The British Accounting Review’s Post

If the point of #materiality determination is to identify information that "is considered material for primary users of general-purpose financial reports [and] if omitting, misstating or obscuring that information could reasonably be expected to influence #decisions that they make on the basis of the undertaking’s sustainability statement" (ESRS 34.b), then having relevant #expertise is important. Obvious no?

Climate risk disclosures and auditor expertise Does auditor expertise in climate related issues have an effect on climate risk disclosure? We found an association between the audit partner’s climate risk expertise and both the likelihood of climate risk disclosures in the annual reports of Australian companies, and the quality of the disclosures. For more details, see our recently accepted paper in the British Accounting Review: https://lnkd.in/grWkTvUm "Climate risk disclosures and auditor expertise", by Ly Pham, David Hay, Antti Miihkinen, Emma-Riikka  Myllymäki, Lasse Niemi and Jukka Sihvonen

𝐒𝐄𝐂 𝐂𝐥𝐢𝐦𝐚𝐭𝐞 𝐃𝐢𝐬𝐜𝐥𝐨𝐬𝐮𝐫𝐞 Here are the key highlights of the SEC climate-disclosure rule with comments of mine in brackets: ➡         Climate-risks (actual or potential) to be disclosed if they are deemed to present a material risk (consistent with the IFRS and other financial disclosure). ➡         If activities to mitigate or adapt to a material climate-related risk were undertaken, a quantitative and qualitative description of expenses and financial impacts to be disclosed. ➡        Disclosure to relevant transition plans, scenario analysis, or internal carbon prices, if any were undertaken. ➡        Any oversight by the board of directors of climate-related risks and any role by management in assessing and managing the registrant’s material climate-related risks (This is good and is aligned with the governance expectations pillar for the TCFD/IFRS S2). ➡        Any processes the registrant has for identifying, assessing, and managing material climate-related risks and, if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes (This aligns with Risk Management pillar of the TCFD/IFRS S2). ➡       Any processes the registrant has for identifying, assessing, and managing material climate-related risks and, if the registrant is managing those risks, whether and how any such processes are integrated into the registrant’s overall risk management system or processes. ➡       For large accelerated filers (LAFs) and accelerated filers (AFs) that are not otherwise exempted, information about material Scope 1 emissions and/or Scope 2 emissions. (this class of filers represent 40% of issuers or so). SRCs, EGCs are exempt. ➡         For those required to disclose Scope 1 and/or Scope 2 emissions, an assurance report at the limited assurance level, which, for an LAF, following an additional transition period, will be at the reasonable assurance level (Having assurance is highly constructive). ➡        The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise. ➡        The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals. ➡       Initial disclosure to be phased in between 2025 and 2028. (This is a reasonable window). I know some people would have wanted to see more, but I believe these rules will stand a court-challenge, and will take US companies climate risk management and disclosure to the next level. Full details here: https://lnkd.in/g4pScq72

Climate-related risk reporting rules and regulations continue to proliferate in the United States and globally. California has adopted two new laws concerning climate-related disclosures, including not only disclosure of Scope 1 emissions and Scope 2 emissions, like the SEC rules, but also Scope 3 emissions. California’s rules also conceivably have a broader reach in that they would apply to both publicly and privately held companies meeting certain doing business requirements in California, not just those public companies regulated by the SEC. Likewise, the recently adopted EU CSRD also requires certain large and listed EU companies to disclose information regarding the sustainability of their operations. Certain non-EU companies, some of which are subject to the SEC’s rules, which meet certain thresholds of net annual turnovers, asset value, and number of employees are required to disclose information regarding the sustainability of their operations.  As this trend continues, a growing number of companies are likely to fall within the scope of one or more climate-related rules, regulations, or standards. 

