This document summarizes Kenneth Witt's presentation on developing sustainability accounting and reporting. It discusses key frameworks for sustainability reporting like the Global Reporting Initiative (GRI) and Integrated Reporting, which aim to integrate financial and non-financial information. It also discusses emerging standards like the Sustainability Accounting Standards Board (SASB), which provides industry-specific sustainability accounting standards. The presentation emphasizes that sustainability reporting is evolving to provide more decision-useful information to investors and stakeholders on material environmental, social and economic impacts.

1. Kenneth Witt, CPA, CGMA
AICPA Technical Manager, Management Accounting
More than “Green Initiatives”:
Developing the future of
sustainability accounting and
reporting
Beta Alpha Psi
Dallas Regional Meeting
March 7, 2014

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Kenneth W. Witt, CPA, CGMA
 Technical Manager, Management Accounting in the Business
Industry and Government team at the AICPA.
 Staff liaison to the Business & Industry Executive Committee which
provides insight and guidance on professional issues and trends
 Involved in thought leadership and professional development activities
for the Chartered Global Management Accountant (CGMA)
designation.
 Managed the development of a portfolio of guidelines on strategy, risk
and performance management topics
 Launched the AICPA Sustainability Initiative
 Created and manages the AICPA Business & Industry Economic
Outlook Survey
 Member of the task force for the COSO Internal Control over Financial
Reporting – Guidance for Smaller Public Companies
 BBA in accounting from the University of Iowa; Started career with
Touche Ross & Co.

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Agenda
Sustainability and sustainable business
Sustainability accounting and reporting
 Climate Disclosure Standards Board (CDSB)
 Global Reporting Initiative (GRI)
 Integrated Reporting (IR)
Sustainability Accounting and Assurance
 Sustainability Accounting Standards Board (SASB)
 Sustainability assurance standards

4. Sustainability and
Sustainable Business

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What is Sustainability?
Image – Ethical Corporation

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Green Growth
Indicators
The 3Rs
Reduce
Reuse
Recycle

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Davos 2015 – The Circular Economy
Cradle to Cradle
Endless
Resourcefulness
Waste-less
Supply Chains
Endless is More
William McDonough - Moderator

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Redesigning with the whole lifecycle
in mind – Levi Strauss & Co.
Paul Dillinger, Head of Global Product Innovation
SustainableBrands.com

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Life Cycle of
a Pair of
Levi Jeans

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Puma– Monetizing
its Impacts
Environmental P&L by Supplier

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More than Green Initiatives
“CORPORATE SUSTAINABILITY IS A
COMPANY’S DELIVERY OF LONG-TERM
VALUE IN FINANCIAL, ENVIRONMENTAL,
SOCIAL AND ETHICAL TERMS.”

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5 Things Sustainable
Businesses Do
1.Principled Business
Human rights
Labor
Environment
Anti Corruption
2.Strengthening Society
3.Leadership Commitment
4.Reporting to
Stakeholders
5.Local Action

13. Sustainability
Reporting
Frameworks

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Sustainability Accounting and Reporting
Triple
Bottom Line
• Economic Viability
• Social Responsibility
• Environmental
Responsibility

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Major Sustainability Frameworks

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Data and Reporting Considerations
• Relevant
• Consistent
• Comparable
• Clear and
understandable
• Inter-connected
• Forward-looking
Data
• Materiality
• Reporting
boundary
• Reporting period
• Faithful
representation
• Assurance
Reporting

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Climate Disclosure
Standards Board
CDSB is an international
consortium of business
and environmental
organizations committed
to the integration of
climate change-related
information into
mainstream corporate
reporting.
“CDSB
connects
corporate
non-financial
reporting
approaches”

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Global Reporting Initiative
– New GRI G4 Guidelines
 Designed to be a universally recognized
standard
 Compatible with other frameworks including
Integrated Reporting
 G4 Focus on -
Materiality
Key stakeholder views
Link between business strategy, operations and
sustainability impacts

