The report, titled The Heat is On: Disclosures of Climate-Related Matters in the Financial Statements, aims to assist and to enhance the ability of issuers to provide more robust disclosures and create more consistency in how climate-related matters are accounted for in financial statements drawn up in accordance with IFRS. The report focuses on disclosures related to climate matters included in the 2022 annual financial statements of European non-financial corporate issuers.
Although ESMA considers that IFRSs are fit for purpose and provide sufficient basis for issuers to account for and to disclose climate-related matters in financial statements, ESMA also believes that real life illustrations of disclosures may assist issuers to better communicate such impacts and investors and other stakeholders to better understand them and take them into account when making informed decisions.
ESMA expects issuers and auditors to consider the illustrative examples of the report when considering how to assess and disclose the degree to which climate-related matters play a role into the preparation and auditing of IFRS financial statements. ESMA also stresses that the guidance addressing climate impacts is not exhaustive and is developing at a fast pace. Issuers should closely follow the developments of standard setters in this area, and their connection with sustainability reporting.
Please click to access the report on the ESMA website.