IFRIC has issued an agenda decision explaining how to assess whether an entity’s commitment to reduce or offset its GHG emissions gives rise to a liability in a specific scenario.
As governments and regulators around the world mobilise to address the climate crisis at a policy level, the business community also has a role to play in mitigating the effects of climate change.
Mandatory sustainability reporting will prove to be a significant step in the path to Net Zero and beyond, providing stakeholders - such as investors, customers and suppliers - with critical information required in making more informed investment decisions.
Beyond mandatory requirements, companies are realising that the need for sustainable business practices is a story that connects ecological care and economic success. Company boards and executives are increasingly willing to redefine ESG goals and be more purpose-led, with sustainability reporting standards providing a framework for doing so.
Climate-related disclosures
Considering the Australian government’s ‘climate first’ approach to mandatory sustainability reporting, this is where many Australian companies embarking on their sustainability reporting journeys for the first time will start.
Entities subject to the corporate climate reporting reforms, expected to commence from 1 January 2025 for the largest entities, will be required to make climate disclosures in accordance with Australian Sustainability Reporting Standards, as issued by the Australian Accounting Standards Board.
These disclosures will be contained in a sustainability report within a company’s annual financial report. This report will supplement the currently required directors’ report, financial report and auditor’s report, and will be subject to audit.
Assurance
As the demand for high-quality, consistent and comparable sustainability-related information increases through evolving legislation and stakeholder expectations, so too will the need for this information to be independently verified.
Like reporting, sustainability assurance requirements will be implemented using a phased approach, starting with limited assurance and progressing to reasonable assurance over time.
How we help clients
For many businesses, understanding and applying the new mandatory climate reporting requirements can be daunting. As the introduction of climate reporting standards approaches, HLB Mann Judd will work with clients to determine the scope of reporting and assurance required. This applies equally to those businesses that operate in other jurisdictions and need advice regarding Australian-specific reporting requirements they need to adhere to.
HLB Mann Judd is well-placed to assist clients with independent assurance services over sustainability reporting, disclosures and metrics, applying the same level of rigour to assuring non-financial information as we do when auditing financial information.
We can also assist those businesses wanting to pursue voluntary efforts to disclose their impacts on the environment and society, as well as those entities responding to requests from suppliers for verified ESG credentials.
As independent technical advisers, we take pride in finding practical solutions to help boards, management and audit committees meet their sustainability reporting obligations. Our approach ensures that clients’ business activities are assurance-ready, enhance shareholder value, and minimise risk.
Depending on the client’s individual needs and circumstances, we achieve this by undertaking any or all of the following:
- Reviewing compliance obligations
- Preparing sustainability reports and non-financial disclosures
- Voluntary or mandatory sustainability and climate-related reporting assurance
- Training to support company boards, executives and staff.