Accounting for climate change

Filed in archive Accounting on July 16, 2010

Companies around the world will soon have to comply with accounting standards requiring them to disclose the impact their operations have on the environment.

The Guardian reports that the International Accounting Standards Board and the British accounting authorities are now talking about the rule changes. According to Accountancy Age, the IASB is looking to introduce a new standard in 2012.

Earlier this year, the Securities and Exchange Commission told American companies that they need to warn investors of any serious risks that global warming might pose to their businesses.

At the same time, the RiskMetrics group has revealed that more resolutions from shareholders on climate change are getting up at annual general meetings.

All this means that within the next two years, companies around the world will have to start accounting for the environment. That will affect everything, from share prices to earnings. We can expect businesses to fight these rule changes, it's going to get ugly.