The Centre for Climate Engagement (CCE) is partnering with Social Value International (SVI) to support its True & Fair Project. This collaboration will bring academic insights to help directors and investors integrate sustainability into financial reporting.
In 2024, SVI commissioned a groundbreaking legal opinion on the obligation of company directors to ensure that financial statements present a true and fair view of a company’s financial position. The opinion examines how sustainability considerations, such as environmental impacts and social costs, fit within existing legal and accounting frameworks.
Since then, the Project has published a guide to support UK company directors who have decided that information relating to sustainability issues is necessary for their accounts to give a true and fair view.
In the next stage of the project, SVI and CCE will work together to examine how these issues intersect with the legal duties of other key stakeholders including investment managers and accounting bodies, and to deliver practical guidance to support businesses and investors in accounting for their impact on people and the planet.
“We are excited to support SVI’s campaign to ensure sustainability is integrated in financial reporting. This partnership gives us the opportunity to examine interactions between various legal obligations, accounting and sustainability, and contribute to practical resources which help businesses and investors navigate these complexities in practice.”
Nick Scott, Manager (Law for Climate Action)
About the Project
As the world grapples with the challenges of climate change and social inequality, the True & Fair Project highlights the economic reality that businesses rely on resources such as carbon, water, and labour – many of which impose hidden costs on society. While these externalities are often overlooked, the Project seeks to change this by encouraging companies to recognise and disclose these costs in their financial statements.
Legal implications for company directors
The legal opinion, delivered by George Bompas KC in 2024, reminds UK company directors that:
- They must provide additional information where necessary to present a true and fair view of their company’s financial health.
- They have a positive duty to assess whether sustainability-related factors, such as their contribution to climate change, are material to this assessment.
- They may structure climate commitments in ways that create financial obligations in the present or future, impacting financial reporting.
Providing practical support
As part of the collaboration, SVI and CCE will develop in-depth analysis and tailored guidance which may inform key stakeholders, including:
- Companies exploring how the true and fair requirement applies in the context of sustainability issues.
- Investors exploring how the requirement can strengthen decision-making and reduce exposure to systemic risks.
- The accountancy profession to share insights and engage their networks.
- Lawyers and legal networks advising businesses on financial disclosure and governance.
