The International Accounting Standards Board (IASB) has released a consultation document featuring eight examples designed to guide companies on applying IFRS Accounting Standards when reporting the impacts of climate-related and other uncertainties in their financial statements.
These examples have been developed in response to strong stakeholder demand, especially from investors concerned about inconsistent or insufficient climate-related disclosures in financial statements. They aim to enhance transparency in financial statements and strengthen the link between financial statements and other reports, such as sustainability disclosures.
The examples cover areas like materiality judgments, disclosures about assumptions and estimation uncertainties, and disaggregation of information. The principles and requirements illustrated in these examples apply equally to other types of uncertainties beyond climate-related uncertainties.
These examples are part of the IASB’s broader effort to improve the reporting of climate and other uncertainties. Developed in collaboration with the International Sustainability Standards Board (ISSB), the examples align with ISSB’s sustainability disclosure requirements.
Andreas Barckow, Chair of the IASB said, “Investors have clearly communicated that they factor climate-related risks into their decision-making process. Although our Accounting Standards already address such risks, we have identified a need for illustrative examples to improve the application of these requirements. Our proposed examples aim to provide this clarity, helping companies better communicate in their financial statements how climate-related and other uncertainties affect their financial position and performance.”
The illustrative examples do not add to or change the requirements in IFRS Accounting Standards but guide how the requirements in the Standards should be applied to provide investors with better information about climate-related risks and other uncertainties.
The IASB is seeking feedback on these examples until November 28, 2024, before deciding on their adoption.