Clear on Climate Reporting

Investors and regulators need to understand how climate-related risks and opportunities have affected and will affect a company’s financial position and performance. They expect a company’s financial statements and sustainability reporting to reflect the risks and opportunities it is facing and the strategic decisions it has made in transitioning to a low-carbon economy. They also expect the different elements of a company’s reporting to provide a coherent, connected and integrated picture.

Are you clear on climate reporting?

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Are you clear on climate reporting in the financial statements?

Get the accounting right

Determine the impacts of climate-related matters on your financial statements

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Get the financial statement disclosures right

Provide relevant and transparent disclosures to enable investors to understand the financial statements

Don't forget the overarching requirements of IAS 1 to provide information that could influence investors' decisions

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Tell a connected story

Provid a coherent, connected and integrated picture across your financial statements, management discussion and analysis (MD&A) and sustainability-related disclosures

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Our Clear on climate reporting hub provides FAQs to help you identify the potential financial statement impacts for your business. Our blogs, podcasts and videos explore the issues further – including by sector.

You can also keep up to date with the development of the new IFRS^® Sustainability Disclosure Standards on our Sustainability reporting pages.

Cross-cutting

• Net-zero commitments | When do you recognise a liability and how do you tell a connected story?
• Has your public net-zero statement resulted in a constructive obligation?
• Net-zero commitments | Impacts on financial reporting
• Climate-related commitments
• Climate-related risks | Financial reporting impacts
• Climate change and your financial statements

Emissions schemes

• Emissions and green schemes in financial reports | Your questions answered
• How do you account for emissions or ‘green’ schemes?
• Generating carbon credits under voluntary schemes
• How do voluntary green schemes work?
• Green initiatives in the airlines industry
• ESG measures in executive pay packages
• Does an emissions scheme create an obligation?

Assets

• What’s the impact on the discount rate used in testing non-current assets for impairment?
• What might a company that purchases carbon credits voluntarily need to consider?
• What’s the impact on useful lives and residual values of PP&E and intangible assets?
• What’s the impact on cash flow projections used for impairment testing of non-financial assets?
• What are the potential impacts on inventories?

Liabilities

• Have you recorded all of your environmental and decommissioning obligations?
• How might employee benefit arrangements be affected by climate-related risks?
• What's the impact on restructuring provisions?

Borrowers | Capital and finance for transition

• How do you account for different forms of government assistance?
• Do green bonds contain embedded derivatives?
• Do you have a lease of green technology?
• What are the potential impacts of leasing polluting assets?
• Do contracts between customers and wind farm operators contain leases?

Lenders | Capital and finance for transition

• Classification of financial assets
• Lessors – How will climate-related risks impact operating and finance leases?
• What's the impact on expected credit losses?

Disclosures

• Contracts for renewable electricity
• What’s the impact on the going concern assessment and related disclosures?
• Have you disclosed the impacts of climate-related matters clearly?

Sector benchmarking

• Banks' climate-related disclosures
• Insurers' climate-related disclosures

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