Law firm ClientEarth has written to the world’s six largest accounting firms to warn that they are failing on their commitments to improve how climate change is addressed in financial reporting and audit. The letter, addressed to the Global Public Policy Committee (GPPC) comprised of senior leaders of BDO, Deloitte, EY, Grant Thornton, KPMG and PwC, said there is a lack of transparency on climate risk in financial reporting and audit that is required by accounting standards. In 2020, the International Accounting Standards Board (IASB) issued guidance on climate reporting, and the GPPC promised to play its part in supporting greater transparency on climate matters. Since, ClientEarth has sought to engage with audit firms on what it says is a failure to adequately consider climate risk in their work. ClientEarth lawyer Robert Clarke said: “Despite promising to drive improvements to how climate risk is reported in financial statements and audit reports, the auditors’ position on this crucial issue remains worryingly unclear. The largest audit and accounting firms have a huge sphere of influence over the crucial issue of how climate risk is reflected in financial reporting and audit, yet it is hard to discern any meaningful leadership from the GPPC when it comes to climate change. We urgently need to see the auditors’ thinking on how financial reporting must be improved and ClientEarth is urging the GPPC to publish and develop its position as financially material climate risk continues to escalate.”
