Climate Accountability on the Rise :A Business Guide to Navigating Climate Disclosures

As global awareness and regulations around climate change intensify, 2023 has set a new precedent for climate-related risk disclosures. Here's a structured overview to help businesses, especially SMEs, understand and prepare for the evolving regulatory landscape.

Introduction to Global Climate Disclosures

- Rise of Standards: The International Sustainability Standards Board (ISSB) introduced landmark standards in 2023, which have been adopted by over 25 countries. These standards aim to unify sustainability reporting across borders.

- Impact on SMEs: While large companies face direct mandates, SMEs are also affected as key players in supply chains. They must now adapt to provide carbon reports and comply with new standards.

The Critical Role of Accountants

- Expertise in Financial Data: Accountants possess essential skills in data analysis and reporting, which are crucial for calculating and reporting carbon emissions.

- Guidance Towards Net Zero: With their expertise, accountants can help businesses not only comply with new regulations but also implement sustainable practices effectively.

Regional Regulatory Developments

Australia and New Zealand

- Australia: Starting in January 2025, mandatory climate disclosures will be required for large companies, expanding to around 20,000 companies by 2028.

- New Zealand: From 2023, companies meeting the Climate Reporting Entities criteria must submit annual climate statements, promoting transparency and accountability.

United Kingdom

- SECR Policy: Organizations must disclose their energy use and carbon emissions in annual reports.

- NHS Requirements: From April 2024, all new NHS procurements will include carbon reduction plans, reflecting a commitment to sustainable practices.

North America

- United States: The SEC is set to standardize climate-related disclosures for public companies. Individual states like California and New York have initiated their own reporting requirements.

- Canada: Plans are underway to introduce enhanced climate disclosure mandates in the coming years.

The Path Forward

- Adaptation and Compliance: Businesses must adapt to these new norms not only to comply with regulations but also to align with global sustainability goals.

- Role of Advisors: Accountants and other financial advisors are pivotal in helping businesses understand and meet these new requirements.

- Sustainability as a Core Business Strategy: Integrating sustainable practices is increasingly becoming a fundamental aspect of business operations, moving beyond compliance to a strategic imperative.

The shift towards mandatory climate disclosures is a significant step in addressing global emissions. Businesses must proactively engage with these changes to remain competitive and responsible in a rapidly evolving corporate landscape. This guide underscores the importance of preparedness and the strategic role of knowledgeable partners like accountants in navigating this journey.