Accounting for climate

Integrating climate-related matters into financial reporting


CDSB has identified a need to support preparers in integrating climate-related matters into the financial statements. This guidance does not seek to create new accounting standards in relation to climate-related matters, but builds on International Accounting Standards Board’s (IASB) position on how climate-related matters should be integrated into financial reporting based on current International Financial Reporting Standards (IFRS) Standards.

This guidance will seek to address three main questions: 

- Are climate-related matters relevant to financial reporting? 
- How should climate-related matters be factored into a company’s financial reporting and what this might look like? and
- What steps can companies take to integrate material climate-related matters into financial reporting?

This guidance explores in detail four of the IFRS Standards that were identified in that paper, which are considered to be relevant for most companies and applicable to a range of sectors and geographies:

- IAS 1 Presentation of Financial Statements
- IAS 37 Provisions, Contingent Liabilities and Contingent Assets
- IAS 36 Impairment of Assets
- IAS 16 Property, Plant and Equipment

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This paper provides supplemental guidance on how climate-related matters could be integrated in areas of the financial statements identified by the IASB and IFRS Foundation that were not considered in the December 2020 guidance. This document explores climate reporting in the context of the following standards:

IFRS 13 – Fair Value Measurement;
IFRS 9 – Financial instruments;
IFRS 7 – Financial instruments: Disclosure;
IAS 2 – Inventories;
IAS 12 – Income Taxes; and,
IFRS 17 – Insurance Contracts

For each of the standards covered, this paper identifies essential accounting and disclosure matters relevant from a climate perspective. These are not exhaustive but illustrate key matters that companies might need to consider. Alongside this discussion, a number of illustrative examples have been developed, which are found in the Appendix.

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    With the contribution of the LIFE Programme of the European Union. The content of this page is the sole responsibility of the author and can under no circumstances be regarded as reflecting the position of the European Union.