The Global Shift towards Sustainable Financial Reporting

Alfred Tang

Hatched by Alfred Tang

Mar 20, 2024

3 min read


The Global Shift towards Sustainable Financial Reporting


As the world grapples with the challenges posed by climate change, governments and regulatory bodies are increasingly recognizing the need for sustainable financial reporting. The aim is to enhance transparency and accountability in the corporate sector by integrating environmental, social, and governance (ESG) factors into financial statements. This article explores the recent developments in Australia and Taiwan, where new guidelines have been introduced to align with international standards and promote the disclosure of sustainability information.

Australia's Transition to Sustainability Reporting:

In Australia, the Australian Accounting Standards Board (AASB) has released Exposure Draft (ED) SR1, which outlines the requirements for sustainability reporting. The implementation timeline varies based on the entity's group classification. Group 1 entities are mandated to adopt these standards from annual periods beginning on or after July 1, 2024, while Group 2 and Group 3 entities have later adoption dates in 2026 and 2027, respectively. The AASB has replaced the term "sustainability" with "climate" to emphasize the focus on greenhouse gas (GHG) emissions reporting.

Measurement Methodologies and Reporting Standards:

The AASB emphasizes the importance of accurately measuring GHG emissions. The guidelines require entities to convert all greenhouse gases into CO2 equivalent values using methodologies outlined in the National Greenhouse and Energy Reporting (NGER) Scheme legislation. Australian-specific data sources and factors are to be utilized for estimation purposes. This approach ensures consistency and comparability in reporting, thus enabling stakeholders to make informed decisions regarding an entity's environmental impact.

Integration with General Purpose Financial Reports:

To streamline reporting processes, the AASB mandates that sustainability disclosures be included in an entity's general purpose financial reports. This integration allows investors and other stakeholders to access comprehensive information about an entity's financial performance and its environmental impact in a consolidated manner. By aligning sustainability reporting with financial statements, the AASB aims to promote transparency and facilitate decision-making processes.

Taiwan's Drive towards Sustainable Disclosure:

In Taiwan, the Financial Supervisory Commission (FSC) has announced plans to align with international financial reporting standards (IFRS) and enhance the quality and transparency of sustainability information. The initial plan targets listed companies with a capital of over 10 billion Taiwanese dollars, requiring them to prepare sustainability reports by 2026 and disclose them to the public by 2027. This move reflects Taiwan's commitment to promoting sustainable practices within the corporate sector.

Key Takeaways and Actionable Advice:

  • 1. Embrace Sustainability Reporting: With the global shift towards sustainability reporting, organizations should proactively adopt these guidelines to demonstrate their commitment to environmental stewardship and social responsibility. By integrating sustainability into financial reporting, entities can attract socially conscious investors and enhance their reputation in the market.
  • 2. Invest in Accurate Measurement and Reporting: Accurately measuring GHG emissions is crucial for meaningful sustainability reporting. Entities should invest in robust systems and methodologies to ensure the reliability and credibility of their environmental disclosures. Collaborating with industry experts and leveraging local data sources can further enhance the accuracy of emissions estimation.
  • 3. Prepare for Scope 3 Reporting: While the AASB allows a grace period for reporting Scope 3 GHG emissions, entities should start preparing to disclose this information in their second sustainability report. Scope 3 emissions encompass indirect emissions associated with an entity's value chain, including those from purchased goods and services, employee commuting, and waste disposal. Entities should proactively collect and analyze relevant data to gain a comprehensive understanding of their environmental impact.


The global push towards sustainable financial reporting is reshaping the corporate landscape. Australia and Taiwan, among other countries, are aligning their reporting standards with international guidelines to enhance transparency and accountability. By adopting these standards, entities can position themselves as leaders in the sustainable finance movement, attract socially conscious investors, and contribute to a more sustainable future. Embracing accurate measurement methodologies, integrating sustainability reporting with financial statements, and preparing for comprehensive Scope 3 reporting are essential steps for organizations on this journey.

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