The need for international sustainability standards is very real, as investors today need to know climate-related risks and opportunities before investing in a company, a renowned European economist underlined on Tuesday on the occasion of his time in Montreal.
“That’s why it’s important to make measurable benchmarks transparent,” said Erkki Liikanen, president of the International Financial Reporting Standards (IFRS) Foundation, a nonprofit organization created to develop global standards. in terms of accounting and information on sustainable development.
This ex-politician and former governor of the Bank of Finland was the distinguished guest of a conference on building a sustainable global financial system which was organized by the Council on International Relations of Montreal (CORIM) at the hotel Westin, in downtown Montreal.
Invited to participate in an exchange with Erkki Liikanen after the latter’s speech, the first vice-president and head of financial management and operations at the Caisse de dépôt et placement du Québec, Maarika Paul, said that the work at accomplishing the standards is difficult because it requires the collection of “a lot of data and a lot of diligence” but is a “necessary cause.”
“Climate change is now part of our DNA at the Caisse,” she said. “This is important, not only because there are risks that we saw in the companies we invested in, but also because we saw that there could be opportunities to identify new companies who were going to succeed in this world of climate change because they were changing the way they did things. »
SCREENSHOT, CORIM CONFERENCE
The first vice-president and head of financial management and operations at the Caisse de dépôt et placement du Québec, Maarika Paul.
Comparing has always been a challenge, she pointed out. “Everyone has a slightly different idea of how to report and what to look at. It is therefore very difficult to compare companies. This is why it was necessary to engage in a standardization process allowing companies to be compared with each other. This helps build confidence in the information collected. And that allowed us to examine the impact of these elements on the valuation of companies. Are we willing to take more risk or not based on how these things add up? These standards will also encourage companies to focus more on their strategies, risks and opportunities. The more companies that have to take these standards into account, the more difference it will make. It won’t just be about ticking a box, but understanding whether companies are properly reviewing their risks or not,” said Maarika Paul.
“Investors can see if a company has an unresolved emissions problem and if this is the case, the company’s valuation will be affected downwards, as will the bonuses,” said Erkki Liikanen. “It’s important,” added the former Finnish finance minister.
Tuesday’s conference came as the IFRS Foundation last month released a voluntary implementation guide designed to help companies communicate their progress as they begin to comply with general financial reporting requirements relating to sustainable development and climate.