INTHEBLACK February 2022 - Magazine - Page 25
Above: A three-dimensional portrait
by the National Aeronautics and
Space Administration (NASA), of
methane in the Earth’s atmosphere.
Methane is the world’s second-largest
contributor to global warming.
SPOTLIGHT
ON THE
SIDE DEALS
I N T E R N AT I O N A L S U S TA I N A B I L I T Y S TA N D A R D S B O A R D
The IFRS Foundation, responsible for the International
Financial Reporting Standards, finalised the creation of
a new standards governing body, the International
Sustainability Standards Board (ISSB), during COP26.
The new board will issue sustainability standards that
incorporate elements from other risk-based sustainability
reporting systems. It has already issued its first
prototype standard on climate risk.
John Purcell FCPA says, “ISSB standards will speak
directly to investors about risk, starting with climate risk,
and that’s valuable, but I don’t believe we can leave this
effort entirely to decisions by investors.
“Companies need clear and responsible signals from
national government in order to broaden the base of a
national economy in processes of decarbonisation.”
Deloitte’s Giam Ei Leen adds, “We need a way to link the
new ISSB standards with IFRS. At present there are very
limited disclosures made within financial statements on
climate risks, and companies need to consider the
accounting impact of climate risk on the financial
statements.”
Above: Canada’s Prime
Minister Justin Trudeau
arrives at the COP26
conference’s Global
Methane Pledge event.
Canada has pledged to
reduce carbon emissions
by between 40 per cent
and 45 per cent below
2005 levels by 2030.
THE GLOBAL METHANE PLEDGE
G L AS G O W F I N A N C I A L A L L I A N C E F O R N E T Z E R O
The Glasgow Financial Alliance for Net Zero (GFANZ) is
an initiative by capital providers to funnel finance and
investment to businesses that aim to drive down either
their own, or others’, greenhouse gas emissions.
The targets of the GFANZ investment do not have to
be in developing nations, however. They could be
anywhere, as long as they are profitable or likely to turn
a profit.
During the Glasgow conference, the GFANZ
announced that it had received commitments from
450 financial institutions in 45 countries, which could
theoretically deliver US$100 trillion (A$143 trillion)
in finance over the next three decades.
“For many Asian markets, the discussion is now
transitioning from ambition to implementation,” says
Anthony Cheung FCPA, convenor of green finance
and board governor at Friends of the Earth (HK)
and managing director ESG at Polymer Capital
Management.
Attracting private capital into green industries
and infrastructure will be critical to achieving many
countries’ climate goals, he says.
“Green bonds in the onshore China market are
skyrocketing. They are also popular in South Korea
and Japan. Enterprise-wide sustainability-linked
financing is not as common in the region, although
this has started to gain traction among Hong Kong
institutions.”
Cheung says that assurance of these products
varies across Asia. “It is not surprising that there is
some level of greenwashing. It’s definitely an area
that needs more skilled professionals.”
CLICK HERE
TO ACCESS
CPA Australia’s
policy submission
on the design of
sustainability
standards
Countries that have joined the Global Methane
Pledge are committed to a collective goal of
reducing global methane emissions by at least
30 per cent from 2020 levels by 2030. The
European Union estimates this will reduce
warming by at least 0.2°C by 2050.
Among the more than 90 country signatories and
the EU are six of the world’s top 10 methane
producers – the US, Brazil, Indonesia, Nigeria,
Pakistan and Mexico. However, the world’s top three
methane emitters – Mainland China, India and Russia
– have not signed the pledge, and neither have
Australia, South Africa or Turkey.
intheblack.com February 2022 25