ACCT5961: Reporting for Climate Change
and Sustainability
Course Objectives
• awareness and understanding of issues related to climate change and
sustainability and the opportunities/challenges it presents to business;
• awareness and understanding of voluntary and mandatory reporting frameworks
and how these initiatives aim to address climate change and sustainable
development issues (e.g. GHG Protocol; GRI, TCFD)
• awareness of emission reduction strategies;
• awareness of Australia’s climate policy and legislative framework (e.g. NGER
Act) and how these affect the accounting and reporting policies of businesses; and,
• awareness and understanding of the trends in the assurance of sustainability and
GHG reports.
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Overview of the Course
Issues on Climate Change and Sustainability
Background
Sneak preview of science of climate
change
Sources of Greenhouse Gases
(GHG)
Emission profile of Australia
Concept of sustainability and
sustainable development
Mega Forces that will affect
business risks
Risk and Opportunities for
responsible business
Business Response
Developments in Business
Reporting
Frameworks:
- GHG Protocol
- Global Reporting Initiative (GRI)
- Task Force on Climate-Related
Financial Disclosures
- Integrated Reporting
Carbon Markets and Accounting for
Carbon Emission Permits
Socially Responsible Investing
Assurance of Non-Financial
Information
Government Response
National Greenhouse and Energy
Act (NGER)
International Commitments
Energy Efficiency
Direct Action Plan
Carbon Market Mechanisms
(repealed in 2014)
Net Zero Targets
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Learning Activities and Teaching Strategies
• The course consists of 10 weekly three-hour seminar
style class.
• The format of each class will include a combination of
some of the following activities:
• PowerPoint presentation and class discussion
• Video presentations
• In-class activities
• Guest lecturers in selected weeks with opportunity to
network Q&A
• Case study and group work
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Learning Objectives (Week 1 and Week 2)
• Awareness of issues on climate change and role of human activities in this
phenomenon;
• Understand that the world is too dependent on fossil fuels and if the world
has a chance of maintaining a 2-degree (or lower) global warming,
humankind must rely on renewable energy sources (such as biofuel, hydro,
wind and solar energy);
• Understand the concept of sustainability;
• Awareness of international and government initiatives to address climate
change and sustainability issues;
• Understand opportunities and challenges that face businesses in the 21st
Century
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Don’t get lost in the alphabet soup!
Examples of frequently used abbreviations
• CDP – Carbon Disclosure Project
• CPM – Carbon Pricing Mechanism
• CO2 -Carbon dioxide
• CO2-e -Carbon dioxide equivalent
• CSR – Corporate Social Responsibility
• ESG – Environmental, social and Governance
• GHG – Greenhouse gas
• GRI – Global Reporting Initiative
• IASB – International Accounting Standards Board
• ISSB – International Sustainability Standards Board
• IR - Integrated Reporting
• LULUCF – Land use land use change and forestation
• NGER – National Greenhouse Energy Reporting
• SRI – Socially Responsible Investing
• SASB – Sustainability Accounting Standards Board
• TBLR – Triple Bottom Line Reporting
• TCFD – Task Force on Climate Related Financial Disclosures
• UNIPCC – United Nations International Panel for Climate Change
• WBCSD – World Business Council for Sustainable Development
• WRI – World Research Institute
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References:
PwC Asia Pacific, 2021. Code Red - Asia Pacific’s Time To Go Green. (accessed 11 May
2022 https://www.pwc.com/gx/en/asia-pacific/net-zero/asia-pacific-code-red-to-go-
green.pdf)
Ernst & Young, 2015. Megatrends 2015: Making sense of a world in motion, EYGM
Limited, London.
Useful Websites:
• https://youmatter.world/en/ipcc-sixth-6th-assessment-report-climate/
• https://www.carbonbrief.org/in-depth-qa-the-ipccs-sixth-assessment-on-how-climate-
change-impacts-the-world/
• KPMG
• PwC
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Evidence on climate change (global warming)
• “Costs of action are lower than risks of inaction” (Stern Report, 2006)
• Need to invest about 2% of GDP per year to reduce GHG gas emissions to avoid a
reduction of up to 20% in GDP due to the impacts of climate change
• If nothing is done, 5 to 20% will be totally and will be difficult, if not impossible to
reverse.
