Page 300 - Ebook HTKH 2024

This study delves into the growing field of GHG disclosures, emphasizing the
collaboration necessary for transparent, consistent reporting. It also explores the

challenges finance professionals face in aligning GHG metrics with financial systems,
ultimately strengthening corporate credibility and fostering stakeholder trust.
2. Methods
This study employs a qualitative research methodology to explore the current
landscape of mandatory greenhouse gas (GHG) reporting and the role of accounting and
finance professionals. The qualitative approach is particularly suitable for investigating
the complexities of regulatory frameworks, investor expectations, and the integration of
GHG disclosures into financial reporting systems.

The primary technique used in this research is a systematic literature review. The
authors conducted a thorough search and examination of existing studies related to GHG
reporting mechanisms, the involvement of financial experts, and the compliance of
corporations with GHG disclosure standards. The review process involved selecting and
analyzing studies that specifically address the role of financial professionals in ensuring
transparency and accountability in GHG reporting. To ensure the reliability of the

conclusions, each selected study was reviewed for quality and potential biases.
Through this qualitative approach, the research aims to collate and synthesize
insights from various sources, highlighting the challenges and opportunities associated
with mandatory GHG reporting. The results from this literature review form the basis
for the discussion of industry best practices and strategic recommendations for
improving GHG reporting processes.
3. Literature review

Mandatory greenhouse gas (GHG) emission disclosures are a policy measure
requiring companies to report their GHG emissions to the public or to regulators. The
primary objectives of such disclosures are to increase transparency and accountability
in corporate environmental performance, inform and influence the decisions of
investors, consumers, and policymakers, and encourage the reduction of GHG emissions
to align with global climate goals.

There are several initiatives and regulations aimed at implementing mandatory
GHG emission disclosures. For example, the SEC proposed a rule on March 21, 2022,
which would make GHG emissions reporting mandatory for nearly all public
companies. This rule requires the disclosure of Scope 1, Scope 2, and Scope 3 emissions
(IFAC, 2022), applying the current version of the GHG Protocol Corporate Standard
(Reichelstein, 2021). The rule was expected to be finalized by mid-2023 (LoPucki,
2022). Additionally, the IFRS Sustainability Disclosure Standards, issued by the
International Sustainability Standards Board (ISSB) on October 29, 2021, require

companies to disclose their GHG emissions using the GHG Protocol Corporate
Standard, effective from January 1, 2024. The European Union’s revision of the
Non-Financial Reporting Directive (NFRD), proposed on April 21, 2021, also extends
the scope of non-financial reporting to include GHG emissions, aligning with EU
taxonomy and standards.

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