Bates Wells has contributed to a new guide, issued by the True & Fair Project, 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.
‘Are Your Financial Statements True and Fair?’ underscores directors’ legal obligation to consider sustainability information when preparing financial statements, and offers practical steps to support compliance. It specifically addresses the challenges faced from climate change and of transitioning to a low carbon economy.
Luke Fletcher, partner at Bates Wells, comments:
“Until accounts reflect companies’ contributions to climate change and the true cost of sustainability commitments, they will be disconnected from reality. The True and Fair Guide shows how companies and investors can make sure accounts are true and fair today and fit for the future in light of climate change.”
The True & Fair Project, an initiative hosted by Social Value International (SVI), issued the publication to raise awareness among companies, investors, accountants about how to integrate sustainability into financial statements in order for them to give a true and fair view. It aims to highlight the importance of acknowledging and disclosing costs tied to resources such as carbon emissions, water usage, and unpaid labour; costs often overlooked but ultimately borne by society.
In 2024, the Project commissioned a legal opinion from George Bompass KC, which clarified that directors have a positive duty to consider whether relevant sustainability issues should be reflected in their financial statements to present a true and fair view of the company’s position. As a follow up to this opinion, the guide supports directors that have decided that information relating to sustainability issues is necessary for the accounts to give a true and fair view, and who are actively preparing their financial statements to meet this requirement.
This milestone supports the True & Fair Project’s efforts to raise awareness among companies, investors and accountants about the true and fair requirement, a statutory duty placed on directors in the Companies Act 2006. By using this guide, company directors can understand how to add appropriate additional information to the accounts within the requirements of Financial Reporting Standard 102. As such, it enables directors to recognise the consequences of carbon emissions as a cost of doing business, which is a powerful mechanism for driving accountability and accelerating the much-needed decisions to rapidly reduce carbon use.
The Project is also engaging international communities in order to produce adapted guides that are suitable for accountancy standards and company law in other jurisdictions. As such, SVI calls on all international partners to help raise awareness of the Project as a whole.