Hello, my name is Gillian Bowen, the Public Affairs Manager at Chartered Accountants, ANZ, or CA ANZ. This is Small Firm, Big Impact.

Hello, my name is Gillian Bowen, the Public Affairs Manager at Chartered Accountants, ANZ, or CA ANZ. This is Small Firm, Big Impact.

Sustainability represents a great opportunity for our SMP members to support their clients and to build their knowledge in this space. We've got plenty of resources and training out there and our new micro courses as well. Those smaller entities who are perhaps leading in this space, are already thinking about how can they measure and capture information such as their greenhouse gas emissions. So I think it's starting to evolve.

Sustainability represents a great opportunity for our SMP members to support their clients and to build their knowledge in this space. We've got plenty of resources and training out there and our new micro courses as well. Those smaller entities who are perhaps leading in this space, are already thinking about how can they measure and capture information such as their greenhouse gas emissions. So I think it's starting to evolve.

It's the podcast giving you and your clients the up to date information you need to do your jobs. Each fortnight, I share resources, tools and expert advice provided by CA ANZ and a range of people across our profession. So make sure you're following the Pod in your favourite podcast app. And if you've got an idea for the show email podcast@charteredaccountantsanz.com Today we have Karen McWilliams, Chartered Accountants Australia and New Zealand Sustainability and Business Reform Leader. The topic Sustainability Reporting - What SMPs Need to Know. Karen, welcome to Small Firm, Big Impact.

It's the podcast giving you and your clients the up to date information you need to do your jobs. Each fortnight, I share resources, tools and expert advice provided by CA ANZ and a range of people across our profession. So make sure you're following the Pod in your favourite podcast app. And if you've got an idea for the show email podcast@charteredaccountantsanz.com Today we have Karen McWilliams, Chartered Accountants Australia and New Zealand Sustainability and Business Reform Leader. The topic Sustainability Reporting - What SMPs Need to Know. Karen, welcome to Small Firm, Big Impact.

Great to join you here today, Gill.

Great to join you here today, Gill.

Okay, so let's set this up. What is sustainability reporting?

Okay, so let's set this up. What is sustainability reporting?

Look, sustainability reporting is basically where organisations are reporting on their sustainability risks, opportunities and impacts. It's principally used to inform stakeholders, including investors, so that they can consider these sustainability matters within their decision making process. So it's typically external reporting by entities.

Look, sustainability reporting is basically where organisations are reporting on their sustainability risks, opportunities and impacts. It's principally used to inform stakeholders, including investors, so that they can consider these sustainability matters within their decision making process. So it's typically external reporting by entities.

So why is it front of mind right now?

So why is it front of mind right now?

The International Sustainability Standards Board has been recently set up by the IFRS Foundation coming out of London. The board this new board is a sister board to the International Accounting Standards Board, which most of our members would be quite familiar with. And this new board is is basically creating some sustainability disclosure standards. Now, these, I guess, build on a lot of work that's been done internationally around improving disclosures in the market, particularly around climate and building on the work of the taskforce for climate related financial disclosures.

The International Sustainability Standards Board has been recently set up by the IFRS Foundation coming out of London. The board this new board is a sister board to the International Accounting Standards Board, which most of our members would be quite familiar with. And this new board is is basically creating some sustainability disclosure standards. Now, these, I guess, build on a lot of work that's been done internationally around improving disclosures in the market, particularly around climate and building on the work of the taskforce for climate related financial disclosures.

It sounds like it's evolving as we go. And on that evolution, we are recording this podcast just as the International Sustainability Standards Board has released something important when it comes to standards. What's happened?

It sounds like it's evolving as we go. And on that evolution, we are recording this podcast just as the International Sustainability Standards Board has released something important when it comes to standards. What's happened?

So the ISSB, the International Sustainability Standards Board, are releasing their final version of their first two standards. IFRS S1 , which is about general requirements for disclosure of sustainability related financial information and IFRS S2 on climate related disclosures. And so those standards are being released basically now and will be out by the time this podcast is out. And we will be able to see what those first two standards look like. Having seen the exposure draft.

So the ISSB, the International Sustainability Standards Board, are releasing their final version of their first two standards. IFRS S1 , which is about general requirements for disclosure of sustainability related financial information and IFRS S2 on climate related disclosures. And so those standards are being released basically now and will be out by the time this podcast is out. And we will be able to see what those first two standards look like. Having seen the exposure draft.

So this is an important development and I want to drill down into what that will mean for our members. But first, I understand there's different regimes in Australia and New Zealand. Can you tell me what this means for Australia first?

So this is an important development and I want to drill down into what that will mean for our members. But first, I understand there's different regimes in Australia and New Zealand. Can you tell me what this means for Australia first?

