Who will encounter the IFRS S2 requirements?
Audiences for the IFRS disclosures include corporations, investors and financial institutions, regulators, stock exchanges, assurance and accounting firms and data providers, credit rating agencies, and financial service providers.
Organisations
The demand for increased disclosures about climate-related risks and opportunities has precipitated this new era of sustainability regulations and standards designed to address this need. Forming the ISSB and developing a climate-related disclosure standard that builds upon the TCFD recommendations is a major step in reducing the fragmentation and uncertainty surrounding the climate reporting space.
Finance functions
As underscored by the requirements of these new IFRS Sustainability Disclosure Standards, we are seeing a shift in the locus of that information, from primarily ‘stand-alone’ sustainability reports prepared by external relations or other departments to the general purpose financial reports and regulatory filings of the enterprise. This has thrust the finance function into these activities front and centre, which is a natural extension of the fundamental technical skills of the management accounting professional.
Finance professionals
In addition to requiring fundamental accounting and reporting skills, the comprehensive nature of these new disclosure requirements — focusing on governance, strategy, risk, and metrics and targets — calls upon the broad range of skills of today’s management accounting professionals. The AICPA & CIMA report Accounting for Carbon guides the finance professional on how to integrate carbon accounting into an organisation.37 Similarly, the AICPA & CIMA report Accounting for Climate Resilience provides a more extensive discussion of scenario analysis and how it can be applied in the organisation.38