Are we witnessing the latest, grand attempt of Milton Friedman’s Shareholder Capitalism to greenwish & greenwash itself?

IFRS Foundation Trustees just announced next steps in response to their perceived broad demand for global sustainability standards. With the announced plans IFRS Foundations is clearly trying to ???????? ??????????????????/???????????????????????? ???????? ???????? ????????, ?????? ???????? ???????????????????????? – ???????????? & ???????????? - ???????? ???? ?????????? ???????????????????????????? ???????????? as their approach is:

• ignoring/lacking ???????????????????????????? ?????????????? (context based sustainability explained:
• propagating ???????????? ?????????????????????? instead of double materiality as proposed for example under the EC’s NFRD & sustainable finance approach; this sounds as if companies’ social and environmental impact is an unimportant component in designing reporting standards
• prioritising an ??????????????????-?????? ?????????????????? ?????????????????? system and actively steering away from mandatory reporting.

What IFRS proposes is a lifeline to ESG incrementalism; this will in turn can only lead to marginal improvements (i.e. better environmental / diversity / gender etc performance than last year, better but not good enough…) but will NOT instigate the changing of the system(s) within which we are heading towards dangerous biophysical tipping points, overshooting of our Planetary Boundaries and fueling societal problems.

Reporting on its own cannot drive or constitute “theory of change”; it could be a tool for transformations, such as decarbonisation and stopping biodiversity loss / deforestation. What IFRS suggests in its Consultation Paper, for which almost 600 responses have arrived , is a dangerous distraction and/or window-dressing. It will channel efforts into consolidating (or: reinventing) an already dysfunctional ESG reporting system (sometimes misleadingly called as sustainability performance reporting) that would not save us from the mess that we have created, including IFRS' own accounting standards turning a blind eye on financially material climate impacts on corporations.

Powerful incumbents are trying to sell a voluntary, single-materiality, shareholder focused reporting regime. In other words, they are attempting to greenwish and greenwash the existing reporting initiatives, even ripping off their most advanced elements for the sake of consensus and incremental progress.

Offering a simple solution to a complex problem is almost always wrong. IFRS must re-consider its simplistic, shareholder-primacy focused, incrementalism – conserving approach.

With respect to the decarbonisation component of sustainability – the area where I have the most confidence within the complexities of the sustainability world – Raj Thamotheram and I put down some thoughts in Investments & Pensions Europe (IPE)’s January edition that may contribute to the badly needed, joint re-thinking of IFRS’s planned reporting standardisation steps.

Your views are more than welcome - you may also wish to check three recent post/comment streams triggered by Larry Fink's latest CEO letter and BlackRock's turning its back on corporate purpose proposal and former International Integrated Reporting Council CEO, Richard Howitt's smart-thinking touching upon the most crucial issues for the convergence/proliferation of reporting standards (Link).