25
Reporting requirements: what do businesses need to know?
WHAT? WHEN? HOW?
A plethora of voluntary reporting standards exists, including the TCFD as well as those from the Carbon Disclosure Standards Board (CDSB) 51 , Global Reporting Initiative (GRI) 52 , the Sustainability Accountancy Standards Board (SASB) 53 and various industry-specific frameworks. However, standards bodies are increasingly converging on the TCFD framework. Its reporting requirements are fast becoming the globally accepted standard for reporting on climate-related risks and mitigation activities. While only two countries so far have declared that it will become mandatory 54 , investors and other stakeholders are increasingly pressing companies to adopt the standard, not least to help them assess and compare companies’ exposure to climate risk. Standardised reporting is generally seen as a positive move to create an established disclosure framework. However, it is not a panacea for businesses looking for absolute clarity on their climate change reporting obligations, for two main reasons.
Firstly, the TCFD does not explicitly tell companies what risks to measure or how to measure them, largely because it is inherently difficult, if not impossible, to come up with a single set of specifications that would suit every type of business. The risks faced by an investment fund are inevitably very different from a global consumer goods brand, a major housebuilder or a hospitality and leisure chain. Not to mention insurers, who face some of the most complex risks of all, as both insurers of risk and holders of assets. Each business will need to work out what its own reporting requirements and metrics are. Climate-related risks can be direct or indirect, moreover since they are by no means the only risks companies are facing, it is important that companies and their directors realise that they can interact with other elements of a company’s risk register in unexpected ways.
Carbon Disclosure Standards Board https://www.cdsb.net/
51
Global Reporting Initiative https://www.globalreporting.org/
52
53 Sustainability Accountancy Standards Board https://www.sasb.org/
54 beehive.govt.nz https://www.beehive.govt.nz/release/new-zealand-first-world-require-climate-risk-reporting; Clyde & Co https://www.clydeco.com/en/insights/2020/12/climate-reporting-heats-up-with-uk-government-anno
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