Reporting climate risk

Climate change is generally accepted to be an urgent risk that entities around the world are already facing. With growing pressure from investors and other stakeholders, as well as increased government activity, entities have to take action to consider and provide meaningful and useful disclosure about climate-related risks that could impact the entity and how management are responding to these risks.

With the government taking action to mandate specific climate-related disclosures for certain entities, all entities have to consider whether climate risks, and their impact on an entity’s financial position, is material information for stakeholders.

In this alert, we discuss:

• How climate risks and uncertainties are likely to have an impact on the financial statements of all entities (whether directly or indirectly through the supply / value chain), and the need for disclosure of these where material.
• The Government’s proposal to mandate the provision of climate-related disclosures by approximately 200 entities.
• The need for auditors to consider climate risks when auditing financial statements, and what audit committees should be considering in respect of the financial statements, and other climate disclosures.
• Snapshots of recent New Zealand and international developments around climate change as it relates to corporate reporting.