In recent years, the attention of the world community, including investors and regulators, to how businesses and capital markets are responding to climate change has increased significantly, creating one of the main challenges facing accountants and auditors today. As always, remaining on the cutting edge of progress, they are obliged to take an active part in how exactly climate information will be disclosed in the reporting for the current 2021 and in the future, says the International Federation of Accountants (IFAC).

Financial reporting standards have changed in recent years, and sometimes significantly, but they have not been the main reason for changes in information requests from investors and other users of reporting. Climate risks have become material issue for them, as they can now lead to significant financial consequences for most companies.

In responding to these changed requests, professional accountants and auditors are required, in IFAC’s opinion, to influence:

  • aligning and integrating climate-related information and disclosures with corporate policy and approving strategic guidelines;
  • quantifying the financial impacts of climate change where possible;
  • ensuring climate-related reporting compliance, in particular, with high standards without omissions and/or misstatement of material information (based on a company-specific materiality determination);
  • supporting global initiatives to enhance and spread climate and broader sustainability-related reporting through the work of the new International Sustainability Standards Board (ISSB) within the IFRS Foundation.