Tax & Accounting Blog

Sustainable investment – climate change and financial risk reporting

Accounting, Audit & Payroll, Audit, Blog, Business Practices, Business Strategy & Development, Business Tax, Corporations, Organisations, Tax, Workflow & Processes July 6, 2017

Australian and New Zealand investors have welcomed the release of the final recommendations from the global taskforce on climate change and economic sustainability – a move which highlights climate change as an economic issue as much as an environmental one.

Transparent reporting framework

The report by The Financial Stability Board Taskforce on Climate-Related Financial Disclosures (TCFD) is a robust demonstration of how serious business is about taking on climate change as a commercial reality outside of a legislative or policy response. The TCFD’s recommendations provide flexible guidance for companies on transparent reporting of climate-related risks and opportunities for their shareholders.

In addition to the report, long-term institutional investors groups have written to the G20 heads of state urging governments to stand by their commitments to the Paris Agreement at their upcoming Summit in Hamburg this week from 7 July.

Corporate support for sustainable investment

ANZ regional institutions such as Colonial First State Global Asset Management, UniSuper, NZ Super Fund, BT Financial Group and Cathay Financial Holdings join others across the globe to bolster support for the climate-change disclosure practices.

Earlier this year, Blackrock, the world’s largest asset manager, with $5.1 trillion under management, announced an outreach effort to increase pressure on companies to improve reports on how climate risk affects their businesses and how they will address these risks.

Following closely in April, was the high profile withdrawal of funding by the Australia’s four largest banks from the Adani Carmichael mine. The banks’ decision was heavily influenced by environmental risk concerns which did not comply with their climate policies.

What do investors want and auditors need?

And as the world transitions to a low-carbon global economy, investors are increasingly looking for resilience in their portfolios. Whether climate-change disclosure becomes a voluntary or mandatory practice, it is an issue that financial advisers and auditors can’t ignore.

Speak to us about our knowledge solutions, including  XYZ Audit ManualAustralian Audit Guide & Toolkit for SMSFS 2017 and Australian Audit Guide & Toolkit for SMES 2017,  so you can confidently advise your clients on the latest reporting and compliance measures.