.

2.9 ONEREPORT

In addition, it is interesting to note that the muddle mentioned previously, in relation to the various financial and non-financial issues confronting businesses, has given rise to dedicated service providers that streamline the sustainability reporting process, as does OneReport (see www.one-report.com), which helps to:

• collect and manage data;
• respond to investment research firms and the Global Reporting Initiative (GRI) reporting guidelines – simultaneously;
• distribute data to the financial community;
• publish data to the Web.

Essentially, OneReport is a web-based sustainability reporting solution that enables companies to centralise all reporting functions, and professes to reduce the cost of reporting and deliver more timely and accurate data. Clearly, such help is beneficial to any who seek to gain some sort of assistance in the confusion that can swamp people who must report to stakeholders.

In amidst the external reporting issues raised earlier, and as a direct consequence of these, there is scope for considerable interpretation, as well as so-called spin, in delivering on measures that can be entirely irrelevant. If all of that was not enough, and perhaps a consequence of the confusion, non-financial audit methodologies are entirely underdeveloped, and this will add a dash of concern to anyone reliant on the related outcomes.

2.10 TAXATION

Taxation is ever present, and never likely to go away. Consequently, it is necessary to acknowledge the existence and the persistence of taxation, particularly when it can have an immense impact on financial reporting and, thus, business reporting in general. This is especially the case when any business entity has cross-border dealings or international operations. In circumstances of that type, the ready hand of governments is to be found.

Of particular interest, in the context of this book, is the massive amount of tax-related data that is collected, with much of it focusing on valuation, and handled by millions of tax auditors worldwide. The related complexity, due to nation-specific laws, rules and regulations, makes life particularly difficult for anyone associated with tax reporting.

For an indication of the problems, it is beneficial to see the related service offerings of reputable accounting firms, such as Deloitte, as at www.deloitte.com/taxguides.

There, it states that the increasing number and variety of business transactions undertaken by companies in today's global economy create both challenges and opportunities. Whether a company already operates in multiple jurisdictions or seeks to expand globally, access to accurate and timely information on taxation and other business conditions is critical.

Therefore, two tax series are available: the Guides, which provide extensive reviews of the tax systems of the major trading jurisdictions, and the Highlights, which provide high-level overviews covering over 130 countries. As an indication of differences, refer to Table 2.5, relating to different tax rates.

Table 2.5 Tax rates in different jurisdictions.

Of course, tax differentials facilitate international business developments. Subject to the results of comparative risk assessment, lower tax rates attract foreign direct investment.

Still, it must be said that the tax system has a costly component, which is often the case when related laws and assessment processes are exceedingly complex. For instance, anecdotal evidence suggests that as many as two million people in Germany are involved with all aspects of tax, from education to collection and assessment, including advisors, lawyers and enforcers.

The extent to which countries will align their income tax regulations with IFRS is an open question, even though there would be better alignment of valuations (such as transfer-pricing), enforcement (and audit efficiencies), as well as improved understanding and education. Additional benefits would also arise from increased use of XBRL, especially in relation to tax-based compliance reporting, as well as the filing of tax returns.