Mandatory climate disclosure is coming to Australia and could affect your company as soon as 1 January 2025. Our advice to companies waiting until climate reporting is compulsory is to start preparing now to develop solid climate risk governance, management and reporting processes that deliver value to your organisation. Our ClimateReady team can help you with this, and I encourage my network to reach out and get their help mapping your reporting requirements, identifying gaps in your reporting, running peer benchmarking and conducting an organisational readiness assessment.   Read their article ‘Preparing for Australia’s Mandatory Climate-Related Financial Disclosures’ here – https://lnkd.in/gCQb2A2q.   For more information, contact me or our ClimateReady team, Renée Law, Izabela Szewczul, Shane Murphy, Elodie Castagna and Paris Ward to see how we can help get your business ready.   #ESG #Sustainability #climatereporting

💡 New article on The Policymaker Australia can lead on comprehensive climate risk management by regulating corporate financial disclosures to include the physical risks posed by climate change. Read Adam Arian PhD, CPA (Aus), CA (ANZ) and John Sands 's article here: https://lnkd.in/gWvxs_uF #ESG #climaterisks #policyinnovation Australian Catholic University University of Southern Queensland

New SEC Climate Risk Disclosure Rule Highlights Legal Action, Accountability   Last month, the U.S. Securities and Exchange Commission adopted new climate disclosure rules that require public companies to take a proactive and transparent stance on climate change’s impact on their stakeholders. The rules aim to support business models that can thrive in a low-carbon economy, contributing to overall sustainability and weather-resilient businesses. https://lnkd.in/eb9QJNaW Climate risk management is a key element of corporate stewardship and presents some of the most material financial risks businesses must manage. While there are ongoing legal battles around the new rule, one thing is clear: the public is interested in how companies and government leaders address climate change.    #Assurtrak #InsuranceCoverage #LegalUp John D. Farris  Assurtrak Insurance Brokers, LLC

U.S. Securities & Exchange Commission (SEC) new climate disclosure rule requires public companies to enhance transparency on climate-related risks, such as greenhouse gas (GHG) emissions and severe weather impacts. Businesses must now evaluate and update internal controls to comply with disclosure and assurance obligations. Internal Audit has a role here. Sooner this will be considered in the Middel East KPMG introduced Key actions include: - Assessing existing internal controls over financial reporting (ICFR) for climate-related disclosures. - Identifying risks and gaps in current processes to meet Scope 1 and Scope 2 GHG reporting requirements. - Enhancing policy documentation and integrating climate disclosures into risk management, internal audit, and IT frameworks. - The rule may be paused due to legal challenges, but companies should proactively prepare to ensure compliance across global reporting regimes. #كلام_حسن #حسن_الكلام #InternalAudit #ClimateDisclosure #InternalControls #ESG #SECCompliance #RiskManagement

After a two-year delay and intense political debates, the U.S. Securities and Exchange Commission (SEC) - Wall Street's top regulator - has today adopted rules for climate-related disclosures by public companies and in public offerings. The final rules reflect the Commission’s efforts to respond to investors’ demand for more consistent, comparable, and reliable information about the financial effects of climate-related risks on a company’s operations and how it manages those risks, while balancing concerns about mitigating the associated costs of the rules. The final rules will, among other information, require a company to disclose: ⭕ Climate-related risks that have had or are reasonably likely to have a material impact on the company’s business strategy, results of operations, or financial condition - including the material impacts of such risks on the company’s strategy, business model, and outlook; ⭕ Any oversight by the board of directors of climate-related risks and any role by management in assessing and managing the company’s material climate-related risks; ⭕ Any processes the company has for identifying, assessing, and managing material climate-related risks and, if the company is managing those risks, whether and how any such processes are integrated into the company’s overall risk management system or processes; ⭕ For large accelerated filers (LAFs) and accelerated filers (AFs) that are not otherwise exempted, information about material Scope 1 emissions and/or Scope 2 emissions - including an assurance report at the limited assurance level, which, for an LAF, following an additional transition period, will be at the reasonable assurance level; ⭕ The capitalized costs, expenditures expensed, charges, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise, subject to applicable one percent and de minimis disclosure thresholds, disclosed in a note to the financial statements; ⭕ The capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates (RECs) if used as a material component of a company’s plans to achieve its disclosed climate-related targets or goals, disclosed in a note to the financial statements; and ⭕ If the estimates and assumptions a company uses to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans, a qualitative description of how the development of such estimates and assumptions was impacted, disclosed in a note to the financial statements. Source: https://lnkd.in/g5YFj-SP #getCSRDready, #CSRD, #ESRS, #CSDDD, #ESG, #Strategy, #SustainabilityReporting, #Digitalisation, #Cleerit