IFRS Publishes Near‑Final Climate‑Related Uncertainty Examples
Overview
On July 24, the International Financial Reporting Standards (IFRS) Foundation released near-final illustrative examples to help companies reflect climate-related uncertainties in their financial statements using existing IFRS Accounting Standards. These practical examples aim to close the gap between sustainability disclosures and audited financial reports.
Photo from IFRS
The Examples
These seven examples present real-world scenarios and disclosures, including:
Materiality judgments - Should climate assumptions be disclosed even if the financial impact isn’t yet quantifiable?
Property, Plant, and Equipment - How should physical assets be disaggregated based on different exposure to transition risk?
Impairment Testing - What happens when a company assumes future carbon costs in estimating asset value?
Decommissioning Provisions - How do evolving climate policies affect long-term closure and clean-up estimates?
Financial Instruments - How does climate-related credit risk show up in bank loan disclosures?
Assumptions and Estimates - What kind of sensitivity analysis is appropriate when future climate costs are uncertain?
Long-Lived Contracts - How should long-term commitments reflect changing climate conditions?
This set of examples was developed by the International Accounting Standards Board (IASB) with input from the International Sustainability Standards Board (ISSB).
These examples are connected to IFRS standards that are commonly used, such as Presentation of Financial Statements (IAS 1) and Impairment of Assets (IAS 36).
The Purpose
Climate change is increasingly seen as a financial risk, not just an environmental one. Investors and stakeholders have long flagged concerns that climate-related risks were inconsistently disclosed. They are often well-covered in sustainability reports but absent from audited financial statements. These examples respond directly to that gap and aim to reinforce alignment between financial and sustainability reporting
Though the examples focus on climate scenarios, the principles apply broadly, whether uncertainties stem from regulation, technology, economics, or other sources
Looking Ahead
The IASB plans to issue the final illustrative examples in October 2025, with no re-exposure needed.
While companies are being given ample time to reflect any disclosure changes in their financial reporting, they are encouraged to begin applying the guidance immediately to enhance transparency and consistency in ESG reporting.
These examples won’t have an effective date, but are designed to map directly to existing IFRS requirements.
The IFRS Foundation’s near-final examples represent a major milestone in making climate-related financial risks auditable, comparable, and transparent. By encouraging early adoption, the IASB is giving companies a head start in aligning financial statements with real-world uncertainty before regulators make it mandatory.