"Investor groups call on companies to reflect climate-related risks in financial reporting", 16 September 2020.

As groups representing institutional investors, we call on companies to ensure that their financial reports and accounts reflect the recent opinion from the International Accounting Standards Board (IASB) and are prepared using assumptions consistent with the Paris Agreement on climate change.

For some time, the largest investor groups in the world representing over US$103 trillion in assets under management globally, including the Principles for Responsible Investment (PRI), the UN Environment Programme Finance Initiative (UNEP FI), the UN-convened Net-Zero Asset Owner Alliance initiative, the Institutional Investors Group on Climate Change, Investor Group on Climate Change (IGCC), the Asia Investor Group on Climate Change (AIGCC), and the Pensions and Lifetime Savings Association the have urged that corporate reporting appropriately reflect climate-related risks, and help support the undertaking in the Paris Agreement to make “finance flows consistent with the pathways towards (…) climate-resilient development”. To deliver this, companies should ensure that their financial statements accurately report their performance by incorporating material information about climate-related risks, for instance that they value assets in a way that would be compatible with a sustainable climate.

In this regard, we welcome the publication by the IASB (International Accounting Standards Board) of a paper explaining that companies that are facing climate impacts “are likely to judge that it is necessary to explain how they have considered climate related risk in their impairment assessments, and…other judgements made in relation to the recognition or measurement of items in the financial statements”.

... We therefore confirm the investor view that climate-related risks are material factors that should be reflected appropriately in financial statements.

...So we are asking:

• That companies apply the IASB opinion in the letter and the spirit, including showing the key assumptions that have been made with regard to climate-related risks
• That auditors only sign off financial statements which are consistent with the IASB opinion in the letter and the spirit, which include showing the key assumptions that have been made with regard to climate-related risks
• That regulators and civil society work with us in enforcing and encouraging these actions
• That henceforward the assu mptions made by companies in preparing financial statements under International Financial Repo rting Standards be compatible with the Paris Agreement