Japanese Accountants Propose that Companies Disclose Climate Impacts to Investors

The Japanese Institute of Certified Public Accountants (JICPA) released on January 14, 2009, a proposal that companies should include climate change-related information in their disclosure documents for investors. Since the importance of climate change is becoming a bigger part of corporate management concerns, the disclosure of company information that would include reporting on greenhouse gas (GHG) emissions would be useful for investors in decision-making.

The proposal specifically advocates that companies disclose information regarding three items: information on exposure to climate change risk (e.g., effects of regulations, physical effects of climate change), current status of their GHG emissions, and current status of climate change policies. As for reporting on GHG emissions, however, the targets are limited to companies with more than a certain emissions volume.

Some companies have already voluntarily disclosed information related to climate change in their corporate social responsibility (CSR) reports, yet there remain challenges as a whole, including a lack of common standards. On the other hand, the system of calculating, reporting, and official announcement of GHG emissions only covers information on emissions volume, and thus is not overly helpful for investors with their decision-making.

The JICPA is also discussing how to reflect its proposal into the current reporting systems of financial statements in an effort to ensure implementation.

The Japanese Institute of Certified Public Accountants official website
http://www.hp.jicpa.or.jp/english/index.html

Posted: 2009/08/10 06:00:15 AM