CDSB's specific focus on natural capital reporting in corporate mainstream financial reports is highly relevant today as the requirements of business reporting are changing.
Natural capital, and in particular climate change, is increasing recognised as a critical factor affecting corporate value. In some countries, there are already legal requirements for environmental disclosure in mainstream corporate reports. This is giving rise to demand for guidance on how such disclosures should be made, given that natural capital disclosure is a relatively new discipline which requires new skill sets.
Through CDSB's work
Investors can make informed and robust capital allocation decisions based on clarity, confidence and trust in climate change, natural capital and environmental opportunities and risks disclosed by a company.
Analysts can be better equipped to utilise climate change, environmental and natural capital-related information in determining impacts on future cash flow and ultimately company valuations.
Companies can use the CDSB Framework to incorporate climate change, environmental and natural capital-related information in mainstream financial reports, assisting companies in achieving a holistic view of how climate change and natural capital can affect their performance and the necessary actions they could take to address the risks and opportunities.
Regulators can benefit from standards-ready material and a framework that can be immediately adopted or referenced as a method of compliance in regulation/guidance, informing business decision-making related to the use of natural resources, land and sustainable behaviour.
Stock exchanges can consider new voluntary and mandatory listing requirements linked to material climate change, environmental and natural capital-related risks and opportunities.
Accounting firms can provide more comprehensive assurance of companies reporting on climate change, environmental and natural capital-related performance.
Benefits of a harmonised natural capital reporting regime are:
- support for activities that future-proof companies though investment ;
- confidence and trust in information and claims to mitigation;
- decision-useful, standardised information with more long-term focus;
- consolidation of existing good practice;
- clarity of environmental reporting requirements for preparers and users of information;
- transparency of disclosures;
- support for global carbon markets;
- global policy influence through collaboration and partnership; and
- effective, stable markets.