• Continued GHG emissions at or above current rates would cause further warming and
could cause abrupt changes in temperature that are irreversible (IPCC Synthesis Report,
2007)
• Business as usual (BAU) GHG scenarios would result to “devastating sea-level rise”
(Hansen, et al, 2007)
• 95% probable that human activities result to changes in atmospheric abundance of
observed regional climate changes particularly temperature increases (IPCC Fifth
Assessment Report, 2013)
• The report warns that if global warming passes 1.5C – even if overshooting that global
average temperature temporarily before falling back again – “human and natural systems
will face additional severe risks”, including some that are “irreversible”(IPCC Sixth
Assessment Report, 2021) (See summary by You Matter World)
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Evidence on climate change (continued)
• Characteristics of climate change directly depend on the level of
global warming, but what people experience is often very different
from the global average. Hence in IPCC SAR, 2021 provided flexible
spatial and temporal analyses of the observed and projected climate
change information. For example, regional climate information will
be useful to make decisions related to risk management and
adaptation.
• IPCC SAR, 2021 also highlights that is it not just about temperature
rise but all about planetary health such as wind, snow, ice, dryness
or humidity patterns
• Extreme sea level events that previously occurred once in 100 years
could happen every year by the end of this century (IPCC).
• There is hope according to the IPCC SAR 2021 and COP 26 with
policy makers developing tools to plan strong and sustained
reductions of CO2 and other GHGs.
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What are we scared of?
• The warming will be too quick for our ecosystems to adapt
and this will be potentially damaging to human populations.
Scientists desire to limit global warming within 2 °C. We
could achieve this by limiting the carbon pollution in the
atmosphere.
• National Geographic video - Global Warming 101
• According to the projections of more recent climate models
(IPCC). Stabilising greenhouse gas concentrations at
450 ppm would only result in a 50% likelihood of limiting
global warming to 2 °C, and that it would be necessary to
achieve stabilisation below 400 ppm to give a relatively high
certainty of not exceeding 2 °C
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Where we are (2°Global Warming) ……
421PPM
WE ARE HERE
400PPM
WE NEED TO
GET BELOW
C
O
2
in
th
e
at
m
os
ph
er
e
2021
Source:
https://www.co2.earth/daily-co2
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Unburnable carbon and carbon bubble
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Refer Carbon Tracking Initiative
“The issue of the bubble arises because the combined proven oil, gas and
coal reserves currently on the books of fossil fuel companies (and
governments in the case of NOCs) will produce far more than this amount
of CO2 when consumed.” (Shell)
Implications on the economy of climate change
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Warming oceans - threat to fisheries
Warmer winter – has led to insect infestations in northern forests resulting to economic losses
Sea-level rise and shoreline erosion in coastal areas that would lead damage to infrastructure and properties
Extreme weather events (e.g., floods, droughts and wildfires) are expected to be more frequent
Water shortages in higher summer temperature with potential damage to the agricultural, tourism and other industry
sectors
Further costs of uncertainty and climate change related disruptions
Social losses (biodiversity imbalance, extinction of species)
Culprits
(Source: UNEP/GRID-Arendal -
http://maps.grida.no/go/graphic/main_greenhouse_gases1
Gas
(regulated by Kyoto
Protocol)
1998 Level
(Pre-industrial
level)
(in ppm)
Lifetime
(in Years)
Main Human Activity
source
Global Warming
Potential (GWP)
Carbon dioxide
(CO2)
365
(280)
50-200 Fossil fuel, cement
production and land use
change
1
Methane (CH4) 1.75
(0.70)
12 Fossil fuel, rice paddocks,
waste dumps, livestock
21
Nitrous Oxide (N2O) 0.31
(0.27)
114 Fertilizers, combustion and
industrial processes
310
Chlorofluorocarbon (CFCs) 1.4 x 10 -5
(0.0)
100 Refrigerants Various
HCFC 7.5 x 10 -7
(0.0)
13 Industrial processes 1,500
Sulfur hexafluoride (SF6) 4.2 x 10 -6
(0.0)
3,200 Industrial processes 22,200
(See also Australia’s National Greenhouse Gas (NGA) Factors for GWP of other gases) 16
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• Individual Task (10 minutes)
• As an individual, what is your biggest concern brought about by
climate change (global warming) today?
