The IFRS Foundation is the standard setter for financial accounting in more than 140 countries globally. We have seen a dramatic increase in questions around how sustainability impact the financial statements of companies. In particular, investors have asked us why companies are rarely addressing climate risk in their financial statements while making bold claims on future emission reductions.
While there are conceptual limits to the boundaries of financial statements, we believe that the current requirements should result in companies disclosing more of their assumptions, estimates, and current impacts. To illustrate the current requirements, we have published eight examples and are asking if these would reflect stakeholders' and investors' expectations:
IFRS - Exposure Draft and comment letters: Climate-related and Other Uncertainties in the Financial Statements
I apologize for posting this relatively late in our process, but if you feel strongly, please reach out.
Otherwise, we have put together an overview on how climate-related risks could impact the financial statements across various topics:
https://www.ifrs.org/content/dam/ifrs/supporting-implementation/documents/effects-of-climate-related-matters-on-financial-statements.pdf
Lastly, I would to highlight a publication of ESMA, the European Securities Market Authorities, on current best practices of climate reporting across both the financial statements as well as sustainability report.
ESMA32-1283113657-1041 Report - Disclosures of Climate Related Matters in the Financial Statements
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Florian Esterer
IASB Board Member
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