News from the profession

A summary of current CICA projects and initiatives

Need for enhanced sustainability disclosures gains wider recognition

Long before the environment gained its current position of prominence on the national agenda, Canada’s CAs were supporting the integration of environmental and social issues into corporate reporting.

In February, the impact of the environment was brought home to the investment community when the National Round Table on the Environment and the Economy (NRTEE), announced the findings of its report Capital Markets and Sustainability: Investing in a Sustainable Future at the Toronto Stock Exchange.The report encourages investors, governments, regulators and corporations to enhance the integration of environmental, social and governance (ESG) factors in capital allocation decisions and the inclusion of material ESG information in corporate reporting.

“The CA profession has long been at the forefront of identifying the important role of sustainability in the capital markets,” said CICA’s president and CEO, Kevin Dancey, FCA. “In addition to participating in many international sustainability initiatives, CICA was a founding member of the Global Reporting Initiative, whose guidelines for reporting on social, environmental and economic aspects of a company’s operations are used around the world.”

Since 1991, the CICA has addressed measurement and re-porting issues on the environment and sustainability in various research studies and reports. In 1993, the CICA introduced sustainability reporting as a judging category in the Corporate Reporting Awards, in recognition of the importance of transparency about how companies integrate all dimensions of sustainability into their business activities.

In late 2005, the CICA issued a discussion paper, MD&A Disclosure about the Financial Impact of Climate Change and Other Environmental Issues. Seen by many as being ahead of its time, the paper was referenced by leading advocates for such disclosures. Now that climate change in particular and ESG issues in general are emerging as important factors in investor decision making, it is anticipated that the value of this discussion paper will become more widely recognized. It has already been referenced in the Conference Board of Canada’s Carbon Disclosure Project Report 2006 Canada 280, in the Carbon Disclosure Project Report 2006 Global FT 500 issued by the Carbon Disclosure Project and by Innovest Strategic Value Advisors on behalf of 225 investors worldwide, with assets of $31 trillion. The NRTEE report also notes the work of CICA in this area.

“The CICA’s ongoing leadership in advancing corporate reporting will soon include new research intended to help corporations meet the increasing expectations for transparency in nonfinancial reporting, including sustainability,” said Dancey. “We encourage all members of the Canadian business, government and investment communities to collaborate in designing and implementing capital market practices better aligned with progress toward a sustainable future for all generations.”

Chronology of CICA’s climate change and sustainability initiatives

1991	The CICA Handbook introduces recommendations on accounting for site restoration costs (believed to be the first such standard anywhere in the world). CAmagazine (March) is devoted to environmental accounting and auditing topics
1992	CICA initiates and organizes sessions on environmental issues for the International Federation of Accountants in Washington (and Paris in 1997). Publishes research report Environmental Auditing and the Role of the Accounting Profession
1993	Publishes Environmental Manual for Business and Executives and Environmental Costs and Liabilities: Accounting and Financial Reporting Issues. Corporate Reporting Awards introduces award for environmental reporting (renamed “sustainability reporting” in 2000). CICA Task Force on Sustainable Development issues final report
1994	Publishes Reporting on Environmental Performance jointly with FEI Canada, Canadian Standards Association and International Institute for Sustainable Development. Auditing Standards Board issues a guideline on audit of financial statements affected by environmental matters. CICA submits brief and appears as witness to Standing Committee on the Environment. Reestablishment of the office of Commissioner of Environment and Sustainable Development
1995	Final report of CICA Advisory Committee on sustainable development
1994-1996	CICA convenes multistakeholder working group to recommend how environmental auditors should be accredited in Canada for purposes of ISO 14001 EMS audits; subsequently supports Canadian Environmental Auditing Association in establishing environmental auditor accreditation program
1994-2000	CICA actively contributes to development of ISO 14000 series standards on environmental auditing and environmental performance evaluation
1995-1998	CICA supports partner of E&Y as head of Canada’s delegation to ISO TC 207, Environmental Management Standards (ISO 14000)
1997-1999	CICA contributes research and report-writing resources to the National Roundtable on the Environment and the Economy (NRTEE) program on developing set of environmental performance (eco-efficiency) indicators for companies
1996-2004	CICA membership in Conference Board of Canada’s Business Council on the Environment
1997-2002	CICA is founding member of Global Reporting Initiative steering committee, also CICA member chairs GRI working group on verification of sustainability reports. CICA participates in all subsequent working groups leading to GRI Sustainability Reporting Guidelines in 2000, 2002 and 2006 (G3)
1998	Publishes research studies: Strategic Performance Monitoring and Management: Using Non-financial Measures to Improve Corporate Governance, and The Measurement of Shareholder Value Creation.
1999	Publishes Environmental Performance and Shareholder Value Creation
1997-1999	CICA participates in NRTEE task force on eco-efficiency indicators, backgrounder and state of debate report. CICA acts as observer to Ontario Pilot Emission Reduction Trading project
2001	Publishes Environmental Performance: Measuring and Managing What Matters
2002	CICA and the International Emissions Trading Association sponsors a meeting of representatives from industry, accounting standards bodies and accounting firms to consider accounting for greenhouse gas emissions
2001-2003	CICA participates in joint AICPA task force that produces Practitioner Guidance on Providing Assurance on Greenhouse Gas Emissions Information
2003-2006	Carbon Disclosure Project international reports recognizes CICA’s leadership work in accounting profession regarding financial accounting and disclosure about greenhouse gas emissions and climate change issues. Participates in Canada’s ISO delegation work to develop ISO 14064 international standard for measurement, reporting and verification of corporate greenhouse gas emissions
2003	Publishes Business Value of Social Capital and Stakeholder Relations
2003-2007	NRTEE Capital Markets and Sustainability. CICA has a representative on task force and contributes 2004 paper on relevant financial reporting disclosure requirements
2004	CICA participates in the Investor’s Perspective on Environmental Finance Conference and the University of Toronto Environmental Finance: Risk Management and Business Opportunities Conference. Develops research paper on accounting issues regarding emissions trading scheme transactions
2005-2006	Conducts sessions on sustainability reporting at CICA Financial Reporting and Accounting Conference
2005	CICA representatives chair session and present paper at Forum Tremblant conference on climate change and investment (attended by Stéphane Dion, federal Minister of the Environment). CICA contributes paper on Public Sector Accounting Issues Related to the Kyoto Protocol, tabled with the International Public Sector Accounting Standards Board. MD&A Disclosure about the Financial Impact of Climate Change and Other Environmental Issues published as a discussion brief to help reporting issuers; builds from the CICA MD&A Guidance
2006	Carbon Disclosure Project report Canada 280 (produced by the Conference Board of Canada) recognizes CICA pronouncements and relevant research. Presented at The Business of Climate Change Conference and the Conference Board of Canada 2006 Corporate Social Responsibility: Integrating CSR with Business Strategy Conference
2006-2007	Participating in Social Investment Organization, Public Policy and Responsible Investment: An Inventory of Global and Canadian Trends