November 3, 2021

As the world turns its eyes to Glasgow for COP26, market traction for environmental, social, and governance (ESG) reporting is accelerating. For example, the European Commission is looking to its European Financial Reporting Advisory Group to develop reporting standards to implement new directives and regulations. The IFRS Foundation is moving toward the establishment of an International Sustainability Standards Board. In the U.S., the Securities and Exchange Commission is putting new resources toward enhancing climate and human resources capital disclosures.

For management accountants, sustainable business isn’t just about measurement and reporting. It’s about having the right perspective, information, processes, and talent for making strategic and sustainable business decisions. Today’s world demands that we take a holistic view for the long term, and IMA is making the case that sustainable business is good business.

Due to these growing needs and IMA’s unique positioning to speak for the management accounting profession, IMA has established a Sustainable Business Management Global Task Force, chaired by Brigitte de Graaff, Lecturer in Accounting and Researcher, Vrije Universiteit (VU) Amsterdam. Its aim is to speak on behalf of the global management accounting profession as regulators and standard setters work to advance the sustainability reporting ecosystem.   

One of the task force’s first efforts was to endorse a Statement of Position on Sustainable Business Information and Management, a series of nine principles that IMA believes are fundamental to building a successful and sustainable accounting system. The principles are as follows:


  1. Sustainable business reporting must instill trust and confidence: Trust, accountability, and transparency are the cornerstones of professional accountancy. The world now expects businesses to deliver on sustainability with the same rigor, thoughtfulness, and energy used to deliver on profits. We support this global transition in a way that facilitates the development of high-quality and reliable ESG information that instills this trust.

  2. Sustainable business information must be decision-useful and actionable from management’s perspective: The fundamental purpose of accounting is the delivery of decision-useful information for external users and for management. Management needs talent resources to report information, analyze the data, respond to risks, innovate, and execute strategies around what is most relevant.

  3. Entities must produce reliable sustainable business information that flows from systems with strong governance, oversight, and internal controls: To promote the disclosure of high-quality, reliable information in accordance with the value of trust, the hallmark of our profession, new climate change and other sustainable business disclosures that are not currently included in annual or quarterly processes will require new systems of oversight. Financial reporting professionals must be allowed the time and space to develop and implement effective systems to ensure the quality of material ESG disclosures.

  4. Corporate reporting must follow from a value-creation mindset: We strongly support initiatives that bring about integration and alignment and avoid the creation (or enabling) of “financial” and “nonfinancial” silos. We believe that integrated thinking is a critical part of integrated reporting and effective management of an entity’s collective resources contributed by its multiple stakeholders.

  5. Sustainable business reporting must fully utilize technology for efficiency in the data ecosystem: We view technology as a critical means to improve corporate reporting along the information ecosystem from data source to ultimate users. This digital transformation process is changing the means of reporting from a periodic document to the delivery of data sets. 

  6. ESG information must be relevant to small- and medium-size entities (SMEs): The needs and perspectives of these businesses must be considered in comprehensive approaches regarding sustainable business information and management. It will be highly beneficial for sustainable business standards setters to consider, at all times, the implementation challenges and benefits for SMEs.

  7. ESG reporting standards must address the burdens of preparers, particularly around fragmentation: IMA observes that fragmentation has generally been detrimental to the development, implementation, and usefulness of reported sustainable business information. This fragmentation has resulted in confusion among well-meaning organizations that seek to respond to stakeholder demands. We endorse efforts and activities by authorities and standards organizations toward reducing this fragmentation and toward alignment.

  8. Disclosure of ESG information to the securities markets must adhere to accepted definitions of materiality: The fundamental purpose of accounting and reporting is delivering decision-useful information. In financial reporting, this is operationalized through “materiality.” We believe that it is important that information released for investors continues to adhere to existing definitions of materiality.

  9. Disclosure mandates must be clear as to the intended user: A lack of clarity about the intended users and purpose of certain reporting proposals can aggravate fragmentation and make operationalizing new mandatory disclosures problematic and excessively wasteful. Moving ahead without this clarity can make the quality of sustainable business information on the market even less reliable than it is today and result in a loss of trust in accounting. 


These principles form the basis of IMA’s responses for input on sustainable business reporting and are an important first deliverable of the task force, guiding its direction and work moving forward.