Parliament has a policy objective of implementing sustainability reporting standards that align with global benchmarks, but it relies on the entities required to report being ready, according to a climate change reporting expert.
Treasurer Jim Chalmers recently announced consultation processes related to the overhaul of the Australian standard-setting process to have one body setting audit, accounting and sustainability standards.
That consultation process will occur while the two standard setters — the Australian Accounting Standards Board and the Auditing and Assurance Standards Board — issue local versions of the sustainability disclosure and assurance standards issued by overseas bodies.
Sustainability standard-setting became a part of the remit of both the accounting and auditing standards boards following the recent passage of an omnibus bill that hardwired sustainability standard setting into law establishing the AAASB, the AUASB and the Financial Reporting Council.
The new standards will require some work by entities to ensure the policy objectives set down by the federal government are met. PwC partner Katelyn Bonato said a critical part of the process was for boards and senior management of entities to get familiar with the information the standards require.
Some entities already comply with climate reporting requirements such as those previously set by the Taskforce on Climate-related Financial Disclosures, Bonato said, and those entities will have an easier time complying with new requirements.
Another group that will have an easier time working their way through the newer regulations on disclosure will be entities like businesses that have been factoring in their impact on the climate in organisational planning.
“Those who have embedded climate risk into their enterprise risk management thinking and strategy are obviously one step ahead,” Bonato said.
“They will have governance processes in place which is a big part of what the standard is already. That will give them a big start in relation to that.”
She also said that the ultimate goal of the new sustainability framework was for users of the disclosures to be able to assess whether an entity has a governance framework that ensures climate impacts are assessed regularly, measured accurately, and embeds environmental considerations into its business operations.
“They should be able to have enough information to understand how a company considers the resilience of their business with climate change,” Bonato said.
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