IFAC: Accountants should act now on climate reporting

The International Federation of Accountants is calling on accountants around the world to take a more active role in climate-related reporting.

In “Corporate Reporting: Climate Change Information and the 2021 Reporting Cycle,” which IFAC issued on Monday, the group urges the profession to take a lead role immediately — starting with the 2021 reporting cycle — in:

• Improving and integrating climate-related information and disclosures;
• Quantifying the financial impact of climate issues;
• Making sure that climate reporting complies with reporting requirements; and,
• Supporting worldwide efforts to enhance climate and sustainability reporting, particularly those of the International Sustainability Standards Board.

“Given the significant attention paid to the impact of climate risk on society and financial stability,” the statement says, “many companies and investors are more closely scrutinizing the potential material impacts of climate change on companies.”
The statement did note, though, that while various standard-setters are issuing guidance and working on reporting frameworks (see our story), current financial reporting standards and requirements under U.S. GAAP and IFRS do not require much in the way of climate reporting.

“Accordingly, in preparing their 2021 financial reports in the context of changing expectations about climate-related disclosures, companies must evaluate what some stakeholders would like companies to report and where they would like it reported (in the financial statements versus the 'narrative' sections of annual, integrated or sustainability reports, or elsewhere) in the context of what is required/allowed under current professional standards (i.e., financial reporting standards and audit and assurance standards) and regulatory requirements,” IFAC wrote.