Most mid-scale and large Australian forestry sector companies will be affected by newly proposed mandatory climate-related disclosure requirements. This article explains why and what you should be aware of.
Earlier this year, the Australian Government confirmed that it will make climate-related disclosures mandatory for large businesses and financial institutions. In June 2023, the Commonwealth Treasury proposed a design for a mandatory climate reporting framework. The framework is to be based on the International Sustainability Standards Board’s climate standard, IFRS S2 – Climate-Related Disclosures.
In 2021 the New Zealand Government amended the Financial Markets Conduct Act 2013, the Financial Reporting Act 2013, and the Public Audit Act 2001 to make it mandatory for some entities to make climate-related disclosures. These amendments were collectively called The Financial Sector (Climate-related Disclosures and Other Matters) Amendment Act 2021 (CRD). The CRD requires around 200 large financial institutions to start making climate-related disclosures as of 1 January 2023. This made New Zealand one of the first countries in the World to make climate-related disclosures mandatory for some entities.
Margules Groome appraised forest and wood processing assets in excess of USD 30 billion over the past two years. Our appraisals are compliant with relevant financial reporting standards and these normally include Fair Value Measurement (IFRS 13), IAS 41 Agriculture, and other relevant standards. Audited annual financial reports in compliance with standards bring transparency by enhancing the comparability and quality of financial information, enabling investors, lenders, customers, and other market participants to make informed decisions.
Over the past five years, large areas of plantations in Australia have been destroyed by fires and impacted by flooding. These events combined with recent storms in New Zealand have highlighted the challenges of managing plantation investments within the context of a changing climate. The impact of climate change on the biological asset (the tree crop) is an active area of research. While climate change is impacting plantation forests globally, this article focuses on New Zealand and Australian forest industries.