Sustainability for Accountants
Case study
Background information
You are the newly appointed Chief Sustainability Officer at SuperYou Limited (SuperYou). After qualifying as a Chartered Accountant, you worked for five years in the sustainability advisory team of a mid-tier global business services firm in Melbourne. During that time, you also completed a postgraduate degree in Sustainable Practice at a local university.
SuperYou is a retailer that operates 288 supermarket stores across Australia and 15 stores in New Zealand. SuperYou has been listed on the Australian Securities Exchange (ASX) for 10 years. You work at SuperYou’s head office in Melbourne.
Approach to sustainability
The Board of SuperYou has placed importance on sustainability issues for many years. Many sustainability issues, such as food safety and worker safety, are an integral part of daily operations. However, the Board’s approach to some sustainability issues, such as the management of the company’s supply chain and climate-related risks, has tended to be more disorganised and reactive.
A year ago, the Board decided to adopt a more structured approach to managing SuperYou’s sustainability strategy, risks, activities and reporting. The Board believes it can strengthen SuperYou’s brand, market share, and employee and customer loyalty by integrating sustainability into its business decisions to enhance shared value between the business and stakeholders.
SuperYou’s competitors have been engaged in sustainability initiatives and reporting for many years, especially market leaders, such as Woolworths Group Limited.
Draft sustainability strategy
As part of your new role, the Board has asked you to draft ‘Sustainability Plan 2040 and Beyond’, a sustainability strategy for SuperYou focused on processes and initiatives with short-, medium- and long-term targets.
You have formed a multi-disciplinary Sustainability Working Group’ to assist you in gathering data and developing the draft sustainability strategy. The working group includes managers from procurement, finance, marketing, logistics, food safety, IT and compliance.
The Sustainability Working Group has been busy getting to know SuperYou’s business and value chain. You have gathered information from internal and external stakeholders about SuperYou’s sustainability impacts on society and the environment, and the impact of sustainability issues on SuperYou’s business and value chain. You have used the ‘double materiality’ approach to identify material issues.
Your analysis has identified the following to be the most material sustainability issues for SuperYou, in no particular order:
Food safety
Food security
Workplace health and safety
Diversity and inclusion in the workplace
Supply chain management
Climate-related management
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Food waste
Ethical sourcing
You and the Sustainability Working Group are working on incorporating the above issues into the draft `Sustainability Plan 2040 and Beyond’.
The Board of SuperYou consists of nine members. Two of the members are non-executive members who have strong sustainability advisory and assurance backgrounds. Their experience assists in developing the Board’s understanding of sustainability issues. All board members have skills in risk management.
A new board sub-committee, the Sustainability Committee, has been formed. This sub-committee sits alongside other board committees, such as the Audit and Finance Committee and Risk Committee. The Sustainability Committee is responsible for monitoring progress against the `Sustainability Plan 2040 and Beyond’ strategy and reviewing and endorsing sustainability targets and metrics.
You are responsible for the implementation of the sustainability strategy and for quarterly reporting on its progress to the Sustainability Committee.
Part A Written submission
Note: The total word limit for your written submission for all tasks in Part A is 1,500 words.
Scenario 1: Supply chain management
SuperYou has many suppliers, including farmers, food processors, and manufacturers of SuperYou’s own or ‘house’ brand products. These products include, for example, SuperYou Gold milk (milk that is more expensive than traditional milk due to its higher health benefits, taste and use of sustainable packaging) and SuperYou Silver milk (a less expensive milk with lower health benefits, reduced taste and sustainability attributes). SuperYou also sells other branded products (eg Brownes milk and Anchor Blue milk). Many of SuperYou’s supply chain sustainability initiatives are aimed at the manufacturers of SuperYou’s own brand products.
SuperYou’s procurement team sources fresh produce locally in Australia and New Zealand. Frozen food and other products are sourced more widely, such as from the USA, Indonesia and China.
Further discussion with the procurement team and manager has highlighted the following issues:
SuperYou knows little about its suppliers’ labour and environmental practices, particularly in Indonesia and China.