• Write issues that you are most passionate about (at least 3 in bullet
points )
• Prioritise the issues and number your top 3 issues
• Post on padlet following this template (see example too on padlet)
Name
1. Issue
2. Issue
3. Issue
• Padlet on this link (acct5961-class-activity-1-z7uq34h9vgjnpozf) or
use QR Code
• Be ready to share during class discussion
Class Activity – Individual
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Climate Change Mitigation and Adaptation
• Climate mitigation is any action taken to permanently eliminate or reduce the long-
term risk and hazards of climate change to human life and property.
• The International Panel on Climate Change (IPCC) defines mitigation as: “An
anthropogenic intervention to reduce the sources or enhance the sinks of greenhouse
gases.”
• Climate adaptation refers to the ability of a system to adjust to climate change
(including climate variability and extremes) to moderate potential damage, to take
advantage of opportunities, or to cope with the consequences.
• The IPCC defines adaptation as the, “adjustment in natural or human systems to a new
or changing environment in response to actual or expected climatic stimuli or their
effects, which moderates harm or exploits beneficial opportunities”.
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Mitigation Strategies
In the United Nations Framework Convention on Climate Change
(UNFCCC) three conditions are made explicit when working towards the
goal of greenhouse gas stabilisation in the atmosphere:
1. That it should take place within a time-frame sufficient to allow ecosystems
to adapt naturally to climate change;
2. That food production is not threatened and;
3. That economic development should proceed in a sustainable manner.
To eliminate or reduce the risk of climate change to human life and
property, both policy instruments and technology must be used in the
context of sustainable development.
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There is hope …..
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There is hope …..
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Policy responses to adapt and mitigate climate change
• Developing awareness in the population of behaviour changes
• Support of energy efficiency measures
• Providing information on relative impact of consumer choices
• Economic and fiscal responses
• Fuel taxes
• Renewable energy targets
• Emissions trading
• For a detailed information on Australia’s policy responses see
(https://www.industry.gov.au/policies-and-initiatives/australias-climate-change-
strategies)
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Some International Initiatives
United Nations Framework Convention on Climate Change (UNFCCC) established set a framework for
policy making to deal with climate change issues
• The Kyoto Protocol (Kyoto) was negotiated in1997
• Ratified by Annex 1 countries (mostly developed nations) to reduce their emissions by 5% below 1990 levels
• Developing countries are not required under Kyoto to reduce their emissions on the basis that emissions are
directly linked with economic development
• Kyoto is also focused on production as opposed to consumption
• Australia is considered a high per capita emission consumption partly because of mineral resources
extraction.
• China is also the fastest growing emissions due to western consumption of manufactured goods.
• Flexibility Mechanisms (ETS, CDM, JI)
• Cap and trade scheme during the commitment period 2008-2012
• Allows developing countries to participate by getting involved in CDM and JI
International Carbon Action Partnership (ICAP)is a climate change initiative designed to facilitate the exchange of
information and assistance in reducing carbon emissions and implementing emissions trading systems.
European Green Deal, approved 2020, is a set of policy initiatives by the European Commission with the
overarching aim of making the European Union (EU) climate neutral in 2050.
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Australia’s Policy Response to Adapt and Mitigate Climate Change
• Under international climate agreements, Australia has two targets to reduce our greenhouse gas emissions:
• 5% below 2000 levels by 2020 (under the Kyoto Protocol)
• 26-28% below 2005 levels by 2030 (under the Paris Agreement)
• Labor Government’s commitment 43% below 2005 levels by 2030 – Updated Nationally determined
contributions (NDC) in 2022
• How Australia is reducing its carbon emissions
• Introduced the National Greenhouse and Energy Reporting Act 2007, which establishes the legislative framework for a
national greenhouse and energy measurement and reporting system for business to government
• Coalition Government is of the view that that Direct Action Plan (DAP) is the cheapest and most effective alternative to
achieve this objective. This replace the Carbon Pricing Mechanism
• Investing in clean energy
• Mandatory Renewable Energy Target (MRET) - By 2020 1/5 of Australia’s electricity will come from renewable energy
• Partnership with Japan, Germany, India, ROK, Singapore, UK and USA to build new clean energy industries
• Supporting businesses to take action
• Clean Business Australia Program
• Australian Carbon Trust
• Supporting households to take action
• Renewable Energy Bonus Scheme
• Green Loan Programs
• National Strategy on Energy Efficiency
• See DCCEEW for more information.
