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Conceptual Framework for Sustainability Reporting

Towards a Conceptual Framework for Sustainability Reporting

By understanding the sustainability context and how organizations impact and depend on all the capitals, leaders can make holistic decisions that create value for nature, people and society alongside businesses and the economy. There is also a growing recognition that the purpose of human activity is to increase the well-being of current and future generations, and therefore the well-being of people and planet, or equally to contribute to sustainability, assessed by accounting for impacts on all capitals.

Natural, social and human capital are important concepts and form the foundation of human wellbeing and economic success, but are missing from the Conceptual Framework for Financial Reporting (CFFR). Currently, the CFFR focuses on financial capital and physical capital within the boundaries of the reporting entity.

This report aims to stimulate discussion and contribute to the development of the International Sustainability Standards Board (ISSB), which will sit alongside the International Accounting Standards Board (IASB). The report addresses the missing capitals and set out what an interim Conceptual Framework for Sustainability Reporting (CFSR) could look like – following the same scope, logic and structure as the CFFR.

Key messages

  1. In this interim CFSR, the primary users would remain current and potential investors, providers and loan finance and suppliers, still making decisions to provide economic resources but now in the expectation of returns to social, human, and natural capital
  2. This interim CSFR will provide a contribution to the work of the ISSB and disclosure of information on social and environmental topics and highlight the consistency between the Natural Capital Protocol, the Social & Human Capital Protocol and the CFFR
  3. By promoting discussion and contributing to the development of sustainability accounting and reporting, this paper contextualizes our relationships with the capitals and helps to illustrate a clear business case for their protection and investment in their health and resilience

The Capitals Coalition will seek to further this agenda in collaboration with its global community. The Coalition is currently combining the Natural Capital Protocol and the Social & Human Protocol into one integrated capitals protocol and developing the links between decision-making and disclosure. This discussion paper, which builds on earlier work on the disclosure of impacts on capitals in financial statements, is also expected to inform that process.

Note: The Appendix, to be found here, features comments as well as the original text.

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