Climate assumptions in forward-looking statements

One of the wicked problems in climate risk disclosures whether to comply with TCFD, ISSB, ESRS or for strategic reasons, is quantification of climate transition risks. While the financial sector and some companies themselves have developed methodologies for transition risk quantification, these methodologies have often not been publicly disclosed, are not based on any peer-reviewed methodology and are not standardized across the economy or industry or sector. Bringing some standardization to transition risk quantification will be imperative to make risk disclosures comparable and meaningful. In our new paper, myself, David Carlin, Edward Byers and Keywan Riahi propose fundamental principles that are based in the science of climate scenarios, and should be followed when doing company level climate transition risk quantifications. These principles include;  1. Climate risks are more than just carbon emissions and won’t be mitigated by emissions reduction only. 2. At least two scenarios should be used for one risk disclosure statement. Risk has to be measured against a ‘business-as-usual’ scenario. 3. There should be transparency around which transition risks are assessed quantitatively and qualitatively, and which are excluded. 4. Lack of extreme events coverage should be acknowledged in the disclosures. 5. Risk model assumptions should not differ from underlying climate scenario assumptions. It would be important to build fora to standardize risk quantification and expand on this set of principles and methodologies. If you want to contribute to this important exercise please don’t hesitate to reach out. You can read the complete paper at https://lnkd.in/dHWsAyER

Rethinking Sustainability & ESG Integration: What External Auditors Will Challenge – Practical Insights Auditors are no longer just reviewing disclosures - they’re testing how sustainability assumptions connect to financial reporting. 2025 will be the year systems, not statements, are under review. Here are six areas where questions will sharpen 👇 💡 Financial connectivity – do climate assumptions align with your accounts? 💡 Transition plan realism – are targets backed by budgets and delivery? 💡 Accounting estimates – have you factored in climate exposures? 💡 Scope 3 & data assurance – can supplier data withstand audit testing? 💡 Controls & documentation – is your non-financial data audit-ready? 💡 Narrative coherence – do your story and numbers tell the same message? The biggest risk next year isn’t a missed disclosure - it’s a lack of connectivity between sustainability assumptions and financial statements. How confident are you that both sides of your reporting tell the same story? Follow Jose Hopkins ACA for practical insights on how sustainability and ESG factors are reshaping accounting, assurance, governance, risk management, strategy & financial reporting. #FinancialReporting #AuditAndAssurance #ClimateRisk #SustainabilityReporting #ESGIntegration

The International Accounting Standards Board (IASB) has issued a near-final draft of "Disclosures about Uncertainties in the Financial Statements Illustrated using Climate-related Examples". 1- These examples aim to improve the reporting of climate-related and other uncertainties in financial statements. 2- They do not introduce new IFRS requirements but show how existing standards apply. 3- While there's no set effective date, the IASB expects entities to have sufficient time for implementation, typically months. 4- Regulators will likely expect these examples to be considered in the next financial statements. .. Example 1: Materiality of Climate Transition Plans (IAS 1/IFRS 18)   Entities facing significant climate-related risks may need to explain the lack of impact from their transition plans on financial statements if deemed material. In contrast, those with limited risks may find such explanations immaterial. This emphasizes the importance of assessing materiality based on specific facts and user expectations. .. Example 2: Impairment Test Assumptions (IAS 36) This example highlights the need to disclose key assumptions and perform sensitivity analysis during impairment tests for goodwill or indefinite-lived intangible assets, even when the recoverable amount exceeds the carrying amount. It stresses that all relevant key assumptions, not just discount or growth rates, should be disclosed. .. Example 3: Sources of Estimation Uncertainty (IAS 1)   This example clarifies that disclosures regarding assumptions that carry a significant risk of leading to material adjustments in asset and liability carrying amounts within the forthcoming year may be essential, even if these assumptions are not expected to be resolved within that period. .. Example 4: Climate-Related Credit Risk (IFRS 7) This example demonstrates the required disclosures related to credit risk when climate-related factors materially influence specific loan portfolios. It outlines the considerations for determining the materiality of such information and offers illustrative examples of relevant disclosures. .. Example 5: Materiality of Provisions (IAS 37)  This example shows that obligations like decommissioning responsibilities can be material even if the recognized provision seems quantitatively immaterial due to discounting. Factors such as the risk of early settlement are relevant in assessing materiality. .. Example 6: Disaggregation for Clarity (IFRS 18) This example shows how to disaggregate asset information within the same class, like Property, Plant, and Equipment (PP&E), based on distinct risk characteristics, such as varying GHG emissions, to offer relevant insights. ... Boards should recognize that these examples offer valuable insights into current IFRS disclosure mandates while maintaining existing requirements. Considering them is essential for effective financial reporting on climate and other uncertainties. .. More: 👇 Source: IASB, EY

