FRC Statement of Intent reveals ESG challenges – economia

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Author: ICAEW Insights
Published: 01 Feb 2023
Audit quality, corporate governance reporting and best-practice data use will all be major themes for the Financial Reporting Council (FRC) in its 2023 environmental, social and governance (ESG) work, the organisation has announced.
On 30 January, the watchdog published an update to its landmark 2021 Statement of Intent on ESG Challenges, outlining the projects it plans to undertake this year in a range of priority areas. The agenda highlights what the FRC considers to be the most pressing ESG challenges currently facing the accounting and auditing profession.
Among the key challenge areas that the regulator will focus on are:
In addition, the update links stakeholders to an array of ESG resources and publications that the FRC has issued in the time since it unveiled its initial Statement of Intent.
In an accompanying press release, FRC Executive Director of Regulatory Standards Mark Babington signalled his delight with the update. “Since we issued [the Statement of Intent] in 2021, the FRC is proud to have produced a wide range of helpful tools, information and guidance that reflects the breadth of the FRC’s remit, as well as the fast-evolving landscape of ESG and sustainability reporting globally.”
Babington said the update “highlights the ongoing challenges and opportunities of producing ESG reporting and disclosures, and where the FRC’s focus in 2023 will continue to provide guidance and examples of best practice – both in the UK and internationally.
“Improving transparency on climate and wider ESG risks and opportunities, and related governance activities and behaviours, is a key priority for our work, benefitting all those stakeholders who demand decision-useful reporting which underpins effective decision-making in capital markets.”
So what do the FRC’s priorities reveal about the ESG challenges facing accountants and auditors – and how useful will its planned initiatives be for helping the profession to tackle those challenges?
ICAEW Technical Manager Laura Woods says: “Challenges around ESG reporting are not going away – in fact, they are continuing to evolve as our response to them improves. The FRC’s planned activities around ESG data, application of materiality and audit quality are, in my view, the three most crucial areas to advance. The FRC’s thematic reviews, reports and guidance are resources that are highly valued by accountants and auditors alike, in an area where help is needed the most.”
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