The Insurance Council of Australia (ICA) has provided its insights to the Auditing and Assurance Standards Board (AUASB) on the consultation paper regarding assurance over climate and sustainability information.
The ICA has welcomed the AUASB’s consultation paper, which brought together insights from businesses, civil society, and government organisations. It emphasised the necessity of incorporating climate-related financial data into annual reports for entities required to disclose financial information.
According to the ICA, establishing these requirements will standardise climate-related disclosures, enhance comparability between reporting entities, and assist Australia in meeting its emissions reduction objectives.
The ICA’s submission focused on several primary points. It said independent external assurance is crucial for validating climate and sustainability information.
“A consistent baseline is needed for there to be trust and confidence in the information provided and to avoid confusion or misunderstanding amongst investors and other stakeholders,” it said.
Assuring Scope 3 emissions and scenario models is challenging due to the numerous variables and estimation methods involved. Therefore, it is important to align assurance progress with the development of appropriate standards.
The representative body is calling for ensuring alignment between different elements of the proposed ISSA 5000 standard. It pointed out that qualitative scenario analysis, a critical input for strategic planning, requires appropriate assurance to complement its relationship with strategy.
The ICA also advocates for a gap between finalising standards and implementation, ensuring that Group 1 entities have adequate time to prepare. It suggested that the January 2025 reporting start should align with finalised standards by mid-2024.
Additionally, it supported adopting ISSA 5000 to facilitate effective auditing across jurisdictions, helping streamline efforts for entities operating internationally.
Finally, the ICA – which also recently backed the federal government’s initiative to introduce a financial sector regulatory initiatives grid to create a transparent and orderly plan for imminent regulatory changes – proposed creating local guidance to clarify how to apply ISSA 5000 standards within Australia, particularly concerning materiality, assurance types, and managing expert inputs, errors, and assumptions in forward-looking disclosures.
