The International Accounting Standards Board (IASB) met in March to initiate its project to examine how to improve companies’ disclosures on climate-related risks. In March 2021, the IASB published a request for information on its Third Agenda Consultation, and received feedback that:

• “climate-related risks are often perceived as remote, long-term risks and may not be appropriately considered in the financial statements; and
• investors need better qualitative and quantitative information about the effect of climate-related risks on the carrying amounts of assets and liabilities reported in the financial statements.”

Some of the questions the IASB received from the open consultation included, “why companies that are expected to be affected by climate-related risks do not provide information about these effects in their financial statements; why companies that have made net zero commitments do not recognize liabilities or impair the value of their assets as a result of those commitments; and how companies should factor long-term uncertainties into the measurement of amounts in the financial statements.” The project expects to address these questions and consider any additional amendments, guidance, and educational materials that may be effective to address stakeholder concerns. The project will align with the ISSB’s (International Sustainability Standards Board) standards and will use the ISSB’s final deliberations on its initial set of standards as a guide.

More information on the IASB’s project on climate-related risks in financial statements is available here.