Page 303 - Ebook HTKH 2024

Consistent, standardized entity-level and consolidated GHG emissions data,
grounded in rigorous data collection and modeling, form the foundation for setting

emissions reduction targets, KPIs, budgets, and developing comprehensive
decarbonization plans (IFAC, 2023). A global survey conducted by the International
Federation of Accountants (IFAC) found that 67% of investors now view GHG
disclosures as a critical factor in their risk assessments and investment decisions, further
emphasizing the importance of reliable GHG reporting in the financial sector.
Adherence to regulatory mandates and standards is critical for organizations.
Mandatory standards such as the International Sustainability Standards Board’s (ISSB)
General Sustainability-related Disclosures (S1) and Climate-related Disclosures (S2),

which align with the Financial Stability Board’s Task Force on Climate-related
Financial Disclosures (TCFD), will be effective from January 1, 2024. These standards
will require companies to disclose material GHG emissions, integrated with financial
reporting. Similarly, the European Financial Reporting Advisory Group’s (EFRAG)
European Sustainability Reporting Standards (ESRS) under the EU’s Corporate
Sustainability Reporting Directive will mandate climate change reporting. Additional

jurisdictional regulations, including the U.S. Securities and Exchange Commission’s
(SEC) proposed climate change disclosure rules and the UK’s mandatory climate-
related financial disclosure regulations, further underscore the need for comprehensive
GHG reporting. These standards position GHG reporting as part of a larger strategy to
provide decision-useful sustainability and climate information to global capital markets.
The increasing global emphasis on sustainability and climate change mitigation
has heightened the demand for transparent and accurate GHG disclosures. These

disclosures are not just a reflection of corporate social responsibility but hold direct
financial implications, significantly influencing a company’s valuation and stakeholder
trust. A 2023 report by MSCI ESG Research found that companies with integrated GHG
reporting frameworks experienced a 23% increase in investor confidence. Transparent
GHG reporting ensures that organizations remain accountable to their sustainability
goals while providing stakeholders with actionable insights into environmental

performance.
Building a strong GHG reporting process requires informed, well-trained teams.
Companies must prioritize investments in training finance and accounting professionals
to develop a comprehensive understanding of GHG emissions, their financial impacts,
and the complexities of relevant reporting standards. Such training will enable teams to
identify potential discrepancies or inaccuracies in the reporting process, ensuring that
final disclosures are accurate and compliant with industry standards.
Additionally, GHG reporting often extends beyond a company’s immediate

operations to include emissions from the supply chain, transportation, and other indirect
sources. Companies that engage stakeholders across various departments—such as
operations, procurement, and IT—can ensure comprehensive

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