The International Accounting Standards Board (IASB) has published a consultation document called the Exposure Draft, which includes eight new illustrative examples showing how organizations apply IFRS Accounting Standards when reporting the effects of climate in financial reporting. The document was released on 31 July 2024. 

The examples released by IASB do not add new or change existing IFRS Accounting Standards; however, they provide guidance on how the requirements should be applied to help organizations and investors better understand climate-related uncertainties and risks. 

Let’s explore the new document or “Exposure Draft” released by IASB in detail. 

Background on IASB Exposure Draft 

The IASB developed a document with illustrative examples responding to strong stakeholder demand, specifically from investors and organizations. Investors' main concern is that information about climate-related and other uncertainties in financial statements appears to be inconsistent with information provided outside financial reports. 

The Exposure Draft contains eight examples, gives specific recommendations, and includes a consultation document to receive feedback from organizations complying with IFRS Accounting Standards. 

Key aspects of the IASB Exposure Draft

• The eight illustrative examples focus on areas such as disclosures about assumptions, materiality judgements, estimation uncertainties, and information disaggregation. 
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  The illustrative examples aim to improve information transparency and strengthen the connection between financial statements and other parts of organizational reporting.
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  In developing the Exposure Draft, IASB collaborated with the International Sustainability Standards Board (ISSB) and its technical staff to ensure that the illustrative examples met ISSB’s sustainability-related disclosure requirements. 
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  IASB also released a consultation document with these examples to provide feedback on proposed illustrative IFRS Accounting Standards. 

Next steps

The comment period for the consultation of the proposed document is open till 28 November 2024. The IASB invites all stakeholders to provide feedback and will decide whether to proceed with proposed illustrative examples to accompany IFRS Accounting Standards.

While you’re here…

Efforts such as this one by the IASB may help institutional investors and corporates streamline sustainability evaluation and reporting processes. 

However, aligning issues, controversies, and impacts to these standards can require significant time and expertise. These are areas where Auquan can help. 

Auquan automates and streamlines deal sourcing, due diligence, monitoring, ESG/sustainability, and compliance workflows so teams can move faster and more efficiently. Using advanced AI, Auquan generates material and sustainability insights on any entity worldwide — public or private — fine-tuned for your team's investment and lending requirements.

Let's explore how Auquan can help you and your team eliminate tedious and time-consuming manual data work and focus more on what you do best: making strategic decisions ahead of the market.