Latest research by CA ANZ, the University of Melbourne and the University of Queensland has found that climate-related risks are impacting statutory financial statements, mainly in the areas of impairment of non-current assets, financial risks and to a lesser extent environmental restoration provisions. The energy, materials and financials sectors have seen the biggest impact to financial statements from climate-related risks.

Although much research has been conducted on the prevalence of climate-related risks in the front end of annual reports, there is less research on the impact that climate-related risks are having on financial statements, and the nature of that impact.

This report outlines the results of a high-level review of annual reports issued in 2021 of listed entities in Australia, New Zealand and globally. It aims to understand how climate-related risks are impacting statutory financial statements and key audit matters (KAM) in auditors’ reports in different entities across different sectors.

The report found that there is variation in how entities report climate-related risks and discuss the impact of such risks. There is also variation in how climate-related risks are discussed as part of financial risk management within Australian and New Zealand entities. A significant difference in the approach of global entities in comparison to Australian and New Zealand ones was that they do not appear to report climate-related risks within financial risks.

Very few KAM in auditors’ reports were in relation to climate-related risks, so it is not possible to draw any inferences across financial statement area or sector.