Management Accounting for Climate-related Financial Disclosures
2017, the Task Force for Climate Related Financial Disclosures (TCFD) released recommendations to address the need for reliable corporate disclosure of climate-related information. The TCFD recommendations are a framework structured around four core themes of governance, strategy, risk management, and metrics and targets. Key climate-related financial disclosures support these four overarching recommendations.
Recognising that climate risk is material for many organisations, the TCFD encouraged all entities with public debt or equity securities to voluntarily adopt its disclosure recommendations.
Research undertaken by a team from the RMIT University Melbourne and the University of Tasmania explored how management accountants can contribute to the development of appropriate climate-related scenarios and to better integrate their management accounting expertise into organisational climate change strategy.
The study supported the need for management accounting professionals to be involved in the climate change risk management processes of their companies.
The corporate managers interviewed consider climate related financial disclosures as a potentially useful tool and but identified some internal and external challenges regarding the implementation of the (TCFD) recommendations.
These include misconceived perceptions of accountants’ role in climate change risk management and a lack of collaboration and communication between the sustainability and finance teams and need to enhance the skills of management accountants.