Transparency and the non-negotiables
Impact reporting is becoming non-negotiable where the facts have to speak for themselves, according to KPMG’s Kay Baldock.
We support the approach the XRB is taking to developing climate-related disclosure standards.
XRB has released a consultation document on the topics of governance and risk management, comprising the first stage of their development of climate-related disclosure standards.
In October 2021 the Financial Sector (Climate-related Disclosures and Other Matters) Amendment Bill passed into law, broadening non-financial reporting, by requiring and supporting the making of climate-related disclosures by certain climate reporting entities.
We submitted on the Bill and we note some changes were made to the Act, including excluding smaller issuers, providing a longer lead in time for assurance requirements and removing the disclose or explain provision.
The new Act provides for XRB to develop climate standards as part of the climate-related disclosure framework. XRB has released a consultation document which focuses on the first stage of the consultation, the Governance and Risk Management sections of the standard. (The next XRB consultation in March 2022 will focus on the proposed Strategy, and Metrics and Targets sections).
In our submission we support the approach the XRB is taking to developing climate-related disclosure standards, including, in particular:
We also support the XRB’s approach in the Governance section to not require disclosure of specific climate-related skills and competencies of individual board members. We note that while it is important that boards have an appropriate understanding of climate-related issues within their organisation, boards need the flexibility to create a diverse group with the relevant knowledge, skills, experience and background suitable for the organisation overall.
To help ensure an effective and successful reporting regime, we encourage the XRB to:
We also stress that it is important that the reporting regime does not become a compliance exercise, that it goes beyond compliance and enables effective, meaningful reporting that helps drive strategic thinking and change