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Think Beyond Today. Invest in a Sustainable Tomorrow with SAMESG® Reporting
In today’s dynamic global economic landscape, accurate and transparent financial reporting is more critical than ever, especially concerning complex and emerging risks like climate change. To address this, the IFRS Foundation has published a near-final draft of illustrative examples designed to enhance the reporting of climate-related and other uncertainties in financial statements. Released by the International Accounting Standards Board (IASB) on July 25, 2025, this crucial release provides companies with early visibility and guidance on applying IFRS Accounting Standards to improve transparency and consistency in financial disclosures. The IASB developed these examples in response to stakeholder concerns about insufficient or inconsistent information on uncertainties, particularly those related to climate, and collaborated with the International Sustainability Standards Board (ISSB) to ensure alignment with sustainability-related disclosure requirements.
These illustrative examples demonstrate how existing IFRS Accounting Standards apply to various types of uncertainties, predominantly using climate-related scenarios as practical illustrations. While the examples use climate-related fact patterns, the principles demonstrated are broadly applicable to all forms of material uncertainties impacting financial reporting.
Specifically, the examples offer practical guidance on:
How to assess and disclose information that is material to users, even when there might be “no impact” on the financial statements in the current period due to a climate transition plan.
How to disclose key assumptions and significant judgments made by management, particularly those related to climate scenarios and their potential impact on assets (e.g., impairment considerations, emission allowance costs).
When and how to provide more granular information in the financial statements, such as disaggregating property, plant, and equipment (PP&E) based on climate vulnerability or credit risk exposures in climate-sensitive sectors.
How to account for and disclose provisions, such as decommissioning and restoration obligations, where long-term climate policies introduce significant uncertainties.
This publication marks a significant step towards more robust and consistent financial reporting globally.
By providing clear illustrations, the IFRS Foundation aims to reduce inconsistencies between financial statements and other general-purpose financial reports (e.g., sustainability reports), ensuring a more cohesive and reliable overall corporate narrative.
Publishing these examples in near-final form allows companies to begin preparing for their application before the final issuance, which is expected in October 2025, facilitating smoother adoption.
Although climate-related scenarios are prominent, the underlying IFRS Accounting Standard requirements and the principles demonstrated apply to a wide range of uncertainties, offering universal applicability to complex financial reporting challenges.
