Property consultancy Knight Frank has released an insight from its Horizon Report into how sustainability standards are changing across the property sector.
On 26 June, the International Sustainability Standards Board released its new sustainability standards and clarified its impact on Australian real estate managers and investors.
According to Knight Frank’s report, they will be required to provide detailed audit-ready reporting on their scope 1 and scope 2 emissions, and on scope 3 emissions from the second reporting year, with the new requirements starting on a sequential basis from the 2024-25 financial year.
However, to stay consistent with international standards, Knight Frank states that climate-related financial information will be required to be disclosed following the four-pillar core content framework, encompassing: governance, strategy, risk management and targets.
Knight Frank has found that the new standards mark a huge shift in reporting requirements to directly address emissions across the full spectrum of activities. Up until now there has not been a need to provide hard data, but now businesses will need a report with audit-ready data and this will be transformational for property.
The audit will require businesses to get ahead with improved processes for capturing and storing data, so they are not caught off guard when their reporting deadlines hit. For many, scope 1 and scope 2 can be reported without major changes to existing processes, but scope 3 presents a huge challenge and will have a cascading impact across the supply chain for all real estate managers and investors.
The four-pillar core content framework
Governance
The processes and procedures used to monitor, manage, and oversee sustainability-related risks and opportunities.
Strategy
The entity’s strategy for managing sustainability-related risks and opportunities.
Risk Management
The processes used to identify, assess, prioritise, and monitor sustainability-related risks and opportunities.
Metrics and targets
The entity’s performance in relation to sustainability-related risks and opportunities, including progress towards any targets the entity has set or is required to meet.
