IASB to Enhance Reporting of Climate Risks, Proposes IFRS 9 Amendments
The International Accounting Standards Board (IASB) updated its work plan to enhance the reporting of climate-related risks in the financial statements, proposed amendments to the classification and measurement requirements in the IFRS 9 Financial Instruments standard, and published the IFRS Accounting Taxonomy 2023. The International Sustainability Standards Board (ISSB) also plans to seek views on the priorities for next two years and on the international applicability of the Sustainability Accounting Standards Board (SASB) standards.
Below is a summary of the recent announcements:
- IASB added a project to its work plan that explores whether and how companies can provide better information about climate-related risks in their financial statements. The project will research to what extent the educational material published in 2020 is helping companies reflect the effects of climate‑related risks in the financial statements, and what actions, if any, the IASB could take to further improve information about these matters. The outcome of this project will be narrow in scope—for example minor amendments to IASB Standards, limited new application guidance or new illustrative examples. IASB also informed that the first two IFRS Sustainability Disclosure Standards are due to be issued by the end of second quarter of 2023.
- IASB published an exposure draft proposing amendments to the classification and measurement requirements in IFRS 9 Financial Instruments, with the comment period ending on July 19, 2023. Based on feedback received to previous consultation, the exposure draft sets out proposed amendments to clarify the classification of financial assets with environmental, social, and corporate governance (ESG) and similar features, along with the settlement of a financial asset or a financial liability through electronic payment systems.
- IFRS Foundation published the IFRS Accounting Taxonomy 2023, which enables digital reporting of financial information prepared in accordance with IFRS Accounting Standards. The IFRS Accounting Taxonomy 2023 includes changes to the IFRS Accounting Taxonomy 2022 to reflect new or amended presentation and disclosure requirements arising from lease liability in a sale and leaseback and non-current liabilities with covenants. It also includes changes to reflect common reporting practice by companies that apply IFRS Accounting Standards and general taxonomy improvements.
- ISSB plans to publish a request for information about its future priorities in May 2023, with a comment period of 120 days. ISSB will seek feedback on the relative priority of the potential projects related to biodiversity, ecosystems and ecosystem services, human capital, human rights, and integration in reporting as well as feedback on the strategic direction of the ISSB activities and the criteria for assessing which projects to prioritize. Also, in May 2023, ISSB plans to open a 90-day consultation on its proposed methodology for revising the SASB Standards to improve their international applicability.
Keywords: International, Banking, ESG, Climate Change Risk, IFRS 9, Financial Instruments, Taxonomy, SASB Standards, Reporting, Sustainability Standards, Disclosures, ISSB, IFRS, IASB
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Previous ArticleCDP Platform to Report Plastic-Related Impact, Issues Other Updates
ECB Finds Banks Unprepared for Pillar 3 Climate Risk Disclosures
The European Central Bank (ECB) published results of the 2022 supervisory assessment of climate-related and environmental risk disclosures among significant institutions (103) and a selected number of less significant institutions (28).
NCUA Assesses Credit Union Exposure to Climate-Related Physical Risks
The National Credit Union Administration (NCUA) released a Research Note that examines the exposure of credit unions to climate-related physical risks. In a related development
EBA Issues Multiple Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) is seeking comments, until July 31, 2023, on the draft Guidelines on the proposed common approach to the resubmission of historical data under the EBA reporting framework.
EC Adopts Regulation on Own Funds, Issues Other Updates
The European Commission adopted Delegated Regulations on own funds and eligible liabilities, on requirements for the internal methodology under the internal default risk model
CDP Platform to Report Plastic-Related Impact, Issues Other Updates
The Carbon Disclosure Project (CDP) announced that its global environmental disclosure platform has enabled reporting on plastic-related impact for nearly 7,000 companies worldwide
BIS Addresses Data Gaps and Macro-Prudential Policy for Climate Risks
The Financial Stability Institute (FSI) of the Bank for International Settlements (BIS) published a brief paper that examines challenges associated with the use of macro-prudential policies to address climate-related financial risks.
FCA Sets Out Business Plan, Launches TechSprint on Greenwashing
The Financial Conduct Authority (FCA) published its business plan for 2023-24. The plan sets out details of the work planned for the next 12 months to achieve better outcomes for consumers and markets
UK Committee Sets Out Recommendations for Next Phase of Open Banking
The Joint Regulatory Oversight Committee (JROC), comprising the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) as co-chairs and the HM Treasury and the Competition and Markets Authority (CMA) as members
ECB Publishes Multiple Regulatory Updates for Banking Institutions
The European Central Bank (ECB) published the results of the 2022 climate risk stress test of the Eurosystem balance sheet,
EC Consults on Environmental Taxonomy, Issues Other Updates
The European Commission (EC) is seeking comments, until May 03, 2023, on a new set of EU taxonomy criteria for economic activities that contribute substantially to environmental objectives.