Some paperwork has been neglected, such as signed supplier codes of conduct and supplier contracts, particularly with international suppliers.
SuperYou has employed third parties to conduct audits on its suppliers’ labour practices and workplace safety. However, since the start of COVID-19 these audits have been ad hoc and third parties to conduct the audits difficult to source.
Recent news reports in Australia have revealed:
Supply chains in countries such as Indonesia and China have poor safety and working conditions.
Workers in the Australian agrifood sector are often underpaid and experience poor working conditions, especially migrant workers.
© 2023 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved. Page 2
SFA_173_ASM-2-2-1_CaseStudy_v3.0 You and SuperYou’s procurement manager are looking at ways to improve SuperYou’s supply chain management as part of the draft sustainability strategy, including gaining a better understanding of the key sustainability risks, activities and reporting requirements.
Task 1 — Supply chain management at SuperYou
Identify and describe three (3) sustainability risks related to supply chain management that are likely to be material to SuperYou.
For each risk:
Explain, with reference to the case study information, why the risk is likely to be material for SuperYou from a financial or impact materiality perspective.
Recommend one (1) improvement that can assist in reducing the risk for SuperYou.
Recommend one (1) metric that could be used to monitor and manage the risk for SuperYou. Explain whether the Sustainability Committee should disclose the metric to external stakeholders (eg in SuperYou’s annual report or sustainability report).
Scenario 2: Climate-related management
SuperYou monitors climate-related risk as an emerging risk category. However, it has not designed or implemented any significant strategies to measure, manage or report on greenhouse gas (GHG) emissions and other climate-related issues.
Following the establishment of the International Sustainability Standards Board (ISSB) with its ‘climate first’ approach to sustainability reporting, and recent growth of mandatory climate-related reporting requirements, SuperYou’s Board has decided that a suitable strategy and appropriate systems must be implemented to prepare SuperYou for possible future GHG reporting requirements and expectations.
In developing a strategy, three areas are relevant for SuperYou:
SuperYou is considering ways to reduce GHG emissions in its own operations. It has not discussed GHG reporting with its suppliers.
In determining which guidelines, frameworks and standards to follow, the Sustainability Committee is reviewing the following:
Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD recommendations)
IFRS S2 Climate-related Disclosures
GRI Standards
United Nations Sustainable Development Goals and Indicators (UN SDGs).
3. The Sustainability Committee is considering setting targets for scopes 1, 2 and 3 GHG emissions. It wants to balance high aspirations involving attainable targets with actions and resources to meet those targets. It is also aware of the risk of `greenwashing’ in the way it reports emissions.
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Task 2 — SuperYou’s approach to climate-related management
Prepare a recommendation for the Sustainability Committee regarding an approach to GHG measurement and reporting.
In your response:
Recommend whether SuperYou should aim to implement systems within the next three years to measure and report externally on scopes 1 and 2 GHG emissions only OR whether they should implement systems within the next three years to measure and report externally on scopes 1, 2 and 3 GHG emissions.
Justify your recommendation with one (1) supporting reason from each of the following four (4) perspectives:
SuperYou as a business.
SuperYou’s impact on communities and/or the environment.
Meeting IFRS S2 reporting requirements.
Alignment with the UN SDGs.
Scenario 3: Reporting location of climate-related disclosures
The Sustainability Committee is aware that, historically, most climate-related disclosures have been located outside the financial statements. Rather these have generally been included in the ‘front half’ of annual reports (eg in the management commentary section), in standalone sustainability reports, and on corporate websites. However, the International Accounting Standards Board’s (IASB) Effects of climate-related matters on financial statements (2020) educational material recently highlighted that some of these disclosures should be located within the financial statements (which includes the notes to the financial statements).
IASB 2020, Effects of climate-related matters on financial statements, November, viewed 30 June 2023, pporti ng-i m plementation/documents/effects-of-cl i mate-related-matters-on­financial-statements.pdf.
