It is well known that “green”, “sustainable” and “eco-responsible” do not mean anything specific and that companies take advantage of this. But if the two standards unveiled Monday by an accounting body are required, companies could be legally compelled to be sincere about their carbon footprint.
” THE greenwashing in the sense of “I am selling sustainable finance which is not sustainable finance to my shareholders”, it is over when our standards have taken a sufficiently important place in the markets”, assures Emmanuel Faber, former p .-CEO of Danone who has become Chairman of the International Non-Accounting Standards Board (ISSB), an offshoot of the international foundations responsible for IFRS accounting standards, used in no less than 140 countries and regions.
Today, most large companies already declare how many tonnes of carbon they emit into the atmosphere each year, but these declarations are à la carte, more or less verified, often incomplete and generally unreliable. They are not comparable between companies, unlike their profits or their turnover.
The first to complain about it are the markets, and the standards are primarily intended to “secure the financial market on the information given to it”, underlines Emmanuel Faber. Investors want to know if the companies they fund will suffer or grow in a warmer or more expensive carbon world. For example, how does an automotive supplier project itself into a Europe of 2035 where only new cars that are electric can be sold?
CO2 accounting
The two standards unveiled Monday by the ISSB would require companies to count everything relevant to their business, and with the same method, as in financial accounting. For example, an oil company should account for “indirect” emissions generated by the combustion of gasoline or gas by its customers, the scope 3 in the lingo.
Companies should also describe their climate strategies in their annual reports, although the standard does not go into too much detail. “Is it just the boss or the boss of the comm. who did something, or did the executive committee sit down and there are many budgets, investments, presented over five, ten years? »
Greenwashing in the sense of “I’m selling sustainable finance that isn’t sustainable finance to my shareholders”, is over when our standards have taken a sufficiently large place in the markets.
The standards would ensure “that what they actually do is detailed in a language that is common to all companies”, explains Emmanuel Faber, who assumes the advent of carbon accounting.
The verification will be “done by the financial auditors of the companies so that the connection with the financial language is total”, he adds. “We go from things that are posed in the air to a system that is completely inside the process of the company. »
“Faithful and sincere”
The standards will either be voluntarily adopted by companies or made mandatory by states.
Japan, the United Kingdom, Singapore, Hong Kong, Brazil, Nigeria, Egypt and others seem well on their way to applying them, specifies Emmanuel Faber. The European Union is designing its own standards, with a much more ambitious scope, which includes biodiversity and human rights: they should be compatible with those of the ISSB, expects its leader, who stresses that biodiversity will be the subject of the following standards.
As for China, the Frenchman, without predicting the future, welcomes the government’s “support” for its work. “We cannot do without China”, he repeats in any case.
In 2025, companies will publish their first annual reports in accordance with these new standards, reports which will relate to their 2024 financial year and in which the published carbon footprint will be supposed to be as “faithful and sincere” as the financial statements.
On pain of being pinned down by the market police, protectors of shareholders.
In theory, companies will therefore have to warn their shareholders when their “carbon” trajectory changes, just as today they must issue “earnings warnings” (” profit warning ”) when they anticipate a drop in profitability.
“A company that makes a carbon warning will be penalized in the same way as a company that makes a profit warning imagines Emmanuel Faber.