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GRI Content – Aspects and Boundaries
Boundaries
Assess whether inside or
outside of organization
Own operations, suppliers,
distributors, etc.
Aspects
Significant economic,
environmental and social
impacts, that
Substantively influence
assessments and decisions
of stakeholders

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GRI – Types of disclosures
• Overall context
• Reporting process
• Seven types of GSDs
General
Standard
Disclosures
• Why material
• How managed
• How evaluated
Management
Approach
(DMA)
• Comparable information
• Primarily quantitative
• Indicators in G4
Indicators

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GRI – Scoping Decision
Core
Essential
elements -
DMA
+ One
indicator for
all material
Aspects
Comprehensive
Additional
Disclosures
+ All
indicators for
all material
Aspects

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G4 Economic and Environmental Aspects
Economic Aspects
• Performance
• Market Presence
• Indirect Impacts
• Procurement Practices
Environmental Aspects
• Materials
• Energy
• Water
• Effluents and Waste
• Biodiversity
• Emissions
• Other

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G4 Social- Sub-categories and Aspects
Labor Practices and Decent Work
•Labor relations
•Occupational health and safety
•Diversity and equal opportunity
Human Rights
•Child labor
•Freedom of association and collective bargaining
•Non-discrimination
Society
•Local communities
•Anti-corruption
•Compliance
Product Responsibility
•Customer health and safety
•Privacy
•Product and service labeling

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What is Integrated Reporting
The primary purpose of
an integrated report is to
explain to providers of
financial capital how an
organization creates
value over time.
International Integrated
Reporting Committee

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Key Concepts of Integrated Reporting
 The creation of value
 The use of “capitals”
 The definition of the organization’s
business model
 Integrated thinking

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What is Integrated Thinking?
Integrated thinking begins with a
thorough understanding of the
business model within the context of
the external environment.
This understanding creates a more
robust basis for identifying risks and
opportunities.
Integrated thinking helps companies
develop a better understanding of
financial and non-financial factors and
how they impact their businesses.
IIRC and PwC

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Traditional Financial Statement Model

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Integrated Reporting Model
International Integrated
Reporting Committee

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Integrated Report Content Elements
Organizational overview and external environment
Governance
Business model
Risks and opportunities
Strategy and resource allocation
Performance
Outlook

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IIRC Vision
Integrated
Thinking
Integrated
Reporting
Capital
Allocation
Financial
Stability
Sustainability

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What companies
are doing

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Assurance Report

33. Sustainability
Accounting and
Assurance Standards

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Sustainability Assurance Standards
 AA1000, Assurance Standard (2008) - an open-
source set of principles that focuses on addressing
CSR issues developed by AccountAbility
 ISAE 3000 (2003) - Assurance Engagements Other
Than Audits or Reviews of Historical Financial
Information, a set of basic principles and procedures
for nonfinancial assurance engagements
 ISAE 3410 (2012) - Assurance Engagements on
Greenhouse Gas Statements
 AICPA SOP 13-1 (2013) - Attest Engagements on
Greenhouse Gas Emissions Information

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Sustainability Accounting Standards
Board (SASB)
The Sustainability
Accounting Standards
Board (SASB) provides
sustainability accounting
standards for use by
publicly-listed
corporations in the U.S.
in disclosing material
sustainability issues for
the benefit of investors
and the public.
SASB Unique focus:
U.S. public equities
Industry-specific issues
Disclosure of minimum
performance standards

36. Developing the
future accountant

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What do employers need?
Pathways Commission
Education
Old School New School

38. Do you want better insight and decision making?
On completion of the CGMA learning program

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The CGMA program covers the following
competencies
Internal Controls
Risk Evaluation
Performance
Measurement
Strategic
Financial Risk
Leading Change
Strategy
Implementation
Corporate Finance
Business
Valuation
Mergers & Acquisitions

41. Questions?
Thank You
CGMA. org
kwitt@aicpa.org