This week, the International Accounting Standards Board (IASB) has published a consultation document proposing guidance for how companies can better inform investors about climate risk, and other uncertainties.
The independent standard setting body of the IFRS Foundation outlined eight illustrative examples which focus on areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information.
The examples, it said, are non-mandatory guidance that accompany IFRS Accounting Standards.
The body explained in a statement that the examples come in response to “strong demand” from stakeholders, particularly from investors. These parties reportedly shared concerns that the information about climate-related uncertainties in financial statements was sometimes insufficient or appeared to be inconsistent with information provided outside the financial statements.
“Investors have clearly communicated that they factor climate-related risks into their decision-making process,” said Andreas Barckow, Chair of the IASB.
Although its Accounting Standards already address such risks, Barckow shared that the body had 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,” Barckow added.
The consultation, launched Wednesday, will close its comment period at the end of November.