Mr Barckow began his speech by pointing out what the existing, principles-based standards already require: consideration of every emerging risk (be it climate-related or not) and deciding how these issues may affect the measurement of assets and liabilities as well as consideration of disclosures required to enable users to understand the effect of some events and conditions on the company’s financial statements. Examples he cited included the recognition and measurement of impairment losses on tangible and intangible assets, the recognition and measurement of provisions for government levies, remediation of environmental damage and onerous contracts, and the measurement of loan contracts with climate-related targets. Events and circumstances that led to the recognition of an impairment loss need to disclosed as well as key assumptions made.

However, Mr Barckow acknowledged, there is a widespread demand for more disclosure on sustainability. He therefore turned to the future of standard-setting. In this context, Mr Barckow pointed to two developments: the IASB's agenda consultation and the cooperation with the ISSB. He noted that at its March and April meetings, the IASB will continue deliberating feedback on its agenda consultation to decide whether and, if so, what more it could do about the accounting for climate-related risks in the financial statements. This would include considering how the IASB's climate education material has led to better covering of the implications of sustainability matters in the financial statements.

Finally, Mr Barckow turned to what he called "virtuous cycle of standard-setting". While the IASB focuses on the financial statements, which reflect transactions and events that have taken place up until the reporting date with some assumptions about the future to the extent that they relate to assets and liabilities recognised, the ISSB standards will require disclosure of information about the sustainability-related risks and opportunities that affect the company’s future cashflows and business model and, thus, its enterprise value — matters that again affect future financial statements. Mr Barckow concluded:

Together, the two boards can help investors connect these two complementary information sets into a single, holistic package to foster transparency, accountability and efficiency in global capital markets.

Please click to access the full transcript of the speech on the IASB website.