Climate Change Risk Assessments 🌎 Climate-related financial disclosure requirements are expanding across jurisdictions, increasing expectations for companies to assess and report on climate-related risks and opportunities. A structured climate change risk assessment (CCRA) is central to meeting these evolving regulatory demands. CCRAs evaluate both physical risks—such as extreme weather events, water stress, and sea level rise—and transition risks, including policy changes, carbon pricing, and shifts in market or technology landscapes. They also help identify potential opportunities linked to decarbonization, energy efficiency, and new revenue models. Scenario analysis is a core component. It enables companies to test strategic resilience under divergent climate pathways, including high-emissions futures and low-emissions transitions aligned with the Paris Agreement. Most regulatory frameworks now require both perspectives. Benefits of a robust CCRA include improved risk management, reduced exposure to disruptions, and strengthened alignment with investor expectations. Insights from these assessments can be embedded into enterprise risk systems, capital planning, and strategic roadmaps. Key challenges include short-term thinking in risk registers, limited access to forward-looking climate data, and misalignment between climate risk analysis and existing sustainability goals. These gaps can reduce the effectiveness of disclosures and slow organizational response. Recommended approaches include leveraging established scenarios (e.g. IPCC, IEA), integrating outputs into ERM systems, using frameworks like ISSB and TCFD for structure, and applying competitive benchmarking to validate assumptions. Cross-functional engagement improves practical relevance. As regulatory standards converge, CCRAs are becoming a baseline expectation. Those who develop structured, forward-looking assessments will be better positioned to adapt business models, manage uncertainty, and align with capital markets under increasing climate scrutiny. Source: Ramboll #sustainability #sustainable #business #esg #climatechange #risk

🌍 Definitely wonkish, but a must-read for anyone invested in our climate future! Before you dive in, I'd like to explain why this matters. This is about macroeconomic models—tools used to inform policymakers on crucial economic and environmental decisions. 📉💼 Now, all macroeconomic models have their flaws. They're built on assumptions and simplifications that help with forecasting or scenario analysis. 🔍 However, it becomes a major issue when certain assumptions or omissions misrepresent the problem they're analyzing. And that's exactly what's happening with the mainstream models often used for climate change and mitigation scenarios. 🚨🌡️ These models (called Environmental Dynamic Stochastic General Equilibrium (E-DSGE) models) aren’t just abstract concepts; they shape our climate action strategies. 🌎✨ This paper by Yannis Dafermos, Andrew McConnell. Maria Nikolaidi. Servaas Storm and Boyan Yanovski(👉 https://lnkd.in/es7a6ZjM) summarises the critique: 1️⃣ Banks as "Pure Intermediaries" is a Misrepresentation: E-DSGE models view banks merely as pass-through institutions of savings, not as money creators. This ignores banks' ability to create money and underestimates potential macro-financial instability (e.g., green booms or fossil-sector busts) from climate policies. 🌱💸 2️⃣ Demand’s Limited Role in Growth: In E-DSGE models, demand impacts the economy only in the short term. Long-term green investments are seen as costly to GDP since increased green spending must offset other demands. This makes net-zero goals look economically heavier than they might actually be. 📉🌍 3️⃣ Struggle with Disequilibrium & Climate Impact: Rational expectations in E-DSGE models mean agents are assumed to have near-perfect foresight. This framework limits understanding of short-term green investments or rising climate damages, ignoring critical disequilibrium effects in real markets. 📈⚠️ 4️⃣ Unrealistic Substitutability Assumptions: E-DSGE assumes fixed substitutability between fossil and green energy. This limits the capacity of green policies to phase out fossil energy fully and reduces the effectiveness of green monetary policies, even making them appear negligible. 💡🔋 5️⃣Downplaying Fiscal Policy Benefits: E-DSGE suggests green public investments "crowd out" private investments by raising interest rates or requiring higher taxes. This view downplays fiscal policy’s ability to complement private-sector green investments and reduce long-term climate risks. 🏗️🌱 6️⃣ Questionable "Optimal" Policies: E-DSGE models operate in a “second-best” world with inherent market distortions. This makes concepts like “optimal carbon tax” unclear—policies might improve welfare, but not necessarily. 🚫💰 See also a summary of these points below 👇 Better models (and common sense) can help us better than these models.

