IFRS Talks - PwC's Global IFRS podcast
December 2023: IFRIC Update and Net Zero Commitments
Dec 14, 2023
Laura Kennedy, accounting expert, discusses the accounting implications of net zero commitments and climate-related matters. They explore topics such as recognizing provisions for past events, the process of publishing analysis on net zero commitments, interconnectivity between financial reporting and sustainability disclosures, and requirements of IFRS 8 operating segments.
30:07
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Quick takeaways
- Net zero commitments do not create a constructive obligation for recognition as a provision unless greenhouse gas emissions occur in a specified time frame.
- Apart from net zero commitments, accounting considerations related to climate change include power purchase agreements, impairment test impacts, disclosure requirements, and alignment of sustainability information with financial reporting.
Deep dives
Key Points on Net Zero Commitments
The podcast episode discusses the IAFRS Interpretations Committee's focus on net zero commitments. The committee received a submission regarding the accounting considerations around such commitments. Specifically, the submission asked whether an entity's commitment to reduce or offset its greenhouse gas emissions creates a constructive obligation and whether it needs to be recognized as a provision. The committee clarified that for a provision to be recognized, there must be a present obligation as a result of a past event. In the example discussed, the entity would only recognize a provision when it emits greenhouse gases in the specified time frame.
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