Gillian Bowen, Host: Hello, my name is Gillian Bowen, the Public Affairs Manager
Gillian Bowen, Host: at Chartered Accountants, ANZ, or CA ANZ. This is Small Firm,
Gillian Bowen, Host: Big Impact.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Sustainability represents a great opportunity for our SMP members to support
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their clients and to build their knowledge in this space.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: We've got plenty of resources and training out there and
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: our new micro courses as well. Those smaller entities who
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: are perhaps leading in this space, are already thinking about how
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: can they measure and capture information such as their greenhouse
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: gas emissions. So I think it's starting to evolve.
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Gillian Bowen, Host: Today we have Karen McWilliams, Chartered Accountants Australia and New
Gillian Bowen, Host: Zealand Sustainability and Business Reform Leader. The topic Sustainability Reporting
Gillian Bowen, Host: - What SMPs Need to Know. Karen, welcome to Small Firm,
Gillian Bowen, Host: Big Impact.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Great to join you here today, Gill.
Gillian Bowen, Host: Okay, so let's set this up. What is sustainability reporting?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Look, sustainability reporting is basically where organisations are reporting on
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their sustainability risks, opportunities and impacts. It's principally used to
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: inform stakeholders, including investors, so that they can consider these
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: sustainability matters within their decision making process. So it's typically
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: external reporting by entities.
Gillian Bowen, Host: So why is it front of mind right now?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: The International Sustainability Standards Board has been recently set up
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: by the IFRS Foundation coming out of London. The board
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: this new board is a sister board to the International
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Accounting Standards Board, which most of our members would be
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: quite familiar with. And this new board is is basically
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: creating some sustainability disclosure standards. Now, these, I guess, build
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: on a lot of work that's been done internationally around
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: improving disclosures in the market, particularly around climate and building
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: on the work of the taskforce for climate related financial disclosures.
Gillian Bowen, Host: It sounds like it's evolving as we go. And on
Gillian Bowen, Host: that evolution, we are recording this podcast just as the
Gillian Bowen, Host: International Sustainability Standards Board has released something important when it
Gillian Bowen, Host: comes to standards. What's happened?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So the ISSB, the International Sustainability Standards Board, are releasing
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their final version of their first two standards. IFRS S1 ,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: which is about general requirements for disclosure of sustainability related
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: financial information and IFRS S2 on climate related disclosures. And so
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: those standards are being released basically now and will be
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: out by the time this podcast is out. And we
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: will be able to see what those first two standards
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: look like. Having seen the exposure draft.
Gillian Bowen, Host: So this is an important development and I want to
Gillian Bowen, Host: drill down into what that will mean for our members.
Gillian Bowen, Host: But first, I understand there's different regimes in Australia and
Gillian Bowen, Host: New Zealand. Can you tell me what this means for
Gillian Bowen, Host: Australia first?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So in Australia we're expecting the Australian Treasury to very
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: soon actually issue a follow up consultation to a consultation
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: that took place in December last year, and that relates
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: to their intention to mandate climate related disclosures for large companies,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: large listed entities and large financial institutions and possibly others,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: but in line with international standards. We also know that
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: the Australian Accounting Standards Board on the release of these
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: two standards from the IFRS will release them as exposure
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: drafts within Australia for comment, in line with their due
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: process as well with the intention to issue those standards
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: domestically in some form.
Gillian Bowen, Host: We'll get further into that in a tick. How will
Gillian Bowen, Host: these standards, firstly though interact with current New Zealand rules
Gillian Bowen, Host: and regulations, the current New Zealand framework?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Yep. So in New Zealand we already have climate standards
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: that are now effective from the beginning of this year
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and those standards are aligned with the taskforce for climate
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: related financial disclosure requirements. So the TCFD and the IFRS S2,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: which is on climate disclosures, is also aligned with the TCFD.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So the XRB, so New Zealand's external reporting board, they
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: will be looking at these final standards from the ISSB
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: just to provide a comparison between their NZ CS1 New
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Zealand climate standard one and the IFRS S2, which is
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their climate disclosure standards. So we will look to see
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: but broadly speaking, they're both based around the same concept,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: so we should see quite a bit of alignment and
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: similarity there.