How should Climate risks be reflected in Credit Loss Accounting such as IFR9 Expected Credit Loss (ECL) impairment standard? This is what this latest publication from European regulators represented by European Systemic Risk Board (ESRB) tries to answer. "𝘾𝙡𝙞𝙢𝙖𝙩𝙚 𝙧𝙞𝙨𝙠𝙨 𝙢𝙪𝙨𝙩 𝙗𝙚 𝙞𝙣𝙘𝙤𝙧𝙥𝙤𝙧𝙖𝙩𝙚𝙙 𝘪𝘯𝘵𝘰 𝘵𝘩𝘦 𝘮𝘢𝘤𝘳𝘰𝘦𝘤𝘰𝘯𝘰𝘮𝘪𝘤 𝘢𝘯𝘥 𝘰𝘵𝘩𝘦𝘳 𝘮𝘰𝘥𝘦𝘭𝘴 𝘶𝘴𝘦𝘥 𝘣𝘺 𝘱𝘳𝘦𝘱𝘢𝘳𝘦𝘳𝘴 𝘰𝘧 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘴𝘵𝘢𝘵𝘦𝘮𝘦𝘯𝘵𝘴, 𝘪𝘯𝘤𝘭𝘶𝘥𝘪𝘯𝘨 𝘣𝘢𝘯𝘬𝘴 𝘧𝘰𝘳 𝘵𝘩𝘦 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝘦𝘹𝘱𝘦𝘤𝘵𝘦𝘥 𝘤𝘳𝘦𝘥𝘪𝘵 𝘭𝘰𝘴𝘴𝘦𝘴" "𝙁𝙖𝙞𝙡𝙞𝙣𝙜 𝙩𝙤 𝙞𝙣𝙘𝙤𝙧𝙥𝙤𝙧𝙖𝙩𝙚 𝙩𝙝𝙚𝙨𝙚 𝙛𝙖𝙘𝙩𝙤𝙧𝙨 𝙞𝙣𝙩𝙤 𝙗𝙖𝙣𝙠 𝙢𝙤𝙙𝙚𝙡𝙨 𝘮𝘢𝘺 𝘱𝘳𝘰𝘥𝘶𝘤𝘦 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘦𝘴 𝘰𝘧 𝘤𝘳𝘦𝘥𝘪𝘵 𝘭𝘰𝘴𝘴𝘦𝘴 𝘵𝘩𝘢𝘵 𝘢𝘳𝘦 𝘵𝘰𝘰 𝘣𝘦𝘯𝘪𝘨𝘯, 𝘢𝘴 𝘵𝘩𝘦𝘺 𝘸𝘰𝘶𝘭𝘥 𝘭𝘪𝘬𝘦𝘭𝘺 𝘳𝘦𝘴𝘶𝘭𝘵 𝘧𝘳𝘰𝘮 𝘥𝘦𝘭𝘢𝘺𝘦𝘥 𝘳𝘦𝘤𝘰𝘨𝘯𝘪𝘵𝘪𝘰𝘯 𝘰𝘧 𝘵𝘩𝘦 𝘴𝘪𝘨𝘯𝘪𝘧𝘪𝘤𝘢𝘯𝘵 𝘪𝘯𝘤𝘳𝘦𝘢𝘴𝘦 𝘪𝘯 𝘤𝘳𝘦𝘥𝘪𝘵 𝘳𝘪𝘴𝘬 𝘧𝘰𝘳 𝘦𝘹𝘱𝘰𝘴𝘶𝘳𝘦𝘴 𝘮𝘰𝘳𝘦 𝘷𝘶𝘭𝘯𝘦𝘳𝘢𝘣𝘭𝘦 𝘵𝘰 𝘤𝘭𝘪𝘮𝘢𝘵𝘦 𝘳𝘪𝘴𝘬𝘴. , 𝘯𝘰𝘵 𝘤𝘰𝘯𝘴𝘪𝘥𝘦𝘳𝘪𝘯𝘨 𝘤𝘭𝘪𝘮𝘢𝘵𝘦 𝘳𝘪𝘴𝘬 𝘪𝘯 𝘵𝘩𝘦 𝙚𝙭𝙥𝙚𝙘𝙩𝙚𝙙 𝙘𝙧𝙚𝙙𝙞𝙩 𝙡𝙤𝙨𝙨 𝙢𝙤𝙙𝙚𝙡𝙨 𝘤𝘰𝘶𝘭𝘥 𝘢𝘧𝘧𝘦𝘤𝘵 𝘵𝘩𝘦 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝙥𝙧𝙤𝙗𝙖𝙗𝙞𝙡𝙞𝙩𝙮 𝙤𝙛 𝙙𝙚𝙛𝙖𝙪𝙡𝙩 (𝘗𝘋), 𝘢𝘴 𝘸𝘦𝘭𝘭 𝘢𝘴 𝙡𝙤𝙨𝙨 𝙜𝙞𝙫𝙚𝙣 𝙙𝙚𝙛𝙖𝙪𝙡𝙩 (𝘓𝘎𝘋), 𝘵𝘩𝘳𝘰𝘶𝘨𝘩 𝘰𝘷𝘦𝘳𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘪𝘰𝘯 𝘰𝘧 𝘵𝘩𝘦 𝘤𝘰𝘭𝘭𝘢𝘵𝘦𝘳𝘢𝘭 𝘷𝘢𝘭𝘶𝘦." "𝘚𝘪𝘮𝘪𝘭𝘢𝘳𝘭𝘺, 𝙞𝙣𝙨𝙪𝙧𝙖𝙣𝙘𝙚 𝙘𝙤𝙧𝙥𝙤𝙧𝙖𝙩𝙞𝙤𝙣𝙨 𝙣𝙚𝙚𝙙 𝙩𝙤 𝙘𝙤𝙣𝙨𝙞𝙙𝙚𝙧 𝙩𝙝𝙚 𝙚𝙛𝙛𝙚𝙘𝙩 𝙤𝙛 𝙘𝙡𝙞𝙢𝙖𝙩𝙚 𝙧𝙞𝙨𝙠𝙨 𝘸𝘩𝘦𝘯 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘪𝘯𝘨 𝘵𝘩𝘦 𝘧𝘶𝘵𝘶𝘳𝘦 𝘤𝘢𝘴𝘩 𝘧𝘭𝘰𝘸𝘴 𝘰𝘧 𝘵𝘩𝘦𝘪𝘳 𝘪𝘯𝘴𝘶𝘳𝘢𝘯𝘤𝘦 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵𝘴 𝘶𝘯𝘥𝘦𝘳 𝘐𝘍𝘙𝘚 17." See section 3.3. of the report (link below) for more details These confirmations were made as part of the broader assessment performed by representatives from European Central Bank, European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA) and other EU regulators of how climate risks are addressed in existing IFRS accounting standards and reflected in financial statements, identifying 4 relevant issues for financial stability: 1) The incomplete incorporation of climate risks in market 𝗽𝗿𝗶𝗰𝗲𝘀 can cause assets to be 𝗼𝘃𝗲𝗿𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝗱 or liabilities to be 𝘂𝗻𝗱𝗲𝗿𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲𝗱 2) Failing to fully include relevant climate risks in impairment tests for non-financial assets may distort their valuation 3) It may be 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹𝗹𝘆 𝗱𝗶𝗳𝗳𝗶𝗰𝘂𝗹t for banks and insurance corporations to incorporate 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝗳𝗮𝗰𝘁𝗼𝗿𝘀 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝗺𝗼𝗱𝗲𝗹𝘀 used to estimate expected credit losses under IFRS 9 Financial Instruments or expected cash flows from insurance contracts according to IFRS 17 Insurance Contracts 4) Efforts should be made to 𝗲𝗻𝗵𝗮𝗻𝗰𝗲 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 requirements about how climate risks are reflected in the financial statements.

