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Meetings took place in Montreal last week that will profoundly alter how Canadian businesses operate and fundamentally transform Canada’s economy. The International Sustainability Standards Board (ISSB), a group of 14 people from regions around the globe, is rushing to finalize the first two (sustainability and climate-related) of six building blocks for new global standards for climate-related financial reporting. The goal is to unveil these first two blocks in a few months, with implementation in fiscal year 2024. The standards are being designed by accountants and will be overseen and audited by accountants. In effect, governments are weaponizing accountants to disrupt and transform the global economy, and the government of Canada is fully on board — though without having bothered to ask Canadians if it’s something they really want.

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Last March, the ISSB issued draft standards for sustainability and climate-related financial disclosures with a comment period that closed at the end of July 2022. The big four accounting firms and the big corporate groups that want ESG accounting and actually helped draft the standards also provided comments — which, circularly, the board has cited to demonstrate support for the proposals. Since July, the ISSB has been working at breakneck speed to revise the standards for implementation.

During its monthly deliberations, which are available to the public, key points proposed by the ISSB staff have been debated and voted on by the board members. It appears that many critical comments raised during the consultation period are being given short shrift. In particular, despite concerns expressed in many of the comment letters, the ISSB has decided to make climate-scenario analysis mandatory and to require third-party verification and “Scope 3” emissions accounting (i.e., accounting for the emissions embedded in 15 different categories not under the control of a company, including the transport, use, and disposal of a company’s product). As pointed out by Krystle Wittevrongel of the Montreal Economic Institute, the very limited relief mechanisms provided will be cold comfort for small and medium-sized businesses, which typically operate on tight margins but now will be forced to hire specialist accountants and auditors to be compliant.

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Criticisms of a requirement to provide “water stress data” also went unacknowledged. Instead, the ISSB made a significant change with respect to water by removing the distinction between the freshwater an entity uses and the total water it draws. This has important implications for mining and oil field services companies, many of whom have worked hard to reduce the freshwater used in their operations. Previously, a company might have a low freshwater number because it primarily used recycled water. The standards as originally proposed would have allowed it to differentiate the two. The wording change means it can no longer show or get credit for how much water it recycled in its operations.

Normally in this type of international standard-setting, a revised draft would be issued and another round of comments solicited in order to smooth out potential shortcomings. Not so with the ISSB. The staff is recommending to the board that there is no need for further comment and the final standards should be released as soon as possible. Former Bank of Canada/Bank of England Governor Mark Carney conceded recently that it took the Task Force for Climate Related Financial Disclosures (TCFD) seven years to refine a workable and acceptable standard, yet he said he supported the ISSB working at “light speed” to bring in the new global language within 12 months.

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The last time accountants had so much power to set the course of events was when U.S. Defense Secretary Robert McNamara and his “Whiz Kids” brought modern technocratic analytics to the war in Vietnam. That did not end well. The climate-warrior accountants aren’t planning a literal war but the oversight they are proposing will fundamentally alter how the businesses that generate our incomes and living standards operate. We need to slow down and have an open, honest conversation about whether adopting this new global language is in Canada’s national interest.

Tammy Nemeth is a U.K.-based strategic energy analyst.


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