IASB published a briefing that explains how existing requirements within IFRS standards relate to climate change risks and other emerging risks. The briefing shows how the principle-based approach of IFRS standards means that climate change and other emerging risks are addressed by the existing requirements, although such risks are not explicitly referenced. It also outlines the current work of IASB on its Management Commentary project—a narrative report that gives context for the financial statements and additional insight into the long-term prospects of a company. The Board is also updating its non-mandatory guidance on management commentary, where it would expect companies to address material environmental and societal issues, complementing the information in financial statements.
IASB is often asked why IFRS standards do not mention climate change. While the phrase "climate-change" does not feature in its requirements, IFRS standards do address issues that relate to climate-change risks and other emerging risks. Thus, IASB has prepared this publication to help analysts and investors better understand its requirements and guidance on the application of materiality. The article addresses:
- Board guidance on how to make materiality judgments
- Applying IFRS Practice Statement 2 Making Materiality Judgments to climate-related and emerging risks
- Financial reporting considerations when applying IFRS standards
- Disclosing climate-related and other emerging risks in the financial statements
- Management commentary: providing context to the financial statements
- Summary: materiality judgments should serve information needs of investors
Keywords: International, Accounting, Banking, Insurance, Securities, Climate Change Risks, ESG, IFRS Standards, Reporting, Disclosures, Materiality Judgements, IASB
Next ArticleFSB Publishes Summary of Plenary Meeting in Paris
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.
EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).
BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.
FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.
EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.
FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.
EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.
The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.