01.08.2024

Global accounting body wants tighter controls on climate impact disclosure

The global accounting body has offered guidance on how companies can do more to show the impact of climate change on their financial results. According to them, the individual disclosures do not give investors the clarity they need, it says Reuters.

The standards, written by the International Accounting Standards Board (IASB), are applied by listed companies in more than 140 jurisdictions, including the European Union, Canada, Japan and Great Britain, although the United States has its own rules.

The IASB launched a consultation on Wednesday on proposed guidance for companies to apply the board's existing rules on reporting the impact of climate change or other uncertainties in their financial statements.

Regulators have already started introducing sustainability disclosures for listed companies, but these are published outside of financial statements and are not as rigorously audited.

The examples are intended to show investors how such sustainability disclosures, such as net zero carbon commitments and plans to move towards them, affect a company's financial statements of assets, liabilities, revenues and expenses.

Investors say they want to know whether assets will hold their value going forward as climate change damages them, such as flood damage.

"They expressed concern that information about climate-related uncertainties in the financial statements is sometimes insufficient or appears inconsistent with information provided outside the financial statements," the IASB said in a statement.

Oil and gas companies already reflect the impact of climate change in notes attached to their financial statements.