Is your company more sustainable than the other one? Who knows, they both follow a different reporting standard. That is about to change…

The Global warming is indisputably the key topic of the 21st century which is impacting all of us. However, the common understanding across the globe of the key levers that are either increasing or reducing the amount of Green House Gases in the atmosphere remains scarce.

What is not helping to improve the common understanding is also the plethora of standards of Carbon Accounting, sometimes also referred to as the 4th statement (after Balance Sheet, Profit & Loss, Cash Flow).

The standards are managed and produced by several leading world organisations; CDP, CDSB, GRI, IIRC, SASB as well as governmental standards such as SECR in the UK. This also very much resembles the accounting world’s dichotomy of IFRS and GAAP standards.

All approaches share similar characteristics of Nested and Dynamic Materiality. Materiality in this regard quantifies the actual material impact of environmental relationship, i.e. the pricing of externalities on three different levels:

1. Environmental impact — on the globe
2. Enterprise impact — on the company’s business model
3. Financial — on the company’s balance sheet

Given the similarities, the leading organisations decided to unify the reporting approach into one common reporting structure:

1. Objectives and Purpose
2. Sustainability-related disclosures
3. Presentation and disclosure

“Reporting on enterprise value Illustrated with a prototype climate-related financial disclosure standard” https://29kjwb3armds2g3gi4lq2sx1-wpengine.netdna-ssl.com/wp-content/uploads/Reporting-on-enterprise-value_climate-prototype_Dec20.pdf

Now, some of the readers might be wondering why is this such an important milestone.

The key answer to that is that in order for the mankind to be able to win the battle with Climate Change, 2 prerogatives are crucial:

1. General understanding of Climate Change levers and how to pull them including ways how to sequester Carbon such as DACC or other forms of Carbon sequestration
2. Having sufficient and reliable data to be able to make informed and rational decisions on our way of reducing the amount of Carbon and Carbon Equivalents we burn into the atmosphere

The above mentioned unification of reporting is tackling indirectly the 2nd prerogative. The first one will be a tougher to crack and will require the inclusion of Carbon Accounting and Carbon Sequestration basics into school curricula as well as into the general mindset of every citizen of the earth.

The time to start is now.