ABSTRACT
Companies taking action to adapt to climate change are encouraged to identify current and potential impacts on business, reduce vulnerability to them and take advantage of any potential opportunities they present. Actions taken to minimise and respond to the effects of climate change should ultimately be reflected in financial statements, but there are other implications for continuous disclosure rules, reporting transparency for improving investor relations and auditing of financial statements around adaptive capacity. Less attention has been given to the broader question of the measurement and reporting framework required to assist investors, ratings agencies and lenders to link climate change adaptation costs with capital allocation decisions. In the context of adaptation, materiality is a professional judgement that determines what to include, and how to present, adaptive capacity and other activity cost information in financial statements. The non-financial reporting of costs associated directly with climate change adaptation should address material issues affecting stakeholders.
