What organisations should disclose in climate-related targets reporting

The disclosure of climate-related targets is intended to provide information on an organisation’s performance towards its targets, including progress towards any legal or regulatory targets. While IFRS S2 does not require organisations to set climate-related targets, including greenhouse gas (GHG) emissions, it provides guidance on the disclosures that are necessary for organisations that do.

Therefore, where an organisation has set one or more climate-related targets, it should ensure that the following accompanying disclosures complement those targets. Some of the information to be provided includes the following.

Organisations are required to disclose the objective of each specific climate-related target they adopt and how this relates to the overall strategic objective of managing the organisation’s climate-related risks and opportunities.

There is also a requirement in IFRS S2 to disclose the part of an organisation to which the climate-related target applies, such as whether it applies to the entire organisation, a segment, a location or a region.

In addition, organisations should provide disclosures on the period over which the target is applicable, the base period from which progress is measured for that target and any milestones and interim targets.

For quantitative targets, organisations should provide information on the use of any absolute or intensity targets applied, including the effect of recent global or local commitments that have informed the climate-related target.

Additionally, organisations should disclose the metrics related to targets, including their approach to setting and reviewing targets, and how they monitor progress against each target.

Organisations should also note the specific GHG emissions targets and related disclosures in IFRS S2, including gross or net GHG emissions targets and the additional disclosures that apply.

Understanding the disclosure requirements of climate-related targets will ensure that organisations provide decision-useful information to their stakeholders.

The writer is a partner at PricewaterhouseCoopers. He is an author who writes and speaks widely on corporate reporting topics.