So in Australia we're expecting the Australian Treasury to very soon actually issue a follow up consultation to a consultation that took place in December last year, and that relates to their intention to mandate climate related disclosures for large companies, large listed entities and large financial institutions and possibly others, but in line with international standards. We also know that the Australian Accounting Standards Board on the release of these two standards from the IFRS will release them as exposure drafts within Australia for comment, in line with their due process as well with the intention to issue those standards domestically in some form.

So in Australia we're expecting the Australian Treasury to very soon actually issue a follow up consultation to a consultation that took place in December last year, and that relates to their intention to mandate climate related disclosures for large companies, large listed entities and large financial institutions and possibly others, but in line with international standards. We also know that the Australian Accounting Standards Board on the release of these two standards from the IFRS will release them as exposure drafts within Australia for comment, in line with their due process as well with the intention to issue those standards domestically in some form.

We'll get further into that in a tick. How will these standards, firstly though interact with current New Zealand rules and regulations, the current New Zealand framework?

We'll get further into that in a tick. How will these standards, firstly though interact with current New Zealand rules and regulations, the current New Zealand framework?

Yep. So in New Zealand we already have climate standards that are now effective from the beginning of this year and those standards are aligned with the taskforce for climate related financial disclosure requirements. So the TCFD and the IFRS S2, which is on climate disclosures, is also aligned with the TCFD. So the XRB, so New Zealand's external reporting board, they will be looking at these final standards from the ISSB just to provide a comparison between their NZ CS1 New Zealand climate standard one and the IFRS S2, which is their climate disclosure standards. So we will look to see but broadly speaking, they're both based around the same concept, so we should see quite a bit of alignment and similarity there.

Yep. So in New Zealand we already have climate standards that are now effective from the beginning of this year and those standards are aligned with the taskforce for climate related financial disclosure requirements. So the TCFD and the IFRS S2, which is on climate disclosures, is also aligned with the TCFD. So the XRB, so New Zealand's external reporting board, they will be looking at these final standards from the ISSB just to provide a comparison between their NZ CS1 New Zealand climate standard one and the IFRS S2, which is their climate disclosure standards. So we will look to see but broadly speaking, they're both based around the same concept, so we should see quite a bit of alignment and similarity there.

So many acronyms. I hope that your brains are moving as fast as we are anticipating they are. How does it impact an SMP?

So many acronyms. I hope that your brains are moving as fast as we are anticipating they are. How does it impact an SMP?

Right. So I guess as I've mentioned in New Zealand and in Australia, these requirements around disclosures will probably initially affect the larger companies and the larger financial institutions and probably other entities more broadly. But still at that bigger end of town. However, these larger entities, particularly when it comes to climate disclosures, will be actually needing information within their value chains. So from their suppliers and from their customers to inform their disclosures. So one of the particular areas we'll see a focus on this is in relation to greenhouse gas emissions. And as they report on what's called their scope three emissions, that comes from those suppliers and customers. So they'll be wanting that information from smaller entities who will be actually part of their supply chain and their value chain.

Right. So I guess as I've mentioned in New Zealand and in Australia, these requirements around disclosures will probably initially affect the larger companies and the larger financial institutions and probably other entities more broadly. But still at that bigger end of town. However, these larger entities, particularly when it comes to climate disclosures, will be actually needing information within their value chains. So from their suppliers and from their customers to inform their disclosures. So one of the particular areas we'll see a focus on this is in relation to greenhouse gas emissions. And as they report on what's called their scope three emissions, that comes from those suppliers and customers. So they'll be wanting that information from smaller entities who will be actually part of their supply chain and their value chain.

That's really interesting. Do you think many of our SMP members have thought about? That that role.

That's really interesting. Do you think many of our SMP members have thought about? That that role.

I think it's emerging at the moment. I think it's at the moment the larger entities are just thinking about how can they get that information from those smaller entities, What's the best way of collecting that information? So and those smaller entities who are perhaps leading in this space, we're already thinking about how can they measure and capture information such as their greenhouse gas emissions. So I think it's starting to evolve. We've certainly got some examples of our members who are already playing a leading role in that space, particularly within the S&P space.

I think it's emerging at the moment. I think it's at the moment the larger entities are just thinking about how can they get that information from those smaller entities, What's the best way of collecting that information? So and those smaller entities who are perhaps leading in this space, we're already thinking about how can they measure and capture information such as their greenhouse gas emissions. So I think it's starting to evolve. We've certainly got some examples of our members who are already playing a leading role in that space, particularly within the S&P space.

Because that then leads me to that idea of our members really seem to have a role to play in all of this. Is there anything else you wanted to articulate to them about their role going forward here?

Because that then leads me to that idea of our members really seem to have a role to play in all of this. Is there anything else you wanted to articulate to them about their role going forward here?