Gillian Bowen, Host: So many acronyms. I hope that your brains are moving
Gillian Bowen, Host: as fast as we are anticipating they are. How does
Gillian Bowen, Host: it impact an SMP?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Right. So I guess as I've mentioned in New Zealand
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and in Australia, these requirements around disclosures will probably initially
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: affect the larger companies and the larger financial institutions and
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: probably other entities more broadly. But still at that bigger
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: end of town. However, these larger entities, particularly when it
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: comes to climate disclosures, will be actually needing information within
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their value chains. So from their suppliers and from their
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: customers to inform their disclosures. So one of the particular
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: areas we'll see a focus on this is in relation
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: to greenhouse gas emissions. And as they report on what's
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: called their scope three emissions, that comes from those suppliers
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and customers. So they'll be wanting that information from smaller
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: entities who will be actually part of their supply chain
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and their value chain.
Gillian Bowen, Host: That's really interesting. Do you think many of our SMP
Gillian Bowen, Host: members have thought about? That that role.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I think it's emerging at the moment. I think it's
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: at the moment the larger entities are just thinking about
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: how can they get that information from those smaller entities,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: What's the best way of collecting that information? So and
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: those smaller entities who are perhaps leading in this space,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: we're already thinking about how can they measure and capture
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: information such as their greenhouse gas emissions. So I think
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: it's starting to evolve. We've certainly got some examples of
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: our members who are already playing a leading role in
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: that space, particularly within the S&P space.
Gillian Bowen, Host: Because that then leads me to that idea of our
Gillian Bowen, Host: members really seem to have a role to play in
Gillian Bowen, Host: all of this. Is there anything else you wanted to
Gillian Bowen, Host: articulate to them about their role going forward here?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Look, we certainly see our members playing a key role
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: in this space, and certainly they can support their clients
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: to identify, collate and provide sort of this kind of information.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Our SME playbook, which is around sustainability, identifies five key
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: ways that accountants can support their clients, and those are
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: to raise awareness about sustainability, to analyze business models, to
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: advise on how to transform those business models, report on
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: non-financial indicators and provide assurance of non-financial indicators. And the
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: playbook actually includes some relevant case studies for both SMEs
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and SMPs. And also, I guess our SMPs are also
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: running a small business themselves. And so they have an
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: opportunity here to lead by example and embedding sustainability into
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their practice as well.
Gillian Bowen, Host: My next question then, and perhaps as well, for members
Gillian Bowen, Host: who are listening along and saying, okay, this now is
Gillian Bowen, Host: impacting me, how are we helping our members with all
Gillian Bowen, Host: of this?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Look, we've been putting together a suite of resources to
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: support our members across all segments. So these include things
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: like our Carbon accounting FAQ, so frequently asked questions, the
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: SME sustainability playbook that I just mentioned, and we also
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: have a shorter Insight series to accompany that. We've got
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: a not for profit sustainability playbook as well as we
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: know that many of our members work in and support
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: the not for profit sector. We also have an assurance
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: a sustainability assurance playbook. So for those looking to expand
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their assurance, offering to include sustainability disclosures and also I
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: guess for those who may be assisting or actually within
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: entities who might be reporting in line with the new
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: ESG standards. We've actually just released three Getting Started guides
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: which cover materiality, connection to finance and data and systems.
Gillian Bowen, Host: Okay, so that sounds really helpful. What I will do
Gillian Bowen, Host: is make sure that I put links to where all
Gillian Bowen, Host: of that sits on our website in the show notes
Gillian Bowen, Host: that go with this episode. So that's the description so
Gillian Bowen, Host: that you can go onto your pod app, have a
Gillian Bowen, Host: look at the description, and then click through the hyperlinks
Gillian Bowen, Host: to get to where you need to go on the website.
