IASB launches climate-related risk project
The International Accounting Standards Board (IASB) has started a new project exploring how climate-related risk can be better outlined in financial statements.
The IFRS Accounting Standards already require companies to consider climate-related matters – so what is this about? The IASB will be looking at a range of questions raised during their “Third Agenda Consultation”, including issues such as:
- why companies that are expected to be affected by climate-related risks do not provide information about these effects in their financial statements;
- why companies that have made net zero commitments do not recognise liabilities or impair the value of their assets as a result of those commitments; and
- how companies should factor long-term uncertainties into the measurement of amounts in the financial statements.
The outcomes of the project will respond to stakeholder concerns, and are likely to be narrow. It could look like minor amendments to IASB standards, limited new application guidance, or new illustrative examples.
The project is designed to complement the work of the International Sustainability Standards Board (ISSB), facilitating connectivity between financial reports and sustainability reports.