Accountancy & Banking

Saffery Partner Jamie Lane discusses climate reporting and we meet Personal Tax Semi-Senior Jake Walsh

Jamie Lane, Partner at Saffery

By Jamie Lane [email protected]

Published: October 3, 2023 | Updated: 2nd October 2023

Climate reporting – start now says Saffery Partner, Jamie Lane as he looks at the reporting requirements and priorities for businesses.

We also get to meet Personal tax semi-senior,  Jake Walsh and learn how he loves to sign up for ‘weird and wonderful events and courses!’

If you follow current events, you will recognise that climate-related reporting requirements have become an increasing priority whilst the complexities surrounding climate reporting have gained recognition for being unclear and intimidating for businesses, especially small and medium sized enterprises (SMEs) to navigate due to a patchwork of reporting frameworks, a plethora of regulation and an ‘alphabet soup’ of abbreviations and acronyms.

In a recent ICAEW webinar, ‘Getting started with climate reporting’, 92% of attendees admitted to having less than limited experience of climate reporting, or none at all. The time to get started with climate reporting is now.

More transparency, less subjectivity

What is clear, is that it’s going to require a collaborative effort from standard setters, accounting firms, regulators, investors and companies to improve transparency and reduce subjectivity around climate reporting.

There needs to be one set of sustainability standards to adhere to, a new global baseline for businesses to disclose their sustainability risks and opportunities, for both mandatory and voluntary disclosures. The International Sustainability Standards Board (ISSB) answered this need by launching its first two standards (S1 and S2) in June 2023:

  • IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
  • IFRS S2 Climate-related Disclosures.

These standards bridge the information gap, facilitate greater consistency, and provide quality information to the investor community. This will enable the community to make more informed decisions on a company and its prospects.

Set to take effect in January 2024, S1 and S2 were developed from two widely adopted existing frameworks, Taskforce on Climate-Related Financial Disclosures (TCFD) and SASB Standards. S1 and S2 focus on integrating climate-related metrics and financial statement impacts, as well as the overall implications for financial reporting, highlighting a distinction from the existing frameworks.

A firm supporter of the ISSB since its launch, the UK government indicated it will explore adopting ISSB’s standards with two adapted UK-centric versions, aiming to make endorsement decisions on its first two standards by July 2024.

Why are these standards important?

With sustainability pressures and incentives creating a shift in corporate activity to achieve a net zero economy, we know that companies are under scrutiny from regulators, investors and the UK government, to better manage their own climate-related risks and their impact of the environment. Further, the environmental, social, and governance (ESG) approach to investing is evolving at a rapid pace, with many investors now taking ESG into account as part of appraising their next investments.

Following concerns raised by investors and surmounting industry pressure to adequately address climate-related matters in financial reports and audits, S1 and S2 mark a significant step in the right direction.

Key challenges facing UK businesses

One of the challenges facing UK businesses is the need to consider the climate resilience of their strategy and business model. Businesses will need to use climate-related scenario analysis, such as assessing the impact of several hypothetical situations using a set of assumptions and inputs.

To make these requirements scalable, they could consider the extent of the exposure to climate-related risks and opportunities as well as the skills, capabilities, and resources available to them in carrying this out, but it must consider all reasonable and supportable information that is available without unnecessary cost or effort.

Other key sustainability-related changes are also unfolding in the European Union (EU). The Corporate Sustainability Reporting Directive (CSRD) is expected to take effect from financial years beginning January 2024.

Organisations are required to provide a detailed outline of sustainability disclosures, including anticipated risks and opportunities pertaining to environmental and social issues and although this is an EU law, it is anticipated to impact around 50,000 UK businesses.

Further, the European Commission recently released a set of 12 European Reporting Standards (ESRS) effective from 2024 for large businesses across the EU. They are mandatory for use by businesses required by the EU Accounting Directive to report sustainability information.

Both reporting initiatives are subject to double materiality, meaning businesses will need to report on their impacts on social and environmental issues and potential risks.

With these imminent changes, coupled with the S1 and S2 (and the expectation that S3, S4 and so on will follow), doing nothing at this stage is not an option.

How we can help

At Saffery, we support the ISSB’s efforts in creating a more streamlined strategy for reporting climate-related and financial disclosures and advocate the importance of ESG to support our clients in reviewing the climate-related opportunities and risks of their businesses, but to also support the industry as a whole in improving transparency around climate-related matters.

If you would like to discuss any of the topics mentioned above, or you’re ready to get started with climate reporting for your business, please get in touch with [email protected]

***

Jake Walsh

Name: Jake Walsh

Role: Personal tax semi-senior

Time at Saffery: 4 years

What’s the best bit about your job?

Meeting and speaking with clients is my favourite part of the job, as I enjoy meeting new people and building up relationships. Having an established relationship with clients enables more fluid conversations and encourages questions to be asked from either party, which helps to provide even better client service.

The culture of Saffery Champness is really important to the business and the people within it – what do you think you bring to the team and what do you contribute?

Another colleague and I run the social committee for our Bournemouth office. We try and run three events each month to help bring colleagues from each department together. Some event examples include paintballing, paddleboarding, sports competitions, and a life-sized game of Monopoly. We have been running our social committee for a few years now, and it’s a great chance to welcome in new colleagues and combat the stereotype that “accountants are boring!”

If you weren’t doing this role, what might you be doing?

My back up plan was to become a primary school teacher. I can imagine having a classroom full of 30 little menaces would be quite enjoyable

What do you enjoy doing outside of work?

I am a big football fan and used to have a season ticket for Southampton FC. However, for a more exciting answer, I enjoy signing up for weird and wonderful events/courses. Some examples include becoming an American wedding officiator, completing a TV presenter course, obtaining a Zoology A level, and achieving a group Guinness World Record.

Tell us something about yourself that we don’t know

When I was around 14 years old I completed grade 5 on the trumpet, and grade 3 on the piano. But one day I had an accident at school, resulting in a deflated lung. Although this led to me giving up the Trumpet, I did get an Xbox out of the incident, so there’s always a silver lining!

Who or what inspires you?

I would like to become as well-rounded as possible. I find this motivates me to get more involved with projects, to push myself out of my comfort zone, and to experience new things.

What’s your favourite place in Dorset?

I’m a big fan of Renoufs. Nothing beats having a classy evening with some wine and cheese.

Give 3 words to describe yourself

Motivated, enthusiastic, and sociable.

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