Mandatory climate reporting. Are you ready?
The Australian government is in the process of implementing mandatory climate disclosures based on the International Sustainability Standards Board (ISSB)’s climate standard, IFRS S2. The ISSB’s standards represent the biggest change to corporate reporting in decades and will require companies to report comprehensively on the climate related risks and opportunities that could affect their prospects over the short, medium and long term. We also expect reporting to have a significant impact on corporate action to drive emissions reduction.
To assist boards respond to this change we have been working as part of the Climate Governance Initiative to produce ‘A director's guide to mandatory climate reporting.’ This landmark publication was released on Tuesday, 3 October 2023, and is a publication jointly written by Deloitte Australia, the Australian Institute of Company Directors and MinterEllison. This document has been developed as a guide for directors seeking to understand and navigate the complex landscape of climate reporting in ensuring their organisations are ready for the forthcoming mandatory reporting obligations.
The Guide is structured into three chapters:
- Chapter 1 provides an overview of the current climate reporting landscape, including a summary of the ISSB Standards, key differences between the ISSB Standards and the TCFD, and the Australian Government’s proposal for mandatory climate reporting in Australia.
- Chapter 2 sets out the legal duties and responsibilities of directors in respect of climate reporting. This includes a consideration of directors’ duties in respect of financial reporting and due care and diligence, as well as the prohibition against misleading or deceptive conduct.
- Chapter 3 provides practical steps that directors can take to meet their obligation to report on climate related risks and opportunities in respect of the topics of governance, strategy and risk management, and metrics and targets outlined in IFRS S2.
Deloitte Australia’s Audit and Assurance Managing Partner, Jo Gorton, says, “Climate change poses a financial risk which management and directors currently need to address. The ISSB standards establish disclosure requirements that aim to enhance the link between sustainability risks and opportunities and financial reporting. The CGI Climate Guide will enable our clients to better navigate the quickly evolving landscape of climate reporting and make sure their organisations are well-prepared for the transition.”
Authors:
Jonathan Streng
Director, Audit & Assurance
Rebekah Cheney
Director, Climate Governance Lead, Deloitte Climate & Sustainability
