Every month we look across the sector, to identify resources and reports that assist in the application of the Future-Fit Business Benchmark.
In this round-up of third-party resources for the month of January, we are taking a look at Fair Tax Mark’s Global Business Standard, WBCSD & UNICEF’s Tackling Child Labour: An Introduction for Business Leaders, and CDSB & KPMG’s Accounting for Climate supplement documents.
Global Multinational Business Standard – Fair Tax Mark
The Global Multinational Business Standard outlines an approach for the management of responsible tax. While previously only applicable to businesses headquartered in the UK, the standard is now available to businesses globally with guidance split into five parts covering: General Transparency; Tax policy, Implementation, and Compliance; Country-by-Country Reporting; Tax Notes Disclosures; and Tax Rates.
Extensive research and consultation have underpinned the development of this Standard, with a shift in focus to ensure its applicability across a global market. And while it has been created with the purpose of securing the Fair Tax Mark, the information is likely useful for businesses using the Benchmark, as guidance closely aligns with BE21: Fair tax, especially as it relates to country-by-country reporting and paying the right tax in the right place at the right time.
Tackling Child Labour: An introduction for business leaders – WBCSD & UNICEF
This resource articulates tangible steps companies can take to eliminate child labour in business operations and supply chains. Guidance focuses on three areas in which business leaders can take meaningful action, including:
- Integrating child rights considerations into core business operations and strategy.
- Investing in business capacity and community resilience to prevent child labour.
- Inspiring employees, suppliers, and industry peers to accelerate meaningful action.
Examples of key actions to integrate, invest and inspire other businesses to eliminate child labour are provided, starting with questions to consider. This resource is relatively high-level, making it a useful tool for business leaders to understand the issues, without having to be issue experts.
There are two areas in the Benchmark where child labour is directly relevant – BE04: Procurement and BE12: Employments terms. Progress toward BE12 requires companies to verify that they do not employ any child labour, which should be straightforward if adequate checks are undertaken and logged during staff onboarding.
When it comes to BE04: Procurement, companies are unlikely to have concrete information about the ages of workers within their supply chain. Therefore, this resource provides an opportunity to start a conversation around potential hotspots. If there are areas of a company’s supply chain which could be associated with child labour (e.g. when procuring a product input from a region where child labour is known to be endemic), the company should treat these as potential hotspots which need to be checked, addressed and eventually eliminated, in line with the BE04: Procurement Action Guide.
Accounting for climate: Supplementary papers 1 & 2 – CDSB & KPMG
In December 2020, CDSB released guidance on “Accounting for climate: Integrating climate-related matters into financial reporting” (we highlighted this resource in the Community). In that paper, preparers of reports were advised to consider whether: a) climate-related matters materially affect their financial statements; or b) the nature of climate-related matters results in investors expecting disclosure.
Two further documents, Supplementary paper 1 (October 2021) and Supplementary paper 2 (December 2021) were released to provide additional guidance on how climate-related matters could be integrated in the areas of financial statements identified by the IASB and IFRS Foundation, which were not considered in the December 2020 guidance.
While the disclosure of financially material sustainability information related to climate change is important, extra-financial materiality is also critical. This means that companies should be aware of the degree to which their activities negatively impact society and/or the environment, irrespective of whether investors would currently consider them to be financially material.
By utilising the Risk Profiler*, businesses can:
- Identify the most and least severe impact risks for different types of business activity.
- Prioritize action to minimize their negative impacts.
- Highlight issues which are likely to pose disruption risks in the future.
This process can help companies determine the degree to which they should prioritize the reporting and mitigation of their climate impacts, whether financially material or not.
*Note that the Risk Profiler tool is available inside the Changemaker Community.