Current corporate reporting by a majority of companies producing the highest levels of greenhouse gas emissions (carbon dioxide) would not comply with the proposed new requirements from the International Sustainability Standards Board (ISSB).

This is the key finding of research carried out by the Association of Chartered Certified Accountants (ACCA) and the Adam Smith Business School at Glasgow University, Scotland, aiming to find out how prepared companies are for new climate-related reporting rules being developed by the ISSB, formed last November, according to a press statement received by WealthPK.

The research analysed the most recent reports published by companies in the construction material and chemical industries, which had the highest greenhouse gas emissions over the last three years, comparing current disclosures against the disclosure requirements of the proposed climate-related disclosure standard (IFRS S2, Climate-related Disclosures).

This analysis found that most companies fell short of the type and level of disclosure that the ISSB is proposing. Further, the research found that disclosures were often scattered and duplicated across different company sources, often with no cross-reference, and with little connection to financial information published in the financial statements.

ACCA and the Adam Smith Business School are urging the ISSB to ensure the disclosure requirements are clear and easily understandable, and that thorough guidance is provided.

Commenting on the research, ACCA’s head of Pakistan, Assad Hameed Khan said: “The colossal impact of recent floods in Pakistan is a reminder on the national climate action urgency. Thus, it is imperative for companies to adopt ESG-focused (sustainable) practices and initiate substantive action related to climate change and strengthen reporting through robust climate-related disclosures. These measures can be a competitive advantage for companies, as well as, enhancing transparency and trust for investors, customers, employees and regulators.”

Mike Suffield, director of policy and insights, ACCA, said: “Standard-setters and regulators should focus support and guidance on those companies that have not adopted the TCFD recommendations, including smaller businesses. It may be appropriate to allow a period of voluntary adoption before making the ISSB standards mandatory.”

He also called on regulators to help users of this climate-related information by resolving the problem of the scattered location of disclosures, the lack of cross-referencing and duplication.

Credit : Independent News Pakistan-WealthPk