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The ED proposes eight examples showing how entities can apply existing IFRS requirements to report the effects of climate-related and other uncertainties in the financial statements. We are generally supportive of the proposals except as follows:
Example 1: This example illustrates the disclosure of ‘non-impact’ statements in the financial statements as the information is material. We are concerned that this may lead to entities including such statements for all risks and uncertainties, regardless of materiality, which may lead to unnecessary clutter in the financial statements. Hence, we urge the IASB to remove this example.
Areas which we have reservations on include:
- Illustrative examples being limited to only disclosures
- Not housing the illustrative examples within a single document
- Challenges in determining whether specific information is material when climate-related risks or other uncertainties do not impact the financial position and performance for the current reporting period or next twelve months
- Lack of clarity whether the disclosures should be included inside or outside the financial statements
Read more in our comment letter.