Appendix D (AASBS2_09-24)

[Not included]

For climate-related financial information to be useful, it must be relevant and faithfully represent what it purports to represent. These are fundamental qualitative characteristics of useful climate-related financial information. The usefulness of climate-related financial information is enhanced if the information is comparable, verifiable, timely and understandable. These are enhancing qualitative characteristics of useful climate-related financial information (see Appendix D).

A complete set of climate-related financial disclosures shall present fairly all climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects.

To identify climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects, an entity shall apply paragraphs B8–B10.

Fair presentation requires disclosure of relevant information about climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects, and their faithful representation in accordance with the principles set out in this Standard. To achieve faithful representation, an entity shall provide a complete, neutral and accurate depiction of those climate-related risks and opportunities.

Materiality is an entity-specific aspect of relevance based on the nature or magnitude, or both, of the items to which the information relates, in the context of the entity’s climate-related financial disclosures.

Fair presentation also requires an entity: 

(a) to disclose information that is comparable, verifiable, timely and understandable; and 

(b) to disclose additional information if compliance with the specifically applicable requirements in Australian Sustainability Reporting Standards is insufficient to enable users of general purpose financial reports to understand the effects of climate-related risks and opportunities on the entity’s cash flows, its access to finance and cost of capital over the short, medium and long term.

Applying Australian Sustainability Reporting Standards, with additional information disclosed when necessary (see paragraph 15(b)), is presumed to result in climate-related financial disclosures that achieve fair presentation.

An entity shall disclose material information about the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects.

In the context of climate-related financial disclosures, information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports, which include financial statements and climate-related financial disclosures and which provide information about a specific reporting entity.

To identify and disclose material information, an entity shall apply paragraphs B13–B19 and B21–B37.

[Not included]

An entity’s climate-related financial disclosures shall be for the same reporting entity as the related financial statements, unless otherwise permitted by law (see paragraph AusB38.1).

An entity shall provide information in a manner that enables users of general purpose financial reports to understand the following types of connections: 

(a) the connections between the items to which the information relates—such as connections between various climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects; and 

(b) the connections between disclosures provided by the entity: 

(i) within its climate-related financial disclosures—such as connections between disclosures on governance, strategy, risk management and metrics and targets; and 

(ii) across its climate-related financial disclosures and other general purpose financial reports published by the entity—such as its related financial statements (see paragraphs B39–B44).

An entity shall identify the financial statements to which the climate-related financial disclosures relate.

Data and assumptions used in preparing the climate-related financial disclosures shall be consistent—to the extent possible considering the requirements of Australian Accounting Standards—with the corresponding data and assumptions used in preparing the related financial statements (see paragraph B42).

When currency is specified as the unit of measure in the climate-related financial disclosures, the entity shall use the presentation currency of its related financial statements.

[Not included]

[Not included]

Short-, medium- and long-term time horizons can vary between entities and depend on many factors, including industry-specific characteristics, such as cash flow, investment and business cycles, the planning horizons typically used in an entity’s industry for strategic decision-making and capital allocation plans, and the time horizons over which users of general purpose financial reports conduct their assessments of entities in that industry.

[Not included]

[Not included]

If an entity discloses a metric taken from a source other than Australian Sustainability Reporting Standards, the entity shall identify the source and the metric taken.

If a metric has been developed by an entity, the entity shall disclose information about: 

(a) how the metric is defined, including whether it is derived by adjusting a metric taken from a source other than Australian Sustainability Reporting Standards and, if so, which source and how the metric disclosed by the entity differs from the metric specified in that source; 

(b) whether the metric is an absolute measure, a measure expressed in relation to another metric or a qualitative measure (such as a red, amber, green—or RAG—status); 

(c) whether the metric is validated by a third party and, if so, which party; and 

(d) the method used to calculate the metric and the inputs to the calculation, including the limitations of the method used and the significant assumptions made.

[Not included]

The definition and calculation of metrics, including metrics used to set the entity’s targets and monitor progress towards reaching them, shall be consistent over time. If a metric is redefined or replaced, an entity shall apply paragraph B52.

An entity shall label and define metrics and targets using meaningful, clear and precise names and descriptions.

[Not included]

An entity is required to provide disclosures required by Australian Sustainability Reporting Standards as part of its general purpose financial reports.

[Not included]

An entity may disclose information required by an Australian Sustainability Reporting Standard in the same location as information disclosed to meet other requirements, such as information required by regulators. The entity shall ensure that the climate-related financial disclosures are clearly identifiable and not obscured by that additional information (see paragraph B27).

Information required by an Australian Sustainability Reporting Standard may be included in climate-related financial disclosures by cross-reference to another report published by the entity. If an entity includes information by cross-reference, the entity shall apply the requirements in paragraphs B45–B47.

