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Investor groups call on companies to reflect climate-related risks in financial reporting.

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21 Sep 2020

Investor groups from around the world, representing over $103 trillion in assets under management, have published an open letter calling on companies to ensure that their financial reports and accounts reflect the recent opinion from the International Accounting Standards Board (IASB) and are prepared using assumptions consistent with the Paris Agreement on climate change.

Central to the letter is that materiality of disclosures should be assessed according to investor concerns.  The letter states:

"We therefore confirm the investor view that climate-related risks are material factors that should be reflected appropriately in financial statements"

The letter concludes by asking:

  • "That companies apply the IASB opinion in the letter and the spirit, including showing the key assumptions that have been made with regard to climate-related risks.
  • That auditors only sign off financial statements which are consistent with the IASB opinion in the letter and the spirit, which include showing the key assumptions that have been made with regard to climate-related risks.
  • That regulators and civil society work with us in enforcing and encouraging these actions.
  • That henceforward the assumptions made by companies in preparing financial statements under International Financial Reporting Standards be compatible with the Paris Agreement".

The full letter is available on the Principles for Responsible Investment (PRI) website.  Our news item on IFRS Standards and climate-related disclosures is available here

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