Regulators and banks are placing growing emphasis on the impact of climate risk on Expected Credit Loss (ECL). The PRA sets the tone with clear expectations: “Consider a broader range of downside climate scenarios, and climate-related variables, in the economic scenarios used in the ECL calculation, to allow for timely identification of borrowers and sectors more exposed to climate risk than the wider economy.” In practice, this guidance points to two main approaches: 1. Introduce dedicated climate-related scenarios and layer them into the ECL framework. 2. Embed climate risk into existing economic scenarios, adjusting key macro variables like GDP, inflation, and credit risk metrics to reflect physical and transition risks. The first route is conceptually elegant. Many banks, like HSBC, already assign probabilities to multiple macroeconomic scenarios and use them in weighted ECL calculations (see below). In that structure, adding a new climate scenario might seem straightforward (HSBC already have 2 Downside scenarios): assign it a probability and plug it in. But here’s the catch: Climate scenarios don’t come with probabilities. At least, not ones you can confidently defend. Climate narratives like “Orderly Transition,” “Disorderly Transition,” or “Hot House World” are plausible, not probable. Institutions have deliberately avoided attaching likelihoods, not due to lack of imagination, but to avoid misleading certainty about long-term, systemic outcomes. So, what about the second approach? If we modify existing macroeconomic scenarios to reflect climate risk, another problem emerges: Which climate assumptions go into which economic scenario? A recession can occur in a green transition, or in a world of extreme weather. Mapping climate futures onto economic narratives becomes an exercise in judgment—and the risk is, climate drivers get blurred into general macro assumptions and lose visibility. We might treat economic and climate scenarios as separate dimensions, and model them using joint probabilities. However we hit the same wall: You still need probabilities for each climate state—the very numbers we’re hesitant to define. So where does this leave us? Well, work in progress..

Help needed with linking 🔗𝐜𝐥𝐢𝐦𝐚𝐭𝐞 𝐭𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧 𝐫𝐢𝐬𝐤𝐬 𝐰𝐢𝐭𝐡 𝐭𝐡𝐞 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐬𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭𝐬?  