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New disclosure standards set during the COP26 summit are set to create a big win for accountants who are involved in sustainability reporting.
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‘Goodbye fragmentation, hello harmonisation’: CA ANZ backs new climate disclosure standards
09 November 2021
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10 minute read
The 2021 United Nations Climate Change Conference (COP26) held in Glasgow between 31 October and 12 November 2021, has outlined a number of global initiatives to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.
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Among the initiatives are a series of new, comprehensive sustainability disclosure standards to meet investors’ information needs.
The development of these standards will be led by the new International Sustainability Standards Board (ISSB), established by the International Financial Reporting Standards (IFRS) Foundation Trustee. COP26 also confirmed that the Climate Disclosure Standards Board (CDSB) and Value Reporting Foundation (VRF) will be consolidated into the IFRS Foundation.
Speaking to Accountants Daily, CA ANZ business reform leader Karen McWilliams welcomed the new disclosure standards, noting that they will go a long way in simplifying a “complex and fragmented reporting landscape”.
“The formation of the International Sustainability Standards Board is the right move, and our members will be pleased to say ‘goodbye fragmentation, hello harmonisation’,” Ms McWilliams said.
“This is yet another confirmation of the heightened importance of robust climate and sustainability information for companies, and the need for added transparency and accountability more generally.
“Our members and their clients are asking for guidance on which sustainability related disclosure framework to use, but in the absence of a single global one, this is difficult to provide.
“The first standard, on climate, will build on the G20 Financial Stability Board’s Taskforce on climate-related financial disclosure (TCFD) recommendations, already used by many Australian companies and encouraged by Australian regulators.
“We have International Financial Reporting Standards and now we will have International Sustainability Disclosure Standards at the same high quality.
“This marks the end of the sustainability standard alphabet soup.”
Ms McWilliams said sustainability reporting is “no longer a nice to have”. Instead, it has “become a critical requirement for businesses to access capital”.
“Investors expect capital markets to provide robust, reliable climate-related risk disclosures and have made it clear they need consistent, comparable sustainability information to assist decision-making,” she explained.
“Many Chartered Accountants are trusted advisors on these issues within businesses already, helping organisations navigate these challenges.
“CA’s also have the skills and expertise to apply to the reporting and assurance of sustainability disclosures – which is a significant opportunity for businesses and practices. CA’s can quantify the risks, and their financial consequences, providing robust, reliable and transparent information for decision makers, investors and the public.”
Looking ahead, Ms McWilliams noted CA ANZ will continue to support its members through their sustainability efforts.
“We will continue to advocate strongly for further alignment and consistency in reporting on climate and sustainability related matters,” she said.
“CA ANZ is part of several international groups that are driving these changes including the International Integrated Reporting Council (IIRC) and the working group of the Climate Disclosure Standards Board (CDSB) – both of which are consolidating into the IFRS Foundation.
“CA ANZ will be directly involved in the consultation process and shaping these guidelines for the benefit of our members, our profession and the environment.
“Climate-related financial risk is real, tangible and measurable – the international investment community already recognises this; so it’s important we ensure changes in our neck of the woods, to help maintain and grow Australia and New Zealand’s competitiveness and access to capital and innovation.
“We look forward to working closely with the Australian Government and advocating to key agencies and regulators on these matters.”
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