Standards body proposes rules for auditing company climate ... - Reuters
Standards body proposes rules for auditing company climate disclosures | Reuters
Standards body proposes rules for auditing company climate disclosures
LONDON, Aug 2 (Reuters) - A global body on Wednesday proposed its first set of comprehensive rules for auditing climate-related company disclosures in an anticipated move regulators have said is crucial for giving investors information free of greenwashing.
Stricter European Union, U.S. and global rules are being introduced over coming months to replace a patchwork of voluntary private sector practices for listed companies to disclose the impact of climate change on their bottom line.
EU members and other countries will require the disclosures to be externally audited in a similar way to how financial statements are checked by outside accounting firms such as EY, KPMG, Deloitte and PwC.
The International Auditing and Assurance Standards Board (IAASB) said its first comprehensive, standalone standard for auditing sustainability disclosures would play a key role in enhancing trust and confidence in reporting.
The proposed standard, put out to public consultation, can be used for disclosures under the various regimes being rolled out to aid global consistency, the IAASB said.
"The final standard will be issued before the end of 2024," it added.
Nigel Sleigh-Johnson, director for audit and corporate reporting at the ICAEW, a London-based professional accounting body, said the proposed standards were a much-needed underpinning for high quality disclosures.
Jurei Yada, programme lead for EU sustainable finance at climate think tank E3G, said auditing can have a "multiplier effect" on the use of new disclosure rules, and accelerate the uptake of company plans on how they will transition to a net-zero economy.
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Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”