Climate Change Theory

what is climate change

long-term rise in the average global temperatures and weather patterns caused by the burning of fossil fuels such as coal, oil and natural gas

Impacts on businesses

1. direct impacts — physical damage caused by floods or wildfires resulting in forced closures

2. indirect impacts — supply chain disruption caused by extreme weather or income being reduced

opportunities of adhering to climate change initiative + policies

1. cost savings and reduction in operational costs by optimizing their water and energy use and investing in sustainable technologies and practices for energy efficient products or processes

2. Transitioning to low-carbon economies opens up new market and investment opportunities (renewable energy sector —> immense growth)

3. proactively manage their environmental impact are able to withstand and adapt to environmental changes and ensure long-term stability

Directors responsibilities

1. responsibilities come under IFRS 2 — disclose climate related information

2. assess the physical risk of direct damages and disruptions caused by a shifting climate and transitional risks which are financial and business uncertainties that organizations face when shifting to a low-carbon and sustainable economy as they change their policies and technologies

3. to monitor, manage and oversee climate-related risks and opportunities

4. manage and oversee climate related targets the company set and any targets required to meet by law or regulation such as carbon emission, carbon taxes, and carbon credits

Accountants responsibilities

1. translating environmental impacts into financial terms which includes estimating potential cost of environmental damage, complaince cost, and the financial benefits to sustainable practices

2. ensure that sustainability measures are included in annual reports to help organizations track and manage their ecological footprint

3. assess the ROI for sustainability initiatives or evaluate the financial impact of complying with regulations

4. guide organizations into meeting regulatory and voluntary disclosure requirements related to environmental impact

5. help craft transparent and accurate reports that address nature-related concerns to establish effective communication with shareholders