“While our economic models endanger the habitability of the planet, what should the company be accountable for? »

2023-12-08 14:00:05

Far from being a strictly technical issue, the new European non-financial reporting directive CSRD (Corporate Sustainability Reporting Directive) poses above all a political question. While our economic models endanger the habitability of the planet, what should the company be accountable for? Beyond the financial management of the company, accounting reveals what society agrees to value. Defining these rules is a major political issue.

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The report by Nicole Notat and Jean-Dominique Senard, “The company, an object of collective interest”, submitted to the government in 2018, already pointed this out: to effectively take into account social and environmental issues in the economy, a change in accounting standards is essential. By installing new reporting standards, the CSRD will force companies to report on their contribution to the common good in their annual publications.

The debates on how to go about it crystallize around a theme: double materiality. Coming from the auditing sector, the notion of materiality represents the threshold beyond which accounting errors can have a significant impact on the truth of the audited accounts. In accounting, saying that information is material is simply saying that it is important.

Change paradigm

This is the whole point of the debate: what is important? Until now, this materiality focused exclusively on financial aspects. The new European directive adds an extra-financial dimension: a double materiality, which will integrate the significant negative or positive impacts of the company on the social and environmental environment. Unsurprisingly, this is where things get stuck: it involves changing the paradigm to regulate the economy.

The proponents of simple materiality demand the self-regulation of the market based on the goodwill of the actors, provided that they integrate climatic factors into their risks and opportunities. They doubt the feasibility and relevance of dual materiality. According to them, a world at +5°C would have become sufficiently bad for business for players to transfer their investments to sustainable activities without constraint…

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Of course, these new standards require time to adapt, but they are simply essential. The scientific community recalls this very well, like the response of the Chair of ecological accounting to the consultation of the International Sustainability Standards Board: without this double materiality, we will not achieve our objectives and will continue to endanger life on Earth.

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