Look, we certainly see our members playing a key role in this space, and certainly they can support their clients to identify, collate and provide sort of this kind of information. Our SME playbook, which is around sustainability, identifies five key ways that accountants can support their clients, and those are to raise awareness about sustainability, to analyze business models, to advise on how to transform those business models, report on non-financial indicators and provide assurance of non-financial indicators. And the playbook actually includes some relevant case studies for both SMEs and SMPs. And also, I guess our SMPs are also running a small business themselves. And so they have an opportunity here to lead by example and embedding sustainability into their practice as well.

Look, we certainly see our members playing a key role in this space, and certainly they can support their clients to identify, collate and provide sort of this kind of information. Our SME playbook, which is around sustainability, identifies five key ways that accountants can support their clients, and those are to raise awareness about sustainability, to analyze business models, to advise on how to transform those business models, report on non-financial indicators and provide assurance of non-financial indicators. And the playbook actually includes some relevant case studies for both SMEs and SMPs. And also, I guess our SMPs are also running a small business themselves. And so they have an opportunity here to lead by example and embedding sustainability into their practice as well.

My next question then, and perhaps as well, for members who are listening along and saying, okay, this now is impacting me, how are we helping our members with all of this?

My next question then, and perhaps as well, for members who are listening along and saying, okay, this now is impacting me, how are we helping our members with all of this?

Look, we've been putting together a suite of resources to support our members across all segments. So these include things like our Carbon accounting FAQ, so frequently asked questions, the SME sustainability playbook that I just mentioned, and we also have a shorter Insight series to accompany that. We've got a not for profit sustainability playbook as well as we know that many of our members work in and support the not for profit sector. We also have an assurance a sustainability assurance playbook. So for those looking to expand their assurance, offering to include sustainability disclosures and also I guess for those who may be assisting or actually within entities who might be reporting in line with the new ESG standards. We've actually just released three Getting Started guides which cover materiality, connection to finance and data and systems.

Look, we've been putting together a suite of resources to support our members across all segments. So these include things like our Carbon accounting FAQ, so frequently asked questions, the SME sustainability playbook that I just mentioned, and we also have a shorter Insight series to accompany that. We've got a not for profit sustainability playbook as well as we know that many of our members work in and support the not for profit sector. We also have an assurance a sustainability assurance playbook. So for those looking to expand their assurance, offering to include sustainability disclosures and also I guess for those who may be assisting or actually within entities who might be reporting in line with the new ESG standards. We've actually just released three Getting Started guides which cover materiality, connection to finance and data and systems.

Okay, so that sounds really helpful. What I will do is make sure that I put links to where all of that sits on our website in the show notes that go with this episode. So that's the description so that you can go onto your pod app, have a look at the description, and then click through the hyperlinks to get to where you need to go on the website. That to me sounds like step one, two and three for members who are in small and medium sized firms, that that is what your recommendation would be.

Okay, so that sounds really helpful. What I will do is make sure that I put links to where all of that sits on our website in the show notes that go with this episode. So that's the description so that you can go onto your pod app, have a look at the description, and then click through the hyperlinks to get to where you need to go on the website. That to me sounds like step one, two and three for members who are in small and medium sized firms, that that is what your recommendation would be.

Oh, look, definitely. I think. Check out the SME Playbook and Insight series. I think as a first step, climate is is what we're seeing is is the first topic of real focus. And now it's very much climate first, but not climate only. But I think particularly, I would say because of that, it's worth members really trying to build their knowledge and understanding in that climate space. And as I've mentioned, there's quite a few resources guides and courses as well to support them. And the other piece I might mention is that the chartered accountants worldwide, who we are part of, we've we've worked with them to develop a roadmap for chartered accountants, which actually goes through step by step and with some really key points around, I guess, supporting CCAs, who are wanting to build their knowledge and expertise in sustainability. So we can give you a link to that one as well.

Oh, look, definitely. I think. Check out the SME Playbook and Insight series. I think as a first step, climate is is what we're seeing is is the first topic of real focus. And now it's very much climate first, but not climate only. But I think particularly, I would say because of that, it's worth members really trying to build their knowledge and understanding in that climate space. And as I've mentioned, there's quite a few resources guides and courses as well to support them. And the other piece I might mention is that the chartered accountants worldwide, who we are part of, we've we've worked with them to develop a roadmap for chartered accountants, which actually goes through step by step and with some really key points around, I guess, supporting CCAs, who are wanting to build their knowledge and expertise in sustainability. So we can give you a link to that one as well.

That'd be brilliant. That was going to be my next question. What are the risks of not acting?

That'd be brilliant. That was going to be my next question. What are the risks of not acting?

