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IFAC releases review of corporate disclosures on emissions

November 10, 2022

The International Federation of Accountants (IFAC) on Wednesday released "Getting to Net Zero", a global review of corporate disclosures on emissions targets that analyses the disclosure trends and transition plans of the 40 largest publicly traded companies in 15 jurisdictions.

The release of the disclosures report comes during COP27, the United Nations climate change summit in Sharm El-Sheikh, Egypt, where reducing emissions is one of the main issues being addressed.

The key policy considerations in the report include:

  1. Consistent terminology: Are changes in current terminology and presentation required to enhance investors' understanding of the nature and scope of company-specific targets and disclosures?
  2. Scope 3 emissions: Should Scope 3 emissions be included in reduction targets and transition plans?
  3. Standardised transition plan disclosures: How can transition plan disclosures be standardised for companies and industries at the international level?
  4. Transparency of financial implications of decarbonisation: What challenges need to be addressed to encourage companies to enhance the information they provide regarding the cost associated with meeting reduction goals?
  5. About 66% of the companies IFAC reviewed included some type of emissions reduction target in their corporate disclosures. These emissions targets used a variety of terminology, and only 39% incorporated Scope 3 emissions, according to the review.

About 90% of companies that disclose emissions targets also provide a disclosure about how they plan to reach their target, according to IFAC, and only 24% of companies with a plan include some past expenditure or future estimate of expenditures to implement plan actions.

COP27 began Sunday and ends on 18 November.

[Financial Management Magazine]