Investors have expressed a strong demand for clearer and more consistent information on climate-related uncertainties. They have pointed out that current information in the financial statements is often insufficient or inconsistent with that provided outside the financial statements. In response to this request, the IASB proposes illustrative examples that aim to :
– Improve the transparency of information in the financial statements,
– Strengthen the link between the financial statements and other corporate reports, such as sustainability disclosures.
The eight examples focus on key areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. These principles are not limited to climate-related uncertainties, but also apply to other types of data: economic, regulatory, technological, societal and environmental uncertainties.
To develop these examples, the IASB has collaborated with the International Sustainability Standards Board (ISSB) and its technical staff. This collaboration ensures that the illustrative examples are consistent with the ISSB’s sustainability disclosure requirements.
Andreas Barckow, Chairman of the IASB, said:
“Investors have clearly communicated that they are taking climate-related risks into account in their decision-making process. Although our accounting standards already address these risks, we have identified the need for illustrative examples to improve the application of these requirements. Our proposed examples aim to provide this clarity, helping companies to better communicate in their financial statements how climate and other uncertainties affect their financial position and performance.
The IASB invites all stakeholders to comment these illustrative examples. The consultation period is open until 28 November 2024. The IASB will consider the feedback received before deciding whether to implement the illustrative examples to accompany IFRS accounting standards.
This IASB initiative is an important step towards greater transparency and consistency in financial disclosures about climate-related and other uncertainties. By meeting investors’ expectations, these illustrative examples will contribute to better decision-making and greater confidence in companies’ financial reporting.
