The International Accounting Standards Board (IASB) today published a consultation document, proposing eight examples to illustrate how companies apply IFRS Accounting Standards when reporting the effects of climate-related and other uncertainties in their financial statements.
The IASB developed these illustrative examples1 in response to strong demand from stakeholders, particularly from investors. They expressed concerns that information about climate-related uncertainties in financial statements was sometimes insufficient or appeared to be inconsistent with information provided outside the financial statements. To respond to these concerns, the IASB’s proposed examples aim to:
- improve transparency of information in financial statements; and
- strengthen the connection between financial statements and other parts of a company’s reporting, such as sustainability disclosures.
The eight illustrative examples focus on areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. The principles and requirements illustrated in these examples apply equally to other types of uncertainties2 beyond climate-related uncertainties.
These illustrative examples are one of several actions that the IASB is undertaking to help improve the reporting of climate-related and other uncertainties in financial statements.
In developing these examples, the IASB collaborated with members of the International Sustainability Standards Board (ISSB) and its technical staff. This collaboration helped ensure that the illustrative examples work with the ISSB’s sustainability-related 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. Instead, they provide guidance on how the requirements in the Standards should be applied to provide investors with better information about climate-related risks and other uncertainties.
The IASB invites all stakeholders to provide feedback on the proposed illustrative examples. The comment period is open until 28 November 2024.
The IASB will consider stakeholders’ feedback and decide whether to proceed with the proposed illustrative examples to accompany IFRS Accounting Standards.
Read and comment on the Exposure Draft
- Exposure Draft Climate-related and Other Uncertainties in the Financial Statements
- Submit a comment letter on the Exposure Draft.
1 Illustrative examples are non-mandatory guidance that accompany IFRS Accounting Standards. Their purpose is to illustrate how the requirements in the Standards apply to particular fact patterns.
2 Other uncertainties include economic, regulatory, technological, societal and environmental uncertainties.
Followable tags
IFRS Accounting consultative documents
IFRS Accounting Standards development
IFRS 9 Financial Instruments
Conceptual Framework for Financial Reporting
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2 Climate-related Disclosures
IAS 1 Presentation of Financial Statements
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Investor
Media
