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
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.