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Voluntary Response to Mitigate Climate Change
• Reduce carbon emissions
• Aim for carbon neutral businesses
• Reduction of direct and indirect emisions
• Purchase of carbon offsets
• Preparation of ESG and/or sustainability reports
• Participation in voluntary markets
• Chicago Climate Exchange (voluntary cap and trade scheme) – now ceased
operations
• Carbon OTC markets (creating carbon products, buying and selling of offsets,
etc.)
• Participation in voluntary reporting of emissions and sustainability (Carbon
Disclosure Project)
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Growing importance of climate change
to businesses
• Climate change likely to have major impacts on corporate and financial risk and
financial performance
• Climate change could cost companies and their shareholders tens of millions of dollars and
require major strategic shifts (CERES 2002)
• Climate change voted most significant issue facing 21st century business (2000 World
Economic Forum)
• Effect of climate change and mitigation efforts on organisations will depend on carbon
intensity of operating practices as well as location of operations
• Difficult to accept that organisations should not be required to make disclosures relating to
implications for business of climate change mitigation policies
• Response of survey of largest 100 companies (by market capitalisation) is mixed—less than
50% of boards have considered the impact of climate change
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Key Risk Exposures for Businesses and Individuals
• Property Damage
• Access to resources (raw materials, water supply, energy
sources)
• Business continuity
• Higher insurance costs (or lack of)
• Supply chain (disruption)
• Infrastructure
• Employee health and well being
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• Regulations
– Carbon taxes
– Costs of meeting energy efficiency
requirements
– Limits on emissions especially on large
emitters
• Products, services and technologies
– Loss of customers who switch away from
goods and services that are GHG-intensive
• Supply Chain
– Higher costs due to higher delivery and
energy cost being passed on by suppliers
Risks to businesses
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Fuel and energy costs
• Exposure to rising prices
Reputation
• Target of public campaigns
Employees
• Challenge in recruiting good employees
• Higher employee costs due to low productivity and higher
employee turnover
Investors
• Concern about climate change risk and inaction
• Subject of shareholder resolution demanding climate
change action
• Regulations
– Benefit from government incentive programs
– Flexibility to act before a regulations takes
place
– Ability to influence future regulations
• Products, services and technologies
– Take advantage of growing demand for climate
friendly products and services
• Supply Chain
– Choose suppliers with low-carbon products to
reduce upstream GHG
– Manage transportation to reduce fuel
consumption and GHG
Opportunities
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• Cost savings from reduced fuel, energy consumption and use of energy
efficiently
Fuel and energy costs
• Brand enhancement and customer loyalty
Reputation
• Attract employees looking for companies with strong sustainable
programs
• Motivating employees, building loyalty and promoting employee
innovation
• Enhancing employee wellness and productivity
Employees
• Attract investors who are interested in socially responsible companies
• Meet corporate social responsibility goals
Investors
Sustainability defined
• “ability of some actions or process to continue operating perpetually” (Macquarie
Dictionary, 2009)
• “able to be maintained at a certain rate or level” (Oxford Dictionary, 2011)
• “able to continue over a period of time” (Cambridge Dictionary, 2011)
• Or alternate definition:
• “related to the depletion of resources and damage to the environment”
• See www.footprintnetwork.org for an illustration of ecological footprinting, a measure of
humanity’s demand for nature.
• What about Sustainable Development?
• “seeks to meet the needs and aspirations of the present without compromising the
ability of those of the future” (Brundtland Report, 1987)
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Breakout Activity
• Introduce yourself to other members
• Do/Discuss the following tasks:
• Using your list, compare with others your 3 concerns brought about
by climate change (share via chat)
• Negotiate/Decide one issue that you think your group may have a
solution
• Highlight the problems and concerns in your negotiations
• Write your suggested solution to the
• Write these issues on form provided
• Class Discussion
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Thank you