Wednesday, September 11, 2024.
O Worldwide Accounting Requirements Board (IASB) has opened a public session, proposing eight examples as an instance how firms apply IFRS Accounting Requirements when reporting the results of climate-related uncertainties of their monetary statements.
The instances are meant to exemplify accounting judgments and assumptions, main or to not normal, particular and extra disclosures on materiality, credit score threat, decommissioning, restoration provisions and disaggregated info.
The examples consult with sectors which can be usually talked about or through which a number of of us work.
(1) A manufacturing facility that operates in a capital-intensive trade and is uncovered to climate-related transition dangers. To handle these dangers, the entity has developed a transition plan. The entity discloses details about the plan in a normal function monetary report exterior the monetary statements, together with detailed details about the way it plans to cut back greenhouse fuel emissions over the following 10 years. The entity explains that it intends to cut back these emissions by making future investments in additional environment friendly power applied sciences and by altering its uncooked supplies and manufacturing strategies.
(2) A service supplier working in a sector with restricted publicity to local weather transition dangers. The entity discloses in a normal function monetary report exterior the monetary statements that it has low ranges of greenhouse fuel emissions, explaining that it makes use of renewable power wherever potential and avoids high-emitting actions. The entity additionally explains the way it intends to maintain emissions low whereas sustaining its present greenhouse fuel emissions coverage.
(3) A big emitter. The entity is topic to greenhouse fuel emissions rules in a number of the jurisdictions through which it operates. These rules require the entity to buy emission allowances for a few of its emissions, leading to prices (emission allowance prices). The entity expects such rules to develop into extra widespread sooner or later.
(4) A capital intensive industrial operationuncovered to climate-related transition dangers that will have an effect on its skill to recuperate the carrying quantity of a few of its non-current belongings.
(5) An operation in a jurisdiction whose authorities has introduced regulation which might prohibit the entity’s skill to function and generate future earnings in that jurisdiction.
(6) A monetary establishment which affords a variety of merchandise to several types of prospects. As a part of its credit score threat administration practices, the entity considers the results of local weather dangers on its credit score threat exposures. The entity identifies two mortgage portfolios that require monitoring and measures to mitigate credit score threat arising from local weather dangers:
(a) agricultural prospects; and
(b) company actual property purchasers secured by properties positioned in low-lying areas topic to flood threat.
(7) A petrochemical producer which has decommissioning and facility restoration obligations for its amenities. The entity anticipates that it’s going to proceed to take care of and function the amenities for a particularly lengthy time period, however could also be required to shut a few of its petrochemical amenities sooner than anticipated resulting from efforts to transition to a low-carbon economic system.
(8) Proprietor of mounted belongings with an extended helpful life whose use leads to excessive greenhouse fuel emissions. The entity has invested in different mounted belongings of the identical class with decrease emissions, however nonetheless makes use of high-emitting mounted belongings in a big a part of its operations.
Feedback on this public session – together with the query of whether or not such illustrative examples ought to accompany IFRS Accounting Requirements – are due by 28 November 2024.
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