1、Applying IFRSAccounting for climate changeDecember 20211 December 2021 Applying IFRS Accounting for climate change Contents What you need to know There is an increased focus on the measurement and disclosure of climate-related matters in an entitys financial statements. The determination of the effe
2、cts of climate change on an entitys financial statements may require significant effort and judgement. Entities are required, at a minimum, to follow the specific disclosure requirements in each IFRS standard. Entities may need to provide additional disclosures in their financial statements in order
3、 to meet the standards disclosure objectives. Hence, in determining the extent of disclosure, entities are required to carefully evaluate whether users of financial statements are able to assess the effects of climate change on their financial position, financial performance and cash flows. This pub
4、lication is intended to support entities in assessing and reporting on the effects of climate change by providing helpful observations and illustrations. Overview 2 1. Disclosure requirements 4 1.1 What is the issue? 4 1.2 What is the impact? 4 2. Property, plant and equipment 12 2.1 What is the iss
5、ue? 12 2.2 What is the impact? 12 3. Impairment of assets 17 3.1 What is the issue? 17 3.2 What is the impact? 17 4. Provisions 27 4.1 What is the issue? 27 4.2 What is the impact? 27 5. Fair value measurement 33 5.1 What is the issue? 33 5.2 What is the impact? 33 Appendix: Other climate-related ac
6、counting considerations 38 December 2021 Applying IFRS Accounting for climate change 2 Overview The efforts to reduce the societys impact on climate change have never been greater. At the same time, there is unprecedented pressure from stakeholders for entities to communicate clear commitments which
7、 is set to continue for the foreseeable future. Although, there is no single explicit standard on climate-related matters under IFRS, climate risk and other climate-related matters may impact a number of areas of accounting. While the immediate impact to the financial statements may not necessarily
8、be quantitatively significant, there are increasing expectations from stakeholders that entities explain how climate-related matters are considered in preparing their financial statements to the extent they are material1 from a qualitative perspective. Stakeholders also expect robust disclosures on
9、the most significant assumptions, estimates and judgements made related to climate change. Investors have highlighted the importance of reducing entities impact on the environment on their investment-making decisions and their assessment of managements stewardship. In November 2021, through the Glas
10、gow Financial Alliance for Net Zero, over US $130 trillion of private capital is committed to transforming the economy for net zero. Climate change is expected to impact businesses in the decades to come. While it is imperative for entities to more explicitly address climate-related risks in their f
11、inancial statements, considering practice in previous and recent years, accounting practice may evolve gradually over the next few years. As climate-related matters continue to evolve and entities make further commitments and take additional actions to tackle climate change, it is important for them
12、 to ensure that their financial statements reflect the most updated assessment of climate-related risks and their impact on the financial statements. Furthermore, entities should ensure consistency between information communicated in the financial statements and the information communicated to stake
13、holders outside the financial statements, such as in press releases, investor updates and disclosures in other parts of the annual report. Most stakeholders that responded to the International Accounting Standards Boards (IASB) Third Agenda Consultation rated a potential project on climate-related r
14、isks as high priority.2 We expect the IASBs work in this area to increase further when cooperating with the International Sustainability Standards Board, which has been established by the IFRS Foundation. Regulators around the world in response have increased their focus on the need to report the im
15、pact of climate risk on financial statements and consistency between sustainability reporting and/or communication on one hand and the related disclosures in the financial statements on the other. In November 2020, the UKs Financial Reporting Council published the results of a Thematic Review of Cli
16、mate-Related Considerations by boards, companies, auditors, professional bodies and investors. In the European Common Enforcement Priorities for 2021 1 In accordance with IAS 1.7, information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that
17、 the primary users of general purpose financial statements make on the basis of those financial statements. 2 IASB, November 2021 meeting, Paper AP24A 3 December 2021 Applying IFRS Accounting for climate change Annual Financial Reports, the European Securities and Markets Authority (ESMA) noted that
18、 it is key all issuers consider the climate-related matters holistically in their communications to the market by ensuring consistency in the information disclosed across the management report, the non-financial statement, the financial statements, and, where applicable, the prospectus. A similar me
19、ssage was delivered in September 2021 by the U.S. Securities and Exchange Commission which published a sample comment letter that highlights the need to consider climate change disclosures in SEC filings. Although in its 2021 Status Report, the Task Force on Climate-Related Financial Disclosures (TC
20、FD) highlighted the greatest-ever growth in disclosures made by entities, it also noted that companies continue to struggle to quantify the impacts of climate change, and to source the data they need to fully assess the threats of a changing climate. This publication is intended to support entities
21、in assessing and disclosing the extent to which climate change affects their financial statements prepared in accordance with IFRS. Significant judgement may be required to identify the accounting considerations that are relevant to the entitys specific facts and circumstances. Any information inclu
22、ded in this publication is, therefore, solely intended to provide helpful observations and illustrations and should not be interpreted as an indication that these would apply or be sufficient in all circumstances. Although this publication highlights the need for consistency with climate-related dis
23、closures in other parts of the annual report, it does not address the management commentary (or MD&A) nor other sections outside the IFRS financial statements (for example, any separate sustainability reporting). Extracts from financial statements presented herein are reproduced for illustrative pur
24、poses. They have not been subject to any review as to their compliance with IFRS or any other requirements, such as local capital market rules. Thus, they document practices that entities have developed to date; they are not intended to represent best practice. The extracts presented here should be
25、read in conjunction with the rest of the information provided in the financial statements in order to understand their intended purpose. Although the extracts address entities sometimes highly specific facts and circumstances, the judgements involved and the requirements in IFRS standards to disclos
