IASB Publishes Proposed Guidance to Help Companies Report on Climate Risk

The International Accounting Standards Board (IASB), the accounting standards-setting body of the IFRS Foundation, announced today the publication of a consultation document, with a series of new proposed illustrative examples aimed at enabling companies to provide investors with better information about climate-related risks and other uncertainties.

The IASB provides illustrative examples as non-mandatory guidance accompanying IFRS Accounting Standards, with the purpose of illustrating how the requirements in the Standards apply to particular fact patterns.

The International Accounting Standards Board (IASB), the accounting standards-setting body of the IFRS Foundation, announced today the launch of a new project aimed at exploring potential changes to the requirements by companies to disclose climate-related risks in financial statements.

According to the IASB, the new project follows feedback to its recent Agenda Consultation, a public consultation held by the board every five years on its activities and work plan, with responses calling for enhancements to the reporting of climate-related risks in financial statements.

According to the IASB, the new examples were developed in response to stakeholder demand, particularly from investors, who expressed concern about climate-related information provided in financial statements that was insufficient or appeared inconsistent with information reported outside of financial statements.

The eight proposed examples focus on areas including materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information, aimed at improving transparency and strengthening the connection between financial statements and other parts of company reporting, such as sustainability disclosures, the IASB said.

The new consultation marks the latest in a series of initiatives by the IASB aimed at helping companies report on climate issues, including the launch by the organization last year of a project exploring potential changes to the requirements by companies to disclose climate-related risks in financial statements.

The IASB also noted that it will consider the work of the International Sustainability Standards Board (ISSB), which is currently in the process of completing its first two reporting standards, covering general requirements for sustainability-related financial information and climate-related disclosures, adding that any information required by the two boards would be complementary.

Barckow added that the IASB could potentially leverage the work of the ISSB and consider issues such as covering opportunities as well as risks, whether sustainability-related risks and opportunities beyond climate should be covered, and how scenario analysis from applying the ISSB standards could inform the measurement of assets and liabilities.