Plenty of companies are making a lot of noise about sustainability efforts, but is it all just talk? This week on When the Facts Change, Bernard Hickey looks into a little-known but crucial area of climate change reporting that might hold the key to keeping companies accountable for their climate claims.
When you think about how companies are reducing their emissions, and more importantly, why, it becomes apparent there aren’t nearly enough incentives for them to make meaningful moves towards sustainability targets. One way to guarantee companies will follow through on their climate change promises is by mandating disclosure of climate-related risks in their accounting systems.
James Shaw recognised this relationship between transparency and action, and during his tenure as climate change minister he pushed for changes to the accounting standards for organisations in Aotearoa. The External Reporting Board (XRB), an independent crown entity responsible for developing and issuing accounting order and assurance and climate reporting standards for public, private and not-for-profit sectors, is responsible for enacting those changes.
With climate-risk disclosure underpinning the new regulations set by the XRB, climate reporting for listed companies now expands beyond the sustainability team and into the risk and finance teams. Ultimately the disclosures need to be signed off at an executive level, bringing climate accountability front and centre at board tables all over the country.
This level of scrutiny could make a huge difference to the way high-impact companies not only think about climate change and their own carbon profiles, but how they interact with their investors, the government, trading partners and regulators.
Dr Amelia Sharman, director of sustainability reporting at the XRB, joins Bernard on When the Facts Change to break down what these changes to climate disclosure mean and why they’re so crucial to the world around us and the way we do business.
Click here for more episodes Bernard Hickey’s economics podcast When the Facts Change, or follow on Apple Podcasts, Spotify or wherever you listen to podcasts. Made possible by Kiwibank.