26、e relevant information apply to all reporting entities. Therefore, we recommend that entities from all sectors consider these examples when reporting on the impact of climate change taking into account their own facts and circumstances. Please see for our most recent IFRS publications. December 2021
27、 Applying IFRS Accounting for climate change 4 1. Disclosure requirements 1.1 What is the issue? IAS 1 Presentation of financial statements states that the objective of financial statements is to provide information about the financial position, financial performance and cash flows of an entity that
28、 is useful to a wide range of users in making economic decisions. In order to support decision-making by the users of financial statements, information should have, at least in part, a forward-looking or predictive quality. Information pertaining to climate-related matters will be relevant if invest
29、ors could reasonably expect that it will have a significant impact on the entity and, therefore, influence their investment decisions. Furthermore, IAS 1 requires an entity to consider whether any material information is missing from its financial statements. As an overarching principle, IAS 1 requi
30、res entities to disclose information, for instance, climate-related matters, that is not specifically required by IFRS standards and not presented elsewhere, but which is relevant to an understanding of the financial statements.3The requirements in IAS 1 are relevant to the entire financial statemen
31、ts. For example, IAS 1 requires the disclosure of assumptions and judgements relied on and uncertainties regarding going concern. 1.2 What is the impact? Assumptions and estimates IAS 1 requires disclosure of information about the assumptions an entity makes about the future that have a significant
32、risk of resulting in a material adjustment within the next financial year.4 As such, assumptions in respect of climate-related matters may be required. In some cases, changes in key assumptions related to climate risk may not be expected to result in material adjustments in the short-term, but the c
33、hance of material adjustments in the longer term may be significant. In that context, it is important to acknowledge that entities must provide additional disclosures beyond the specific requirements in IFRS Standards when those requirements are insufficient to enable users to understand the impact
34、of particular transactions, other events and conditions on an entitys financial position and performance. Thus, disclosures about key assumptions may be required although the risk of material adjustments in the short-term may be considered as low. Furthermore, the fact that investors and other users
35、 are requesting more transparency on climate-related matters, may, in itself, suggest that such disclosures are material, although the quantitative impact on financial measures in isolation may be deemed of little significance, as in the case of for instance assets with relatively short useful lives
36、 BHP Group Limited (BHP) presented the impact of climate change and the transition to a low carbon economy in their 2021 annual financial statements. BHP disclosed two low carbon energy transition scenarios representing managements assumptions regarding the impact of the transition, as well as the i
37、tems in the financial statements affected by those scenarios. 3 Refer to IAS 1.112(c). 4 Refer to IAS 1.125. Disclosure of assumptions in respect of climate-related matters may be required. 5 December 2021 Applying IFRS Accounting for climate change Illustration 1-1 BHP Group Limited 2021 annual rep
38、ort Transition risks Global transition signposts and commodity impacts In addition to the Groups targets and goals, significant judgements and key estimates are also impacted by the Groups current assessment of the range of economic and climate related conditions that could exist in transitioning to
39、 a low carbon economy, considering the current trajectory of society and the global economy as a whole. Despite recent progress, all 1.5C pathways to 2050 represent a major departure from todays global trajectory and the Group does not believe the technological, regulatory, or economic foundations f
40、or a rapid transition to net zero emissions are currently in place. Acknowledging these signposts, the Groups current best estimate of the potential impacts of climate change and the transition to a low carbon economy are reflected in the following two scenarios, which consider existing policies, tr
41、ends and commitments and the Groups view of the most likely range of futures for the global economy and associated sub-systems: Central Energy View: reflects, and is periodically updated to respond to, existing policy trends and commitments and currently tracks to approximately 3C temperature increa
42、se above pre-industrial levels by 2100 Lower Carbon View: currently tracks to approximately 2.5C temperature increase by 2100, and accelerates decarbonisation trends and policies, particularly in easier-to-abate sectors such as power generation and light duty vehicles These two scenarios are reviewe
43、d periodically to reflect new information. These scenarios are currently being used as inputs to the Groups planning cases, informing updates to the Groups supply, demand and price forecasts, capital allocation and portfolio decisions. As such, these scenarios impact certain significant judgements a
44、nd key estimates, including the determination of the valuation of assets and potential impairment charges (notes 11 Property, plant and equipment and 13 Impairment of non-current assets), the estimation of the remaining useful economic life of assets for depreciation purposes (note 11 Property, plan
45、t and equipment), the timing of closure and rehabilitation activities (note 15 Closure and rehabilitation provisions) and the recoverability of certain deferred tax assets (note 14 Deferred tax balances). The Group continues to monitor global decarbonisation signposts and update its planning cases a
46、ccordingly. Where such signposts indicate the appropriate measures are in place for achievement of a 1.5C Paris-aligned scenario, this will be reflected in the Groups planning cases. December 2021 Applying IFRS Accounting for climate change 6 Equinor ASA provide disclosures of a commodity price sens
47、itivity aligned to a Paris Agreement scenario in their 2020 annual financial statements. Illustration 1-2 Equinor ASA 2020 annual report 10 Property, plant and equipment Sensitivities Commodity prices have historically been volatile. Significant downward adjustments of Equinors commodity price assum
48、ptions would result in impairment losses on certain producing and development assets in Equinors portfolio including intangible assets that are subject to impairment assessment under IAS36, while an opposite adjustment could lead to impairment-reversals. If a decline in commodity price forecasts ove
49、r the lifetime of the assets were 30%, considered to represent a reasonably possible change, the impairment amount to be recognised could illustratively be in the region of USD 11 billion before tax effects. A future change in the trajectory of how the world acts with regards to implementing actions in accordance with the goals in the Paris agreement could, depending on the detailed characteristics of such a trajectory, have a negative impact on the valuation of Equinors oil and gas assets. A calculation of a possible effect of using the prices in a sustainable development scenario as estimat
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