The International Accounting Standards Board (IASB) is extending a ✋ Factoring in climate risks 💰 into financial analysis isn't entirely new for companies. However, many organizations still struggle with 𝗱𝗶𝘀𝗰𝗹𝗼𝘀𝗶𝗻𝗴 𝗵𝗼𝘄 𝘁𝗵𝗲𝘀𝗲 𝗿𝗶𝘀𝗸𝘀 𝘀𝗵𝗼𝘂𝗹𝗱 𝗯𝗲 𝗶𝗻𝘁𝗲𝗴𝗿𝗮𝘁𝗲𝗱 𝗮𝗻𝗱 𝗰𝗼𝗻𝗻𝗲𝗰𝘁𝗲𝗱 🖇️ 𝘁𝗼 𝘁𝗵𝗲𝗶𝗿 𝗳𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝘀𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀. To address this issue, on July 31st, the IASB released a consultation paper (𝘰𝘱𝘦𝘯 𝘶𝘯𝘵𝘪𝘭 𝘯𝘰𝘷𝘦𝘮𝘣𝘦𝘳 28𝘵𝘩) featuring 𝗲𝗶𝗴𝗵𝘁 𝗶𝗹𝗹𝘂𝘀𝘁𝗿𝗮𝘁𝗶𝘃𝗲 𝗲𝘅𝗮𝗺𝗽𝗹𝗲𝘀 designed to help companies enhance their reporting of climate-related risks and other uncertainties in their financial statements 📑. In my opinion, the proposed examples are thorough and well-defined ✅. However, their extensive accounting rigor might pose challenges for entities in implementing the recommendations and providing accurate information to investors 😵💫. Some key takeaways on the proposed examples 👇 🔸Companies are not required to disclose financial information on their climate transition plans 𝐢𝐟 𝐢𝐭 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐚𝐟𝐟𝐞𝐜𝐭 𝐭𝐡𝐞 𝐫𝐞𝐜𝐨𝐠𝐧𝐢𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐦𝐞𝐚𝐬𝐮𝐫𝐞𝐦𝐞𝐧𝐭 𝐨𝐟 𝐭𝐡𝐞𝐢𝐫 𝐚𝐬𝐬𝐞𝐭𝐬/𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 (e.g., if the company’s risk exposure is minimal, and the inclusion of such information is unlikely to influence the decisions of users of the financial statements). 🔸When assessing whether an asset may be impaired, companies must 𝐜𝐨𝐧𝐬𝐢𝐝𝐞𝐫 𝐚𝐧𝐝 𝐚𝐜𝐜𝐨𝐮𝐧𝐭 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐩𝐨𝐭𝐞𝐧𝐭𝐢𝐚𝐥 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐞𝐟𝐟𝐞𝐜𝐭𝐬 𝐨𝐟 𝐜𝐥𝐢𝐦𝐚𝐭𝐞 𝐜𝐡𝐚𝐧𝐠𝐞 𝐨𝐧 𝐢𝐭𝐬 𝐟𝐮𝐭𝐮𝐫𝐞 𝐟𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 (e.g., how future emission allowance costs may impact the recoverable amount of assets). 🔸Entities must disclose the assumptions used in their climate transition planning, along with other major sources of estimation uncertainty, t𝐭𝐡𝐚𝐭 𝐜𝐨𝐮𝐥𝐝 𝐥𝐞𝐚𝐝 𝐭𝐨 𝐬𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭 𝐚𝐝𝐣𝐮𝐬𝐭𝐦𝐞𝐧𝐭𝐬 𝐭𝐨 𝐭𝐡𝐞 𝐜𝐚𝐫𝐫𝐲𝐢𝐧𝐠 𝐯𝐚𝐥𝐮𝐞 𝐨𝐟 𝐚𝐬𝐬𝐞𝐭𝐬 𝐨𝐫 𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 (e.g., assumptions about the risks of upcoming climate regulations). 🔸Companies should disaggregate information when there are 𝐬𝐢𝐠𝐧𝐢𝐟𝐢𝐜𝐚𝐧𝐭𝐥𝐲 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐭 𝐯𝐮𝐥𝐧𝐞𝐫𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 𝐭𝐨 𝐜𝐥𝐢𝐦𝐚𝐭𝐞-𝐫𝐞𝐥𝐚𝐭𝐞𝐝 𝐭𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧 𝐫𝐢𝐬𝐤𝐬 (e.g., information on PP&E should be split based on distinct climate risk profiles). 🔸Companies should disclose the financial implications of their climate transition plans, 𝐞𝐯𝐞𝐧 𝐢𝐟 𝐭𝐡𝐞 𝐩𝐥𝐚𝐧 𝐡𝐚𝐬 𝐧𝐨 𝐞𝐟𝐟𝐞𝐜𝐭 𝐨𝐧 𝐭𝐡𝐞 𝐫𝐞𝐜𝐨𝐠𝐧𝐢𝐭𝐢𝐨𝐧 𝐨𝐟 𝐢𝐭𝐬 𝐚𝐬𝐬𝐞𝐭𝐬/𝐥𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬. #ClimateReporting #IFRS #Sustainability #SustainabilityReporting