With the increasing pressures of climate change, Regulators and investors now more than ever want to understand the impacts of climate change on your organisation and what you are doing to manage the risks that climate change poses. It is becoming evident that climate change will have a true economic impact on the value of an organisation.
WHAT ARE THE REQUIREMENTS TO DISCLOSE THE IMPACTS OF CLIMATE CHANGE?
Unlike other jurisdictions, Australia presently has minimal disclosure requirements that capture the impacts of climate change. Most disclosure is in the front half of a company’s annual report with some disclosures being made in the Operating and Financial review as part of the Directors’ report. Listed Australian organisations must also provide disclosures under the ASX Corporate Governance Principles and Recommendations (4th Edition) on their environmental risks and how they manage them. Up to now, smaller unlisted organisations have not typically considered this in much depth.
HOW SHOULD I DISCLOSE THE IMPACTS OF CLIMATE CHANGE IN MY FINANCIAL STATEMENTS?
However, climate change impacts should be reflected within the financial report itself. Whilst climate change is not explicitly mentioned, Australian Accounting Standards (AAS) do contain requirements which would require you to include the impacts of climate change in your financial statements if it is material. Accordingly, as climate change becomes a more significant issue, it may become more material for your organisation and be required to be incorporated into your financial statements.
The implications on the financial statements can be broad reaching, as climate change impacts many areas of your organisation. It may impact your financial statements due to:
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Changes in the costs of doing business
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Forecast future cashflows and customer expectations
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Management’s intentions to address climate issues
Read our guide for further information.
If you need further information on climate change in your financial statements or ESG matters more broadly, please contact your local Moore Australia Advisor.