New climate regulations create challenges for industries producing more CO2

KARACHI: Unprecedented Climate-Related Disclosure rules have now been imposed on the companies emitting excessive green-house gasses, like carbon dioxide.

Consequently, current reporting by many high-emission corporate entities, especially the companies working in the areas of construction materials and chemicals, would no longer be in compliance with the proposed new requirements and standards (IFRS S2), recommended by the International Sustainability Standards Board.

According to research by the Association of Chartered Certified Accountants (ACCA) and the Adam Smith Business School at Glasgow University, those companies (77% of the sample) that have adopted the Task Force on Climate-related Financial Disclosures (TCFD) recommendations have shown significantly better compliance, but still they do not meet the new standards. Therefore, these new Disclosure Requirements must be made clearer and easily understandable with more guidance.

In this regard, chief of the ACCA in Pakistan Assad Hameed Khan said: “The devastation of floods has necessitated climate-action urgency and adoption of ESG focused (Sustainable) practices in Pakistan. Although the new standards are quite challenging for the smaller companies, adopting these measures will give competitive advantages to companies, by enhancing transparency and trust for investors, customers, employees and regulators.”

Copyright Business Recorder, 2022