Investors and regulators need to understand how climate-related risks and opportunities have affected and will affect a company’s financial position and performance. They expect a company’s financial statements and sustainability reporting to reflect the risks and opportunities it is facing and the strategic decisions it has made in transitioning to a low-carbon economy. They also expect the different elements of a company’s reporting to provide a coherent, connected and integrated picture.

Are you clear on climate reporting?

Read the talkbook

Are you clear on climate reporting in the financial statements?

Get the accounting right

Determine the impacts of climate-related matters on your financial statements

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Get the financial statement disclosures right

Provide relevant and transparent disclosures to enable investors to understand the financial statements

Don't forget the overarching requirements of IAS 1 to provide information that could influence investors' decisions

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Tell a connected story

Provid a coherent, connected and integrated picture across your financial statements, management discussion and analysis (MD&A) and sustainability-related disclosures

Watch the video here

Our Clear on climate reporting hub provides FAQs to help you identify the potential financial statement impacts for your business. Our blogs, podcasts and videos explore the issues further – including by sector.

You can also keep up to date with the development of the new IFRS^® Sustainability Disclosure Standards on our Sustainability reporting pages.

Cross-cutting

• Net-zero commitments | When do you recognise a liability and how do you tell a connected story?
• Has your public net-zero statement resulted in a constructive obligation?
• Net-zero commitments | Impacts on financial reporting
• Climate-related commitments
• Climate-related risks | Financial reporting impacts
• Climate change and your financial statements

Emissions schemes

• Emissions and green schemes in financial reports | Your questions answered
• How do you account for emissions or ‘green’ schemes?
• Generating carbon credits under voluntary schemes
• How do voluntary green schemes work?
• Green initiatives in the airlines industry
• ESG measures in executive pay packages
• Does an emissions scheme create an obligation?

Assets

• What’s the impact on the discount rate used in testing non-current assets for impairment?
• What might a company that purchases carbon credits voluntarily need to consider?
• What’s the impact on useful lives and residual values of PP&E and intangible assets?
• What’s the impact on cash flow projections used for impairment testing of non-financial assets?
• What are the potential impacts on inventories?

Liabilities

• Have you recorded all of your environmental and decommissioning obligations?
• How might employee benefit arrangements be affected by climate-related risks?
• What's the impact on restructuring provisions?

Borrowers | Capital and finance for transition

• How do you account for different forms of government assistance?
• Do green bonds contain embedded derivatives?
• Do you have a lease of green technology?
• What are the potential impacts of leasing polluting assets?
• Do contracts between customers and wind farm operators contain leases?

Lenders | Capital and finance for transition

• Classification of financial assets
• Lessors – How will climate-related risks impact operating and finance leases?
• What's the impact on expected credit losses?

Disclosures

• Contracts for renewable electricity
• What’s the impact on the going concern assessment and related disclosures?
• Have you disclosed the impacts of climate-related matters clearly?

Sector benchmarking

• Banks' climate-related disclosures
• Insurers' climate-related disclosures

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KPMG

KPMG

In today’s increasingly disruptive world of climate disasters, political conflict and societal inequalities, rapid ESG progress is crucial to achieving a more sustainable future.

KPMG, as a global organization, knows the intrinsic power of ESG to transform your business and our professionals can show you how to enhance trust, mitigate risk and unlock new value as you transform to build a sustainable future. Member firms’ services are holistic and practical to guide your teams to drive sustainable innovation across your business.

Through industry-leading expertise, data-driven technology and global alliances, KPMG’s experience across critical ESG issues means our professionals can assist you in creating the right roadmap for your ESG journey.

KPMG helps turn insight into opportunity for your business, people and the planet and designed our services to put ESG at the core of your operations — where it should be.

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