The long-serving sustainable finance expert identifies five trends that will shape the next few years of climate-related disclosures. Michael Hurley reports
Mardi McBrien has long been a passionate advocate for the power of financial disclosures to improve management of climate-related risks and opportunities, particularly during her time as managing director of the Climate Disclosure Standards Board (CDSB).
McBrien says that, "as one of the very early voices 15 years ago talking about climate as a financially material risk, [I was] able to count those working on the issue almost on my [fingers]".
Recent years have seen marked improvement in the state of disclosures, she says – though much of this progress has been concentrated in developed markets and among the largest companies.
After about 11 years at CDSB, McBrien was rewarded with the role of chief of strategic affairs and capacity building at the IFRS Foundation in 2022, following the latter's absorption of the CDSB as the IFRS International Sustainability Standards Board (ISSB) readied its disclosure standards.
McBrien says one of her most important achievements in the last 12 months was convening more than 40 global stakeholders "to work together to build the skills and capacity in market participants to support high quality adoption of the ISSB standards, with a focus on supporting emerging markets and developing economies".
The IFRS Foundation launched a ISSB knowledge hub and will soon launch 'e-learning' services "to get all stakeholders – regardless of location and economic situation – up to speed and started on their journey with the ISSB standards".
She says this will help broaden the improvements in quality and quantity of climate-related and broader sustainability-related disclosures beyond developed markets.
"Building the skills required to support the transition to a more sustainable future keeps me awake at night," McBrien says, adding: "It was and is still very much a team effort – I cannot take all the credit."
It is essential that jurisdictions embrace the spirit of the ISSB's aim to establish the 'global baseline' for sustainability-related disclosures, McBrien says: "To achieve this baseline, we need to ensure that those with the powers to introduce the standards do so in such a way that does not deviate from the Standards text and cause undue burden and costs for reporters and users of the information.
"Once introduced, they need to be enforced to ensure quality reporting and prevent greenwashing."
McBrien notes there are "long-standing requirements" in IFRS Accounting Standards, required for use for all or most publicly listed companies in 145 jurisdictions, to report on the effects of climate-related matters in the financial statements when those effects are material.
"Building the skills required to support the transition to a more sustainable future keeps me awake at night"
The IASB published examples of where this was required, which are currently open for market feedback.
"These will also have an important role to play in driving quality, increasing accuracy and ensuring investors are getting the decision-useful information they require," McBrien adds.
Asked to identify some trends that will shape the next few years of climate-related disclosures, she notes five:
- "Improvements in the comparability of structured climate transition plans by corporates and financial institutions.
- "Increasingly, companies including the quantitative impacts of climate-related risks in their financial statements.
- "An increase in digital reporting requirements from regulators for sustainability information. XBRL International are working closely with us on a capacity building programme to support regulators on digital sustainability reporting.
- "An internal shift from climate and broader sustainability reporting being seen for compliance purposes to be key for corporate strategy and long-term value creation.
- "Greater enforcement of sustainability related reporting – regulators are upskilling."
McBrien says her optimism for the future "stems from the groundswell of support from all stakeholder types in all regions of the world for the IFRS Foundation's current work – it is challenging to manage it all – but a good challenge to have and we are very grateful".
She looks forward to helping educate professionals around the world on sustainability-related topics – spanning accounting professionals, lawyers, boards, corporate governance professionals, and others.
"There is lots to do. My to-do list is never ending but it is a very exciting time and never a dull day at the office!"