© 2023 Chartered Accountants Australia and New Zealand ABN 50 084 642 571. All rights reserved. Page 4
Task 3 — Guidance on reporting location of SuperYou’s climate-related disclosures
Prepare advice for the Sustainability Committee regarding the appropriate reporting location of SuperYou’s climate-related risk and other climate-related disclosures.
In your response:
a) Advise whether climate-related risk and other climate-related disclosures in SuperYou’s annual report should be located in:
the financial statements (including the notes to the financial statements), or
the ‘front half’ of the report (eg in the management commentary section), or
b) Justify your advice by outlining the following:
The guidance provided by IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information relating to the location of sustainability reporting.
The guidance provided by IFRS S2 Climate-related Disclosures relating to the location of climate-related reporting.
The guidance provided by IASB educational material, Effects of climate-related matters on financial statements on the location of climate-related reporting.
The guidance provided by GRI 1: Foundation 2021 (page 7) on the location of sustainability reporting.
Latest guidance/standards issued by the Australian Accounting Standards Board (AASB) OR New Zealand’s External Reporting Board (XRB). (Choose the regulatory body that is relevant to your jurisdiction).
An evaluation of the reporting location used by Woolworths Group Limited, a market leader, in its latest annual report, including the disclosures in the financial statements. Climate-related disclosures in the report can be found using relevant search words.
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Part B Video presentation
Following the success of the Taskforce on Carbon-Related Financial Disclosures (TCFD), the Taskforce on Nature-Related Financial Disclosures’ (TNFD) was established in 2021.
The TNFD is describes as (TNFD 2023, p 1)
… a global, market-led initiative with the mission to develop and deliver a risk management and disclosure framework for organisations to report and act on evolving nature-related risks and
opportunities, with the ultimate aim of supporting a shift in global financial flows away from nature-negative outcomes and toward nature-positive outcomes.
SuperYou’s Board is interested in understanding this new Taskforce and how the risk management and disclosure framework may be relevant to the business.
TNFD 2023, The TNFD Nature-related Risk and Opportunity Management and Disclosure Framework, p 3, viewed 30 June 2023,
Prepare a video presentation for the SuperYou Board (maximum five (5) minutes duration). In your presentation:
Explain the current status of the TNFD’s work on the development of a nature-related risk management and disclosure framework, including regulatory developments specific to your jurisdiction (ie either New Zealand or Australia).
Explain how the TNFD’s recommendations may apply to SuperYou by providing two (2) examples of each of the following in the context of SuperYou:
nature-related risk, and
nature-related opportunity.
To complete this task, you are required to prepare and submit two (2) files as follows:
A video recording of your presentation. You must record yourself in full screen. (Do not include your slides in your recording.) Your recording should not exceed five (5) minutes.
A slide deck to accompany your video presentation. Your slide deck should support the points you covered in your video presentation. It should not exceed four (4) slides (including your cover slide).
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Task 1:
Supply chain management risk is likely material from both a financial and impact perspective for SuperYou. Issues in the supply chain could lead to financial losses from disruptions, fines, and loss of customers who value ethical practices. It could also damage SuperYou’s reputation and brand.
One improvement is for SuperYou to implement a supplier code of conduct that clearly outlines its expectations on labour practices, environmental standards and business ethics. This should be signed by all suppliers as part of contractual agreements.
A metric to monitor this risk is the percentage of suppliers that are audited annually and found compliant with the code of conduct.
Task 2:
SuperYou should align its sustainability reporting with the IFRS S2 Climate-related Disclosures reporting requirements. This involves identifying climate-related risks and opportunities, governance and strategy, risk management, and metrics and targets used to assess and manage climate-related risks and opportunities.
Reporting should also demonstrate how SuperYou’s approach supports the UN Sustainable Development Goals, such as SDG 12 on responsible consumption and production.
Task 3:
Climate-related disclosures should be located in both the financial statements and the front half of the annual report. IFRS S1 and S2, and the IASB educational material indicate some disclosures relating to significant climate-related risks and financial impacts should be in the notes. Other non-financial information is appropriate for the front half. GRI 1 and AASB/XRB standards also support dual location. Woolworths’ report provides a good example of dual location of climate disclosures.

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