Treasury guidance insufficient to support climate transition planning, CA ANZ says
In a recent submission to Treasury, CA ANZ said that the government’s guidance on transition planning was not “sufficiently practical” to support organisations.
Last Thursday (25 September), Chartered Accountants Australia & New Zealand (CA ANZ) provided Treasury with feedback on its climate-related transition planning guidance.
The Treasury’s guidance has been designed to provide firms with an overview of transition planning best practices, and to endorse a recommended transition plan disclosure framework.
However, CA ANZ said that it was unclear whether the guidance aimed to support firms’ internal transition planning processes, or the design and disclosure of a transition plan.
“We do not consider the guidance to be sufficiently practical to support organisations to undertake the transition planning process,” the submission read.
The industry body highlighted three areas that organisations would need to understand to create their climate transition plans, and therefore would require better guidance on.
These included the transition planning process itself, including the details and steps that needed to be considered and integration into businesses’ strategy and operations.
The design and disclosure of the transition plan itself was another area which would require adequate guidance, given that transition plans were an expected output of the transition planning process.
Firms would also need to understand disclosure requirements in line with mandatory reporting requirements of AASB S2, the Australian Accounting Standards Body’s disclosure rules regarding climate-related risks and opportunities.
CA ANZ recommended that the Treasury collaborated with other government agencies to ensure better regulatory connectivity. Possible partners could include the Department of Climate Change, Energy, the Environment and Water (DCCEEW), the Australian Accounting Standards Board (AASB) and the Australian Securities and Investments Commission (ASIC).
The industry body also called for further clarity in Treasury’s transition planning guidance to boost its practical utility.
“Further clarity is needed if the guidance is to help preparers understand and practically undertake the transition planning process or assist in the disclosure of the transition plan,” CA ANZ said.
“The range of knowledge of this target audience is broad and we acknowledge that it is challenging to meet all the needs of the preparers that will be referencing this guidance.”
It added that Australia’s national climate risk assessment report, released in September, should be considered as part of the guidance.
The risk assessment provided a comprehensive analysis of national climate risks and impacts, which CA ANZ said should be considered by organisations when creating their climate transition plans.
“When incorporated into the guidance, it should help organisations understand how to use it as part of the transition planning process,” CA ANZ’s submission read.
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