The External Reporting Board (XRB) announced yesterday it has approved three out of the four proposed amendments to the climate and assurance standards.
The Financial Markets Authority (FMA) also advised it intends to consult on a class exemption relating to assurance over scope 3 greenhouse gas emissions before the end of the year.
A link to the XRB’s media release is available here.
Who should read this? Why?
All climate reporting entities (CREs) will want to know about the XRB’s decisions, which will have an impact on their preparations for their second climate statements.
CREs should also be aware of the FMA’s incoming consultation on a class exemption for assurance over scope 3 emissions, to ensure they are active in responding.
What does it cover?
The XRB has approved the following proposed amendments to the climate and assurance standards following its consultation in October:
- A one year extension to the adoption provision for scope 3 greenhouse gas (GHG) emissions disclosures;
- A one year extension to the adoption provision for anticipated financial impacts disclosures; and
- A new one year adoption provision relating to assurance of scope 3 GHG emissions.
The amendments will apply from 1 January 2024, so will be applicable for reporting periods that begin on or after that date.
To support the changes, the FMA has advised that it intends to consult on a class exemption around the scope 3 GHG emissions assurance requirements – this consultation is intended to happen before the end of the year.
The proposal to delay transition planning disclosures for one year was not adopted due to hearing strong user demand for this information, and also a “strong theme of learning-by-doing” coming through in submissions.
Our view
We support the extensions, and also the decision not to approve the transition planning extension to reflect feedback from submissions highlighting the importance of this information.
It is great to see the XRB recognising the enormous amount of effort CREs are putting into their climate-related disclosures, and these extensions should alleviate some of the concerns around the more challenging aspects of the regime. At least for some CREs, it will better align with the timing of the Australian regime.
We also welcome the FMA’s consultation for a class exemption for any additional certainty it can provide.
What next?
The XRB is developing a series of guidance documents for reporting and assurance of GHG emissions – the first is intended to be released in December 2024.
Also due in December 2024 is more guidance on transition planning, to be published by the XRB in conjunction with the Sustainable Business Council.
If you have any questions about the XRB’s decisions or would like to discuss your climate-related disclosures obligations more generally, please contact one of our experts.
This article was co-authored by Hannah Cross, a Solicitor in our Financial Services team.
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