An entity shall report its climate-related financial disclosures at the same time as its related financial statements. The entity’s climate-related financial disclosures shall cover the same reporting period as the related financial statements.

Normally, an entity prepares climate-related financial disclosures for a 12-month period. However, for practical reasons, some entities prefer to report, for example, for a 52-week period. This Standard does not preclude that practice.

When an entity changes the end of its reporting period and provides climate-related financial disclosures for a period longer or shorter than 12 months, it shall disclose: 

(a) the period covered by the climate-related financial disclosures; 

(b) the reason for using a longer or shorter period; and 

(c) the fact that the amounts disclosed in the climate-related financial disclosures are not entirely comparable.

If, after the end of the reporting period but before the date on which the climate-related financial disclosures are authorised for issue, an entity receives information about conditions that existed at the end of the reporting period, it shall update disclosures that relate to those conditions in the light of the new information.

An entity shall disclose information about transactions, other events and conditions that occur after the end of the reporting period, but before the date on which the climate-related financial disclosures are authorised for issue, if non-disclosure of that information could reasonably be expected to influence decisions that primary users of general purpose financial reports make on the basis of those reports

This Standard does not mandate which entities would be required to provide interim climate-related financial disclosures, how frequently, or how soon after the end of an interim period. However, governments, securities regulators, stock exchanges and accountancy bodies may require entities whose debt or equity securities are publicly traded to publish interim general purpose financial reports. If an entity is required or elects to publish interim climate-related financial disclosures in accordance with Australian Sustainability Reporting Standards, the entity shall apply paragraph B48.

Unless another Australian Sustainability Reporting Standard permits or requires otherwise, an entity shall disclose comparative information in respect of the preceding period for all amounts disclosed in the reporting period. If such information would be useful for an understanding of the climate-related financial disclosures for the reporting period, the entity shall also disclose comparative information for narrative and descriptive climate-related financial information (see paragraphs B49–B59).

[Not included]

An entity whose climate-related financial disclosures comply with all the requirements of this Australian Sustainability Reporting Standard shall make an explicit and unreserved statement of compliance. An entity shall not describe climate-related financial disclosures as complying with this Standard unless they comply with all the requirements of this Standard.

This Standard relieves an entity from disclosing information otherwise required by an Australian Sustainability Reporting Standard if law or regulation prohibits the entity from disclosing that information (see paragraph B33). This Standard also relieves an entity from disclosing information about a climate-related opportunity otherwise required by an Australian Sustainability Reporting Standard if that information is commercially sensitive as described in this Standard (see paragraphs B34–B37). An entity using these exemptions is not prevented from asserting compliance with Australian Sustainability Reporting Standards.

An entity shall disclose information to enable users of general purpose financial reports to understand the judgements, apart from those involving estimations of amounts (see paragraph 77), that the entity has made in the process of preparing its climate-related financial disclosures and that have the most significant effect on the information included in those disclosures.

In the process of preparing climate-related financial disclosures, an entity makes various judgements, apart from those involving estimations, that can significantly affect the information reported in the entity’s climate-related financial disclosures. For example, an entity makes judgements in: 

(a) identifying climate-related risks and opportunities that could be reasonably expected to affect the entity’s prospects; 

(b) determining which sources of guidance to apply; 

(c) identifying material information to include in the climate-related financial disclosures; and 

(d) assessing whether an event or change in circumstances is significant and requires reassessment of the scope of all affected climate-related risks and opportunities throughout the entity’s value chain.

[Not included]

An entity shall disclose information to enable users of general purpose financial reports to understand the most significant uncertainties affecting the amounts reported in its climate-related financial disclosures.

An entity shall: 

(a) identify the amounts that it has disclosed that are subject to a high level of measurement uncertainty; and 

(b) in relation to each amount identified in paragraph 78(a), disclose information about: 

(i) the sources of measurement uncertainty—for example, the dependence of the amount on the outcome of a future event, on a measurement technique or on the availability and quality of data from the entity’s value chain; and 

(ii) the assumptions, approximations and judgements the entity has made in measuring the amount.

When amounts reported in climate-related financial disclosures cannot be measured directly and can only be estimated, measurement uncertainty arises. In some cases, an estimate involves assumptions about possible future events with uncertain outcomes. The use of reasonable estimates is an essential part of preparing climate-related financial disclosures and does not undermine the usefulness of the information if the estimates are accurately described and explained. Even a high level of measurement uncertainty would not necessarily prevent such an estimate from providing useful information.

