The International Accounting Standards Board (IASB) has responded to investor demands for better climate-related financial data. The global accounting body proposed new guidance. The goal? To enhance how companies disclose climate change’s impact on their financial performance. Standalone sustainability reports aren’t cutting it.
IASB rules influence more than 140 countries, excluding the US. Their latest move involves helping companies apply existing rules to climate-related uncertainties within financial statements.
Regulators are already introducing sustainability disclosures. However, these are separate from financial reports and face less rigorous audits. The new guidance aims to clarify how sustainability goals, like net-zero commitments, affect a company’s bottom line. Investors want to know how climate risks, such as floods, impact asset values.
The IASB acknowledges investor concerns about inconsistent climate-related information across company reports. Oil and gas firms already disclose some climate impacts in financial statements. This move brings climate change further into the financial spotlight. It remains to be seen how companies will adapt.
Reference- Reuters, International Accounting Standards Board (IASB) website & Newsroom, ANI