ESSAY

Answering Questions Name Institutional Affiliation Instructor Course Date Answering Questions Question 1 Financial materiality is the core of guiding the disclosure of carbon accounting and GHG (greenhouse gas) emissions for public companies. In particular, it means the importance of information related to the financial performance of a company and its prospects to investors in their decision-making process (McMahon Jr, 2024a). In the frame of carbon accounting, financial materiality means evaluating whether the emissions data and climate-related information are important enough to affect the investors' decision on whether the company is a good investment. This assessment entails measuring the financial effects of climate-associated hazards and opportunities on the business operations, profitability, and sustainability. Double materiality entails the connection between environmental and financial factors, which is one of the substantial shifts. Double materiality shows that ecological problems can fundamentally affect a financial state (Securities and Exchange Commission, 1999). In contrast, traditional financial materiality concentrates on how the financial data can affect the company's operations. For example, climate change can influence customer preferences, damage infrastructure, and bring on regulatory requirements, affecting a company's value, efficiency, and capital access. Companies and investors can assess the risks and opportunities related to environmental aspects, such as GHG emissions, more precisely and articulately and use them in defining their decision-making frameworks when they embrace a double-faceted approach (Munter, 2022). The financial materiality criterion is the base principle influencing the disclosure of greenhouse gas emissions and carbon accounting among publicly traded enterprises. McMahon Jr. (2024b) defines financial materiality as the importance of information on a company's financial performance and prospects to investors for their investment decision-making process. Financial materiality under carbon accounting entails figuring out whether emission data and information on climate change are essential enough to critically affect investors' views on whether investing in the company is profitable (Munter, 2022). Understanding financial materiality offers insight into the risks and opportunities associated with the climate on the firm’s operations, profitability, and sustainability. Question 2 Investors are becoming increasingly knowledgeable about climate risks and shifting to sustainable investing. As a result, they have begun to realize how important it is to present GHG emissions and other climate-related information (McMahon Jr., 2024a). There are various ways in which public companies disclose clim...