PwC says companies have been slow to recognise the impact of climate change on their businesses. Photo / File
PwC says companies have been slow to recognise the impact of climate change on their businesses. Photo / File
Cyclone Gabrielle and other extreme weather events have improved companies’ awareness of climate change, yet they have still been slow to recognise the risks in their accounts, PwC said.
The consultancy, in an analysis of 13 NZX-listed companies with March balance dates, said six (2022, three) had discussed the impactof climate-related risks in their financial statements.
Not one of them included quantification of the impacts of climate-related risks in their financial statements of climate risk, the same as last year.
Ten companies included some non-financial climate-related information outside of the financial statements.
Four elected to voluntarily report against New Zealand Climate Standards for 2023 before mandatory reporting comes into being next year.
Karen Shires, PwC’s chief risk and reputation officer, said climate change awareness among companies was slow but was gradually increasing.
“Disclosures remain brief, but there is a bit more,” she told the Herald.
“We did see some of those extreme weather events actually discussed, along with the impacts from Cyclone Gabrielle, which has brought a new level of focus,” she said.
“Clearly, companies are putting a lot of effort in and there is definitely a lot of thought going into the annual reports, but what we are not yet seeing is that flowing into the financial statements - which probably does leave investors wondering,” she said.
Karen Shires, chief risk and reputation officer at PwC.
Shires expected more companies to get on board with their climate change reporting in risk management notes to the accounts.
“These things (extreme climate events) will just keep happening more and more, and companies will need to be thinking about it,” she said.
In its report, PwC said two of the March 2023 reporters discussed the impacts of Cyclone Gabrielle and the recent severe weather events in their financial statements, making reference to physical damage to property and related insurance proceeds.
PwC noted that as entities prepare to apply those soon-to-be mandatory standards, their thinking about how climate-related risks and opportunities impact their business was expected to mature.
“This appears to be the case as only seven of the March 2023 reporters identified climate-related risks and opportunities that could impact their business.”
For all climate reporting entities, the pathway to full compliance with the New Zealand Climate Standards will have to include a process identifying climate-related risks and opportunities relevant to their business.
Anecdotally, reporters were grappling with the significant effort required to be ready to report under the new Climate Standards PwC said.
“There are risks to be understood, data to be sourced and processes to be implemented.
“Although preparation is well underway, we are not seeing much of that insight reflected in financial statements or annual report disclosures.
“We will likely see better quality discussion about the impact of climate change in financial statements and annual reports when those entities start publishing fully compliant climate disclosures in line with the new Climate Standards next year,” PwC said.
Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.
