December 17, 2020


The Accounting Profession and Public Company Disclosure -
How Far We Have Come With the Focus on Sustainability Matters!


Looking back 90+ years to the 1920s, corporate financial disclosure was in essence, a joke. (Why, said one public company leadership, would we ever tell investors what our real financial condition is!)  Financial reporting was voluntary!   And then…came the 1929 market crash.

And so, back 80 years, the federal government – at last! – moved to regulate disclosure by companies with outside (“public “) investors.  An important provision of the landmark 1930s legislation to regulate companies and the capital markets: by the power of the Securities Act of 1933 and Securities Exchange Act of 1934, all registrants (corporate entities under the supervision of the Securities & Exchange Commission) had to have their financial statements audited by independent CPAs. The early SEC even created a chief accountant position to work with CPAs and guide the “independent audit” of the books process.

Shortly after this the concept of the Generally Accepted Accounting Principles would take shape (today’s GAAP).  The accounting profession as we know it today began to take shape in the late-1800s, as states (starting with New York) licensed Certified Public Accountants (CPAs).  By the 1930s there were hundreds and more of credible CPAs available to help publicly-traded companies with their financial reporting. The “Big 8” firms evolved (major accounting firms, now only four globally with mergers).

And now to 2020, 2021: The accounting profession is deeply involved in corporate sustainability disclosure.   As indication of this profound involvement, KPMG has published its 11th edition of the annual survey of sustainability reporting (dating back to 1993, even before the US SIF began its biannual survey of professionally-managed funds following ESG principles). 

Looking at 5200 companies in 52 countries, the latest survey provides a good look at global trends in sustainability disclosure/reporting.

We are a long way from the wild west days of corporate reporting of 90 or even 80 years back.  In this 60+ page report – “The Time Has Come” for corporate sustainability reporting – we see topics and issues that would be unimaginable to the corporate leaders of yesteryear (in the 1930s struggling to understand what they should be telling investors after adoption of the historic legislation and creation of SEC to regulate disclosure). 

Think:  What about biodiversity loss?  What companies have to say about climate risk (a clear responsibility of the board of directors, SEC has pointed out) – and reduction of carbon emissions?  What about the public sector and individual company in adopting, then reporting on alignment of mission etc. with the UN Sustainable Development Goals?

What would corporate leaders – and investors! – of the past think of the “time has come” positing of KPMG experts saying, “sustainability and ESG reporting is now widely recognized by financial stakeholders as a critical component of corporate reporting”.  (Translation:  those parties providing your company with capital want to know about ESG!).

How are companies moving (or not moving) toward “net zero” and a low carbon economy?  What is the quality of the disclosure from the largest of the public companies? (The N100 and G250 – with data provided.)

We’ve made this our Top Story of the week – and the link to the report is included in the introductory text from the KPMG experts (Richard Threlfall, Adrian King, Jennifer Shulman, and Wim Bartels).

Do read the report – it is chockful of data findings and has good advice for corporate managers wrestling with sustainability disclosure and reporting.

As the authors tell us: “By the time of the next edition of the KPMG Sustainability Report survey, we expect to see a significant shift is global sustainability reporting practice driven by key factors (outlined in the report for you). We further predict a tightening of focus on non-financial reporting on investors’ need, more harmonized reporting based on common metrics and further coalescence towards a global corporate reporting system.  The time has come.”

We are G&A Institute agree – corporate sustainability disclosure and reporting is at the core of what we do, day in and day out.  2021 is shaping up to be a dramatic year of change – advancement! – of such reporting.  

And finally, a question pops into mind:  wonder what, if they had a time machine to return to 2020, those early accounting professionals of almost a century back would be thinking about where we are in this, the era of the open kimono on sustainability for the corporate sector!


Top Story


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