Tue, Jun 27, 2023 page11

• Agency issues emissions standards

  COMPANY REPORTING: The guidelines would create a common language to disclose the effect of climate risks on a company’s prospects, a sustainability board said

  • AFP, PARIS
  • • 
    • 
    • 

  Companies around the world are to have a uniform set of standards on sustainability issues after the body governing international accounting rules yesterday published its first guidelines on reporting greenhouse gas emissions.

  Most large companies report how many tonnes of carbon they emit into the atmosphere each year, but the data is often not reliable.

  The poor quality of data and lack of common standards allow companies to burnish their climate credentials, or to greenwash their reputations.

  

  A BP refinery and a Uniper coal-fired power plant is pictured in Gelsenkirchen, Germany, on March 6.

  Photo: AP

  The International Financial Reporting Standards (IFRS) Foundation in 2021 tried to fill that gap with the creation of a board to work on sustainability disclosure standards.

  The International Sustainability Standards Board’s first standards — IFRS S1 and IFRS S2 — are to be available for use from next year.

  “The standards will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions,” the board said.

  “For the first time, the standards create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects,” it added.

  Countries are adopting measures to achieve carbon neutrality by 2050 to limit the increase in global temperatures at 1.5°C in line with the 2015 Paris climate agreement.

  This is creating a patchwork of regulations for firms to comply with, and the financial stakes in the transition are becoming more important for the firms and their shareholders.

  The foundation’s accounting standards are required in many countries, while many companies in other countries use them to better tap international finance.

  The board said some countries, including Japan and the UK, can quickly make the new climate standards mandatory, and it hopes China — the world’s second-largest economy — would adopt it as well.

  The EU is working on its own standards, which would include biodiversity and human rights, the board said, adding that it hopes they will be compatible.

  The standards ensure “that what they are actually doing is detailed in a common language for all the companies,” said Emmanuel Faber, former chief executive officer of French food company Danone SA, who led the effort to develop the rules.

  The standards define how companies measure their direct and indirect emissions, using a method that is widely used, but until now has not been mandatory — the Greenhouse Gas Protocol.

  They would require companies to audit their emissions data and ensure their climate strategy is adopted by the top management.

  Although the board has not gone as far as the EU, creating common baseline standards is positive, E3G associate director for sustainable finance Kate Levick said.

  “When you have lots of countries all making regulations and requirements at the same time, that’s a bit of a nightmare scenario for companies,” she said.

  That would help reduce greenwashing by companies, she added.

  “The disclosure requirements have been very carefully considered and thought out, and designed with anti-greenwashing in mind,” she said. “The whole idea of this is to hold firms accountable.”
• Most Popular

  • 1

    China seeks to divide Okinawa: report

  • 2

    Cabinet mulls chip aid after Trump threat

  • 3

    AI scare to boost Taipei-US ties: expert

  • 4

    Weekend quakes aftershocks from Tuesday: experts

  • 5

    Coast guard identifies 52 ‘suspicious’ Chinese ships