The Centre for Climate Engagement is partnering with Social Value International on the True & Fair Project, which highlights the economic reality that businesses rely on resources such as carbon, water, and labour – many of which impose hidden costs on society. In this Q&A, we ask how the Project aims to address the issue.
Q1. Please tell us a bit about Social Value International and your role within the organisation.
Jo: Social Value International (SVI) is a global network focused on changing the way the world accounts for value. Our mission is to ensure that decision-making across the economy properly reflects the social, environmental, and economic value created or destroyed by organisations. We work with practitioners, governments, investors, and standard-setters to build a more equitable and sustainable world through better measurement and reporting of impact.
As Director of Global Affairs, my role centres on advancing SVI’s global engagement strategy – ensuring that our thought leadership, partnerships, and campaigns reach the right audiences and create tangible shifts in practice and policy. I’ve been closely involved in the development of the True & Fair Project and am supporting our collaboration with the Centre for Climate Engagement as we bring this work to a broader audience.
Q2. What is the True & Fair Project, and what inspired SVI to launch it?
Jo: The True & Fair Project is an initiative that challenges the way financial profit is calculated. We engage investors, company directors, legal experts, policymakers and civil society to support the recognition of dependencies and negative impacts (hidden costs) within financial statements, rather than being confined to a non-financial report. In doing so, the Project aims to internalise externalities in the global financial system.
In commissioning a legal opinion from George Bompas KC, SVI aimed to test whether existing directors’ duties under UK law already create a requirement to consider these wider issues. The answer, it turns out, is yes – directors must consider whether information on climate-related impacts and obligations should be disclosed in their financial accounts to meet the requirement for the accounts to give a ‘true and fair’ view. This project is about turning that legal clarity into practical action, and we’ve since produced a guide for company directors on this requirement in the context of carbon.
Q3. The legal opinion commissioned by SVI has been described as groundbreaking. Why is this legal clarification so important, and what are the key takeaways for company directors?
Jo: This legal opinion matters because it reframes the conversation: it’s no longer just a question of *whether* companies should disclose climate-related risks and liabilities in the accounts – it’s a question of *when they are legally required to do so*.
One of the most important takeaways is that climate change isn’t an externality sitting outside of financial reporting. It can be materially relevant to a company’s assets and liabilities,.
This challenges the notion that sustainability reporting is something separate from financial reporting. It opens the door to a more integrated, accurate, and legally grounded approach to corporate accountability, one that directors cannot ignore.
The opinion also made the point that directors might choose to ‘structure commitments in such a way as to create constructive obligations, which impact upon the accounts’. In doing so, directors can accept responsibility for their dependencies and negative impacts. When directors decline to make these commitments, externalities are left unaddressed. A responsible business, in our view, embraces the opportunity to lead by accepting this responsibility
Nick: As Jo outlines, this opinion confirms that sustainability issues may be relevant to financial reporting, and that directors should consider them when approving accounts. Perhaps as importantly as explaining what directors are *required* to do, it points to what they are *permitted* to do under law. Directors who do want to leverage their position to address sustainability risks should feel empowered to do so through financial accounting. This is especially important as certain narrow perspectives on what businesses can do to address sustainability, which often do not reflect a proper understanding of the law, gain traction.
The opinion aligns with similar pieces evaluating directors’ broader duties under company law, but the specific focus on accounting adds additional important angles. First, accounting standards and the way in which they interact with legal obligations are highly complicated. The opinion helps directors understand how sustainability reporting requirements fit into their core duties. Second, being centred on a specific function which directors carry out – approving accounts – the opinion might offer more concrete routes to practical action than broader assertions about directors’ duties. We can see this in its discussion of constructive obligations.
Q4. The campaign highlights ‘hidden costs’ that businesses impose on society. Could you give an example of what this looks like in practice?
Jo: An example that we’ve been leading with through our company guidance is carbon emissions. A company may operate profitably on paper while offloading the real costs of pollution onto the public – through health impacts, environmental degradation, or contributions to climate change. These costs are “externalised” and don’t show up in the company’s financial statements, even though they create real liabilities for society – and eventually, for the business itself.
Another example is poor labour practices in supply chains. If a company benefits financially from subcontractors who underpay workers or compromise on safety, those human costs are rarely accounted for in financial terms. But they may affect long-term brand value, regulatory risk, or even legal liability.
The True & Fair Project seeks to help directors consider whether information on these impacts and dependencies is material to the accounts and whether they should consider constructing commitments to pay for these costs, so they are reflected in decision-making and disclosures.
Q5. Why is it important for sustainability to be treated as a financial issue?
Nick: In principle, sustainability should be considered a financial issue because of the hidden costs which Jo describes – many of which are only really hidden in the short term, as they pose serious transition risks to businesses and entire economies. More practically, we cannot expect organisations, or even individuals, to make transformative changes without appropriate financial incentives. That’s not to say that we should ignore ethical and social imperatives, but that we should make sure that financial incentives align with these imperatives.
Many climate policy measures, in particular carbon pricing, aim to internalise these externalities and have largely been successful. However, representing these issues as pertinent to financial accounts puts sustainability even closer to the heart of business decision making. It is also a way to ensure that businesses are incentivised to improve their sustainability in lieu of government regulation and may therefore be resilient in the face of political changes which can impact social and environmental policy.
Q6. What kind of response have you had so far from company directors, accountants, or investors?
Jo: There’s been a mix of curiosity, support, and – importantly – serious engagement. Some directors have told us the legal opinion highlights a duty they hadn’t fully considered. Others say they didn’t realise they could construct obligations under existing accounting standards. The response confirms that now is the right moment to deepen the conversation and support practical guidance that helps directors and their boards act with confidence.
Nick: Directors and investors have been core audiences for our work at the Centre for Climate Engagement, especially through our collaboration with the Climate Governance Initiative. We’ve seen strong interest in how climate and sustainability are reshaping governance and disclosure. Partnering with Social Value International allows us to extend this work, including engaging the accounting community
Q7. What does the partnership with the Centre for Climate Engagement bring to this next phase of the campaign?
Nick: The CCE’s mission is to turn expertise in climate law and governance into practical guidance and tools for decisionmakers, so we are excited to dive deeper into technical aspects of the True & Fair Project while also helping to amplify its messages to business leaders. As with all CCE projects, these efforts will be informed by insights from our multidisciplinary academic and practitioner networks.
Jo: The Centre for Climate Engagement brings deep expertise in corporate governance, legal research, and translation of complex issues into boardroom-ready insights. Their partnership is helping us move from theory to practice, taking legal concepts and embedding them in tools, guidance, and dialogues that boards can engage with.
Through their connection to the Climate Governance Initiative, we also gain access to a global network of directors who are already thinking seriously about their role in tackling climate change. That reach, combined with the academic rigour and policy insight CCE brings, makes them a natural partner for shaping this campaign.
Q8. Looking ahead, how do you see the role of accounting evolving in relation to social and environmental value?
Jo: It’s up to all of us to ensure accounting evolves in a way that reflects the full picture of value being created and destroyed by a business and the business being held to account accordingly. We believe the future of accounting must be about integration: recognising that social and environmental factors are not separate from financial performance but deeply entwined with it. That shift is already underway. Our job now is to accelerate it by providing the legal clarity, practical tools, and stakeholder pressure needed.
Nick: Like many other areas of sustainability policy, there has been significant movement towards sustainable accounting but this is too often siloed into specific standards and teams which are separate from organisations’ core financial objectives. Through efforts like the True & Fair Project, I hope that social and environmental value are not seen as separate or secondary to finances, but simply a part of the value that businesses aim to preserve and create.