The requirement in paragraph 77 for an entity to disclose information about the uncertainties affecting the amounts reported in climate-related financial disclosures relates to the estimates that require the entity’s most difficult, subjective or complex judgements. As the number of variables and assumptions increases, those judgements become more subjective and complex, and the uncertainty affecting the amounts reported in the climate-related financial disclosures increases accordingly.

The type and extent of the information an entity might need to disclose vary according to the nature of the amount reported in the climate-related financial disclosures—the sources of and the factors contributing to the uncertainty and other circumstances. Examples of the type of information an entity might need to disclose are: 

(a) the nature of the assumption or other source of measurement uncertainty; 

(b) the sensitivity of the disclosed amount to the methods, assumptions and estimates underlying its calculation, including the reasons for the sensitivity; 

(c) the expected resolution of an uncertainty and the range of reasonably possible outcomes for the disclosed amount; and 

(d) an explanation of changes made to past assumptions concerning the disclosed amount, if the uncertainty remains unresolved.

[Not included]

An entity shall correct material prior period errors by restating the comparative amounts for the prior period(s) disclosed unless it is impracticable to do so.

Prior period errors are omissions from and misstatements in the entity’s climate-related financial disclosures for one or more prior periods. Such errors arise from a failure to use, or the misuse of, reliable information that: 

(a) was available when the climate-related financial disclosures for that period(s) were authorised for issue; and 

(b) could reasonably be expected to have been obtained and considered in the preparation of those disclosures.

Corrections of errors are distinguished from changes in estimates. Estimates are approximations that an entity might need to revise as additional information becomes known.

If an entity identifies a material error in its prior period climate-related financial disclosures, it shall apply paragraphs B55–B59.

This Standard requires an entity to disclose information about all climate-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, its access to finance or cost of capital over the short, medium or long term (referred to as ‘climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects’).

An entity’s climate-related risks and opportunities arise out of the interactions between the entity and its stakeholders, society, the economy and the natural environment throughout the entity’s value chain. These interactions—which can be direct and indirect—result from operating an entity’s business model in pursuit of the entity’s strategic purposes and from the external environment in which the entity operates. These interactions take place within an interdependent system in which an entity both depends on resources and relationships throughout its value chain to generate cash flows and affects those resources and relationships through its activities and outputs—contributing to the preservation, regeneration and development of those resources and relationships or to their degradation and depletion. These dependencies and impacts might give rise to climate-related risks and opportunities that could reasonably be expected to affect an entity’s cash flows, its access to finance and cost of capital over the short, medium and long term.

[Not included]

Reasonable and supportable information used by an entity in preparing its climate-related financial disclosures shall cover factors that are specific to the entity as well as general conditions in the external environment. In some cases—such as in identifying climate-related risks and opportunities that could reasonably be expected to affect an entity’s prospects—reasonable and supportable information includes information about past events, current conditions and forecasts of future conditions. Other Australian Sustainability Reporting Standards may specify what is reasonable and supportable information in specific cases.

An entity may use various sources of data that may be both internal and external. Possible data sources include the entity’s risk management processes; industry and peer group experience; and external ratings, reports and statistics. Information that is used by the entity in preparing its financial statements, operating its business model, setting its strategy and managing its risks and opportunities is considered to be available to the entity without undue cost or effort.

An entity need not undertake an exhaustive search for information to identify climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. The assessment of what constitutes undue cost or effort depends on the entity’s specific circumstances and requires a balanced consideration of the costs and efforts for the entity and the benefits of the resulting information for primary users. That assessment can change over time as circumstances change.

[Not included]

Paragraph 17 requires an entity to disclose material information about the climate-related risks and opportunities that could reasonably be expected to affect the entity’s prospects. Materiality of information is judged in relation to whether omitting, misstating or obscuring that information could reasonably be expected to influence decisions of primary users of general purpose financial reports, which provide information about a specific reporting entity.

The decisions of primary users relate to providing resources to the entity and involve decisions about: 

(a) buying, selling or holding equity and debt instruments; 

(b) providing or selling loans and other forms of credit; or 

(c) exercising rights to vote on, or otherwise influence, the entity’s management’s actions that affect the use of the entity’s economic resources.

In respect of not-for-profit entities, the following are examples of decisions of primary users relating to providing resources to an entity: 

(a) parliaments deciding on behalf of constituents whether to fund particular programmes for delivery by an entity; 

(b) taxpayers deciding who should represent them in government; 

(c) donors deciding whether to donate resources to an entity; and 

(d) recipients of goods and services deciding whether they can continue to rely on the provision of goods and services from the entity or whether to seek alternative suppliers.

The decisions described in paragraph B14 depend on primary users’ expectations about returns, for example, dividends, principal and interest payments or market price increases. Those expectations depend on primary users’ assessment of the amount, timing and uncertainty of future net cash inflows to the entity and on their assessment of stewardship of the entity’s economic resources by the entity’s management and its governing body(s) or individual(s).

