THE latest instalment of ACCA’s sustainability reporting series is Sustainability Reporting: Risk and Materiality, which takes a practical approach to helping businesses determine material information for sustainability reporting.

Author Aaron Saw, head of corporate reporting insights – financial at ACCA, said: “Many organisations have siloed management and reporting of financial and sustainability-related matters. As a result, they don’t realise they already have access to insights they need for reporting. To streamline cost and effort and to produce connected information, it makes sense to leverage existing risk-management processes to identify and manage sustainability-related risks and opportunities.”

The article sets out three steps to determine material information to be disclosed:

1) Identify the organisation’s sustainability-related risks and opportunities (SRROs)

2) Assess whether SRROs could affect the organisation’s prospects

3) Determine material information for disclosure.

Each step is supplemented with illustrative, anonymised, real-life examples to inspire our community of accountants, finance and business professionals to learn, adapt and improve their approaches to identifying and communicating risks and opportunities.

Given the severe operational disruptions that weather-related events are causing many businesses, the examples featured are biased towards climate-related risk. Small and medium-size entities (SMSEs) also feature in the examples to demonstrate how smaller organisations approach reporting.

The article emphasises the importance of organisations taking a holistic approach in creating and communicating material information about their SRROs, and recommends all organisations to:

• allocate resources to start identifying SRROs arising from the resources and relationships in the value chains on which they depend and those that their activities would affect

• provide the most relevant sustainability-related information they can, and continue to improve the reporting process over future reporting cycles

• use knowledge and expertise gained in determining material information in one reporting cycle to improve the communication of material information in the following cycle.

Saw concludes: “We encourage everyone to work collaboratively with peers in the same industry, or within the same value chain. In this way we can further refine the approach to identifying SRROs, manage the risks or realise identified opportunities, and measure the relevant metrics and provide better information to support decision-making.”

About ACCA

We are ACCA (the Association of Chartered Certified Accountants), a globally recognised professional accountancy body providing qualifications and advancing standards in accountancy worldwide.

Founded in 1904 to widen access to the accountancy profession, we’ve long championed inclusion and today proudly support a diverse community of over 252,500 members and 526,000 future members in 180 countries.

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