Look, I think when it comes to to the sustainability space now, and particularly if we're looking at that, those smaller organizations, they are going to see larger organizations are going to ask them for that information. So if they're not starting to prepare now, they're going to be caught on the hop and have to suddenly respond very quickly. So if you get prepared and start preparing that information and collecting it now, from our members perspective, if they're not supporting their clients, the clients are going to turn somewhere else because they're going to need to prepare. This information is going to come through those value chains. And also, I guess it's an opportunity as well. We're certainly seeing that the next generation of accountants are particularly interested in sustainability. So I think from an SAP perspective as well, starting to bring those service offerings into the firm could actually help, I guess, attracting talent in that next generation to the firm.

Look, I think when it comes to to the sustainability space now, and particularly if we're looking at that, those smaller organizations, they are going to see larger organizations are going to ask them for that information. So if they're not starting to prepare now, they're going to be caught on the hop and have to suddenly respond very quickly. So if you get prepared and start preparing that information and collecting it now, from our members perspective, if they're not supporting their clients, the clients are going to turn somewhere else because they're going to need to prepare. This information is going to come through those value chains. And also, I guess it's an opportunity as well. We're certainly seeing that the next generation of accountants are particularly interested in sustainability. So I think from an SAP perspective as well, starting to bring those service offerings into the firm could actually help, I guess, attracting talent in that next generation to the firm.

And look, as this space continues to develop and you did mention it at the top of the show about further consultation, I'm thinking going forward, how can our members help us help CA ANZ ensure that the standards are fit for purpose?

And look, as this space continues to develop and you did mention it at the top of the show about further consultation, I'm thinking going forward, how can our members help us help CA ANZ ensure that the standards are fit for purpose?

Look, we're always asking for feedback from members and certainly do go out and seek it. So we'd certainly encourage members to tell us what they think in terms of consultations. Look, the ISSB, they're now consulting on what? Next after these first two standards. So we'll be responding to that one. As I've mentioned in Australia, Treasury will be issuing their second consultation soon around mandatory climate disclosure standards within Australia, and the AASB will be putting out S1 and S2 for exposure as well. So we'll be responding to all of those consultations. So any member feedback on that would be greatly welcomed, but also on the resources that I've mentioned as well we would really welcome. Members are saying that's great, but I want to know X, then let us know and then we can start to fill those gaps for them.

Look, we're always asking for feedback from members and certainly do go out and seek it. So we'd certainly encourage members to tell us what they think in terms of consultations. Look, the ISSB, they're now consulting on what? Next after these first two standards. So we'll be responding to that one. As I've mentioned in Australia, Treasury will be issuing their second consultation soon around mandatory climate disclosure standards within Australia, and the AASB will be putting out S1 and S2 for exposure as well. So we'll be responding to all of those consultations. So any member feedback on that would be greatly welcomed, but also on the resources that I've mentioned as well we would really welcome. Members are saying that's great, but I want to know X, then let us know and then we can start to fill those gaps for them.

Okay. Well, I think we're out of time. Is there anything else that you want members to know about before we wrap up?

Okay. Well, I think we're out of time. Is there anything else that you want members to know about before we wrap up?

I think just that sustainability represents a great opportunity for our SMP members to support their clients and to build their knowledge in this space. We've got plenty of resources and training out there and our new micro courses as well. And it was it's climate first, but not climate only. So have a look at some of the other areas across sustainability too.

I think just that sustainability represents a great opportunity for our SMP members to support their clients and to build their knowledge in this space. We've got plenty of resources and training out there and our new micro courses as well. And it was it's climate first, but not climate only. So have a look at some of the other areas across sustainability too.

Great. There is a lot of links to put in the show notes, so make sure that you check that out so that you're across everything that Karen and I have discussed today. And of course it will all be available on the chartered accountants ANZ website. That is all we have time for. If you're loving the podcast, make sure you followed it wherever you listen to your podcasts, like our posts on LinkedIn, share your favourite episodes among your network. This is about sharing information, useful information. The podcast has an email, so feel free to get in touch. Podcast@charteredaccountantsanz.com Let's start a conversation. Thank you Karen McWilliams for being my sustainability standards expert on Small Firm, Big Impact.

Great. There is a lot of links to put in the show notes, so make sure that you check that out so that you're across everything that Karen and I have discussed today. And of course it will all be available on the chartered accountants ANZ website. That is all we have time for. If you're loving the podcast, make sure you followed it wherever you listen to your podcasts, like our posts on LinkedIn, share your favourite episodes among your network. This is about sharing information, useful information. The podcast has an email, so feel free to get in touch. Podcast@charteredaccountantsanz.com Let's start a conversation. Thank you Karen McWilliams for being my sustainability standards expert on Small Firm, Big Impact.

Thank you.

Thank you.

Bye bye.

Bye bye.