Mandatory reporting is coming for large business to report on net emissions both up and down stream over the next five years, an HVIA event in Sydney was told last week.
Nick Palousis, Chief Executive of 2XE and co-founder of Accelerate Zero, shared the background for forthcoming reporting obligations with a gathering of NSW-based HVIA members, HVIA Directors and a healthy cohort of out-of-town partners, members and stakeholders.
Accelerate Zero deliver net zero training tailored to align with clients’ corporate commitments across their supply chain.
Mr Palousis explained what is likely to be required for businesses to comply.
“Detailed domestic standards will prescribe reporting requirements being developed by the Australian Accounting Standards Board to align the four-pillar framework with International Finance Reporting Standards S2 Climate-related Disclosures,” Mr Palousis said.
Those pillars are governance, strategy, risk and opportunity, and metrics and targets:
- Governance processes, controls and procedures used to monitor and manage climate-related financial risks and opportunities.
- Strategy for identifying and addressing climate-related risks and opportunities, including transition plans.
- Material climate-related risks and opportunities to the entity’s business, and how these will be identified, assessed and managed by the entity.
- Climate-related targets and progress toward those targets, including scope 1 and 2 emissions for the reporting period (with disclosure of material scope 3 emissions also required from an entity’s second reporting year onwards).
“All reporting content (except scope 1 and 2 emissions disclosures) will be subject to the existing concept of ‘financial materiality’ as it applies in Australia, and which aligns with the position on materiality adopted by the International Sustainability Standards Board (ISSB) Climate Standard.”
“Climate-related financial information would be material if ‘omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial reports (existing and potential investors, lenders and other creditors) make on the basis of the reports’.
Mr Palousis said global consumers not only feel that environmental sustainability is important, it is now an important purchase criteria and is a key differentiator.
“Pursuing net zero emissions can be an opportunity for business,” he said.
“Assess where you’re at in terms of resources; upskill and build the capacity of your people; understand where your risks are (climate and otherwise); use data (or start collecting ) to inform your decisions and develop a plan to address these risks.
“A proactive strategy creates efficiencies, enhances your company’s reputation and relationships, opens new markets, and drives product and service innovations.”
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