By Tammy Nemeth
If the federal government is worried about grocery prices now, wait until the global sustainability and climate-related financial disclosures of the International Sustainability Standards Board (ISSB) come to Canada.
Among other things, these standards mandate the use of intrusive, burdensome, and expensive CO2 emissions accounting across a company’s entire value chain. For grocery retailers this includes explaining and accounting for emissions in the production, transport, packaging, refrigeration, consumption and disposal of everything they sell. In other words, your grocery store will need to quantify all the emissions of that hamburger meat you bought: whether in producing it (including all steps from farm to processor), transporting it to the store, packaging and refrigerating it at the store, plus your travelling to and from the store, your refrigeration and eventually your cooking of the hamburger, and your disposal of the packaging and any waste of the food.
Needless to say, doing and documenting those calculations for every product in the store will not lower your grocery bill but instead will increase grocers’ costs and therefore their prices, too. What say do grocery retailers and other businesses have regarding the practicality, burden, and cost impacts of these standards in Canada? So far, it seems, not much.
The warrior accountants of the newly formed Canadian Sustainability Standards Board (CSSB) recently said that consultations with Canadians on the global standards might begin in 2024. Given how the standards’ far-reaching consequences in terms of costs, reporting and completely altering how businesses — regardless of size — do business, the discussions ought to be as open and comprehensive as possible. But that doesn’t seem to be the plan. In fact, it is a bad sign that the CSSB says it has already engaged in significant stakeholder outreach. But who precisely have the board members been speaking with?
It is difficult to determine precisely whose views the CSSB has sought. By contrast, the ISSB provides open access to its recorded meetings and agendas, has a register of significant stakeholder engagement, publishes all relevant documentation, including all comments it receives, and openly promotes interviews and presentations of board members across social media.
The CSSB offers no such transparency. It is not clear when it has met, what was on the agenda, what was talked about, what comments were received, who the board has been consulting with, what sorts of presentations the chair or board members have been making, or much else. On all these matters, its website contains no useful information. Unless you’re already plugged into the insider network of securities regulators, financial reporting standards-setters, or CPA Canada, you won’t have any idea what’s going on.
Even when the CSSB does ask for comments on future ISSB standards, transparency is lacking. For example, it encouraged certain businesses and groups to provide input on two future ISSB projects. Canadian groups were directed to a CSSB online survey portal, but the replies were not published individually but instead were aggregated and interpreted by the CSSB. The Canadian board appears to act more as a filter or gatekeeper in the process. The CSSB chair and board members, drawn primarily from accounting, are appointed by a committee of regulators, sustainability experts and other accountants and so may be unaccustomed to open and thorough-going consultation.
The CSSB’s lack of transparency is in stark contrast to practices in the United Kingdom. In its consideration of the ISSB standards, it has opened a broad consultation, or “request for evidence,” on: how (or if) the ISSB standards could be implemented in the U.K.; whether they will generate benefits commensurate with their costs; how technically feasible their preparation may or may not be; and what changes might be needed to adapt them to the U.K. economic context. Canada may have promised this level of detail but so far has failed to deliver.
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The standards that are coming are not just another set of accounting rules that ought to be left to accountants to decide. They are intended to completely transform how all Canadian businesses operate, and the substantial impacts they will have on costs will be passed on to consumers. Though the standards will raise all industries’ costs, their coming at a time when Canadians already face substantial inflation of food prices is a special concern. Widespread new costs should not be imposed on the economy without discussion or debate. We need a much more thorough discussion than has been conducted so far.
Tammy Nemeth is a U.K.-based energy analyst.