A global accounting standards organization is releasing a new reporting model for corporations looking to add climate-related consideration disclosures.
The International Financial Reporting Standards Foundation released an early version of their new disclosure program designed to support timely and informed application of corporate sustainability with real life examples. Indeed, the new program is designed to dispel reporting uncertainties and assumptions within existing accounting standards from the IFRS.
Sustainability disclosures in accounting standards have become increasingly important as companies continue embarking on energy transition plans and reckon with the impact climate change considerations have on their businesses. Institutional investors have also expressed the importance of these disclosures as part of their own due diligence when reviewing capital allocations.
The document includes explanations with examples for a variety of reporting scenarios for companies including how an entity discloses information about key assumptions used to determine recoverable amount of assets and even the effects of particular asset scenarios like with credit risk exposure. It also includes a scenario where a company might decommission a plant or other site restoration obligations.
The examples were developed by the International Accounting Standards Board with support from the International Sustainability Standards Board to ensure alignment with relevant sustainability disclosures. The finalized version is expected later this year in October.
“By publishing the examples in near-final form, we are providing companies with earlier visibility of our work,” said Andreas Barckow, chair of the IASB, in a press release.
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