Gillian Bowen, Host: That to me sounds like step one, two and three
Gillian Bowen, Host: for members who are in small and medium sized firms,
Gillian Bowen, Host: that that is what your recommendation would be.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Oh, look, definitely. I think. Check out the SME Playbook
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and Insight series. I think as a first step, climate
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: is is what we're seeing is is the first topic
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: of real focus. And now it's very much climate first,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: but not climate only. But I think particularly, I would
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: say because of that, it's worth members really trying to
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: build their knowledge and understanding in that climate space. And
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: as I've mentioned, there's quite a few resources guides and
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: courses as well to support them. And the other piece
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I might mention is that the chartered accountants worldwide, who
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: we are part of, we've we've worked with them to
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: develop a roadmap for chartered accountants, which actually goes through
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: step by step and with some really key points around,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I guess, supporting CCAs, who are wanting to build their
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: knowledge and expertise in sustainability. So we can give you
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: a link to that one as well.
Gillian Bowen, Host: That'd be brilliant. That was going to be my next question.
Gillian Bowen, Host: What are the risks of not acting?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Look, I think when it comes to to the sustainability
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: space now, and particularly if we're looking at that, those
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: smaller organizations, they are going to see larger organizations are
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: going to ask them for that information. So if they're
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: not starting to prepare now, they're going to be caught
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: on the hop and have to suddenly respond very quickly.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So if you get prepared and start preparing that information
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and collecting it now, from our members perspective, if they're
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: not supporting their clients, the clients are going to turn
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: somewhere else because they're going to need to prepare. This
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: information is going to come through those value chains. And also,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I guess it's an opportunity as well. We're certainly seeing
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: that the next generation of accountants are particularly interested in sustainability.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So I think from an SAP perspective as well, starting
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: to bring those service offerings into the firm could actually help,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I guess, attracting talent in that next generation to the firm.
Gillian Bowen, Host: And look, as this space continues to develop and you
Gillian Bowen, Host: did mention it at the top of the show about
Gillian Bowen, Host: further consultation, I'm thinking going forward, how can our members
Gillian Bowen, Host: help us help CA ANZ ensure that the standards are fit
Gillian Bowen, Host: for purpose?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Look, we're always asking for feedback from members and certainly
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: do go out and seek it. So we'd certainly encourage
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: members to tell us what they think in terms of consultations. Look,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: the ISSB, they're now consulting on what? Next after these
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: first two standards. So we'll be responding to that one.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: As I've mentioned in Australia, Treasury will be issuing their
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: second consultation soon around mandatory climate disclosure standards within Australia,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and the AASB will be putting out S1 and S2 for
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: exposure as well. So we'll be responding to all of
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: those consultations. So any member feedback on that would be
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: greatly welcomed, but also on the resources that I've mentioned
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: as well we would really welcome. Members are saying that's great,
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: but I want to know X, then let us know
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and then we can start to fill those gaps for them.
Gillian Bowen, Host: Okay. Well, I think we're out of time. Is there
Gillian Bowen, Host: anything else that you want members to know about before
Gillian Bowen, Host: we wrap up?
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: I think just that sustainability represents a great opportunity for
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: our SMP members to support their clients and to build
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: their knowledge in this space. We've got plenty of resources
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: and training out there and our new micro courses as well.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: And it was it's climate first, but not climate only.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: So have a look at some of the other areas
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: across sustainability too.
Gillian Bowen, Host: Great. There is a lot of links to put in
Gillian Bowen, Host: the show notes, so make sure that you check that
Gillian Bowen, Host: out so that you're across everything that Karen and I
Gillian Bowen, Host: have discussed today. And of course it will all be
Gillian Bowen, Host: available on the chartered accountants ANZ website. That is all
Gillian Bowen, Host: we have time for. If you're loving the podcast, make
Gillian Bowen, Host: sure you followed it wherever you listen to your podcasts,
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Gillian Bowen, Host: your network. This is about sharing information, useful information. The
Gillian Bowen, Host: podcast has an email, so feel free to get in touch.
Gillian Bowen, Host: Podcast@charteredaccountantsanz.com Let's start a conversation. Thank you Karen McWilliams for
Gillian Bowen, Host: being my sustainability standards expert on Small Firm, Big Impact.
Karen McWilliams FCA, CA ANZ Sustainability and Business Reform Leader: Thank you.
Gillian Bowen, Host: Bye bye.