An eyewash for green washing
For the coming U.N. climate conference, a new body to set accounting standards for public companies could result in less rhetoric about goals and more action toward a healthy climate.
If you’re looking for a scorecard to judge the highly anticipated United Nations Climate Change Conference that starts Oct. 31, watch for the debut of this particular scorecard: The world body that now sets rules for financial accounting of public companies plans to announce a similar body to set “sustainability standards.” The aim is to ensure firms are transparent and accurate about their promises to both fight climate change and adapt to climate-related risks.
The proposed International Sustainability Standards Board (ISSB) would help investors and others hold companies accountable for their promises to lighten their impact on the environment. In other words, the board would provide eyewash for any green washing, or challenge a company’s rhetoric and numbers when they don’t result in verifiable action.
Unfulfilled promises about climate action, by both companies and countries, have dogged these U.N. climate conferences. This 26th conference being held in Glasgow, Scotland, may see the global use of quantifiable metrics for measuring real progress.
One reason for the global standards is that many companies want them. Under pressure from activist stockholders and employees to be less polluting, they now face a proliferation of standards by different bodies. The standards are often inconsistent, lack comparability, or are too subjective. Companies seek clarity and simplicity, especially when operating in many countries.
Several countries from China to Canada are eager to host the headquarters of the new board, as it could be a powerful force for influence over climate action. It will help build long-term trust in companies as credible fighters of climate change as well as help define what is the best path toward a healthy climate.
Differences remain over how the ISSB will operate. Will it allow for subjective judgments, such as the long-term benefits of tree planting? Will it merely assist companies to find new ways to improve their bottom line in helping the environment? Will it force them to lower profit expectations for the sake of a global cause? Nudging often works better than coercing.
For now, at least, the world is expanding ways to achieve the public good of a healthy climate. While new limits may be placed on air pollution, the idea of a common goodness has no limits.