Accounting for Climate: The Numbers Investors Need

Presented by

The PRI

About this talk

Speakers: Mark Carney, COP 26 Finance Adviser and UN Special Envoy Sue Lloyd, Vice-Chair, International Accounting Standards Board David Pitt-Watson, Investor and Emeritus Chair, UN Environment Finance Initiative Anne Simpson, Interim Managing Investment Director, Board Governance & Sustainability, CalPERS Guenther Thallinger, Member of the Board of Management, Allianz SE and Chair, UN Net Zero Asset Owner Alliance Investors are calling out for hard information on the financial impacts climate change will have on companies. The financials define profitability and drive executive remuneration, so ensuring they properly reflect climate-related risks is crucial. TCFD and other initiatives go a long way in providing this information, but a focus on the front end reporting only provides half the story. Investment decisions, both by companies and investors, also depend on the numbers disclosed in the audited financial statements. Fuller financial disclosures enable investors to incorporate climate risks into their investment decision making, helping focus investment on those companies that are more likely to thrive in a carbon-constrained future. Currently, most companies assume business as usual in their financial statements, while at the same time in the annual report recognising that business as usual is something that the planet simply cannot sustain. This is why the IASB’s (International Accounting Standards Board) accounting treatment of climate issues is so crucial. The IASB, has issued a paper making clear that material climate change risks must be incorporated in IFRS financial reporting. If properly followed it will have profound implications for the way companies are valued and the decisions made by investors. In this webinar we examine the implications of the IASB paper and what the accounting profession, investors and regulators will need to do to ensure that ensure companies declare profits consistent with a sustainable world.

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