In respect of not-for-profit entities, the decisions described in paragraph AusB14.1 depend on primary users’ expectations about returns and a not-for-profit entity’s ability to continue providing goods or services. Those expectations depend on primary users’ assessment of the amount, timing and uncertainty of future net cash inflows to the entity and on their assessment of stewardship of the entity’s economic resources by the entity’s management and its governing body(s) or individual(s).

Assessing whether information could reasonably be expected to influence the decisions made by primary users requires consideration of the characteristics of those users and of the entity’s own circumstances.

Climate-related financial disclosures are prepared for primary users who have reasonable knowledge of business and economic activities and who review and analyse information diligently. At times, even well-informed and diligent users may need to seek the aid of an adviser to understand climate-related financial information.

Individual primary users may have different, and sometimes even conflicting, information needs and desires. Information needs of primary users may also evolve over time. Climate-related financial disclosures are intended to meet common information needs of primary users.

Materiality judgements are specific to an entity. Consequently, this Standard does not specify any thresholds for materiality or predetermine what would be material in a particular situation.

[Not included]

An entity shall assess whether information, either individually or in combination with other information, is material in the context of the entity’s climate-related financial disclosures taken as a whole. In assessing whether information is material, an entity shall consider both quantitative and qualitative factors. For example, an entity might consider the magnitude and the nature of the effect of a climate-related risk or opportunity on the entity.

In some cases, Australian Sustainability Reporting Standards require the disclosure of information about possible future events with uncertain outcomes. In judging whether information about such possible future events is material, an entity shall consider: 

(a) the potential effects of the events on the amount, timing and uncertainty of the entity’s future cash flows over the short, medium and long term (referred to as ‘the possible outcome’); and 

(b) the range of possible outcomes and the likelihood of the possible outcomes within that range.

When considering possible outcomes, an entity shall consider all pertinent facts and circumstances. Information about a possible future event is more likely to be judged as being material if the potential effects are significant and the event is likely to occur. However, an entity shall also consider whether information about low-probability and high-impact outcomes might be material either individually or in combination with information about other low-probability and high-impact outcomes. For example, an entity might be exposed to several climate-related risks, each of which could cause the same type of disruption—such as disruption to the entity’s supply chain. Information about an individual source of risk might not be material if disruption from that source is highly unlikely to occur. However, information about the aggregate risk—the risk of supply chain disruption from all sources—might be material.

If a possible future event is expected to affect an entity’s cash flows, but only many years in the future, information about that event is usually less likely to be judged material than information about a possible future event with similar effects that are expected to occur sooner. However, in some circumstances, an item of information could reasonably be expected to influence primary users’ decisions regardless of the magnitude of the potential effects of the future event or the timing of that event. For example, this might happen if information about a particular climate-related risk or opportunity is highly scrutinised by primary users of an entity’s general purpose financial reports.

An entity need not disclose information otherwise required by an Australian Sustainability Reporting Standard if the information is not material. This is the case even if the Australian Sustainability Reporting Standard contains a list of specific requirements or describes them as minimum requirements.

An entity shall disclose additional information when compliance with the specifically applicable requirements in an Australian Sustainability Reporting Standard is insufficient to enable users of general purpose financial reports to understand the effects of climate-related risks and opportunities on the entity’s cash flows, its access to finance and cost of capital over the short, medium and long term.

An entity shall identify its climate-related financial disclosures clearly and distinguish them from other information provided by the entity (see paragraph 62). An entity shall not obscure material information. Information is obscured if it is communicated in a way that would have a similar effect for primary users to omitting or misstating that information. Examples of circumstances that might result in material information being obscured include: 

(a) material information is not clearly distinguished from additional information that is not material; 

(b) material information is disclosed in the climate-related financial disclosures, but the language used is vague or unclear; 

(c) material information about a climate-related risk or opportunity is scattered throughout the climate-related financial disclosures; 

(d) items of information that are dissimilar are inappropriately aggregated; 

(e) items of information that are similar are inappropriately disaggregated; and 

(f) the understandability of the climate-related financial disclosures is reduced as a result of material information being hidden by immaterial information to the extent that a primary user is unable to determine what information is material.

An entity shall reassess its materiality judgements at each reporting date to take account of changed circumstances and assumptions. Because of changes in the entity’s individual circumstances, or in the external environment, some types of information included in an entity’s climate-related financial disclosures for prior periods might no longer be material. Conversely, some types of information not previously disclosed might become material.

When an entity applies Australian Sustainability Reporting Standards, it shall consider all facts and circumstances and decide how to aggregate and disaggregate information in its climate-related financial disclosures. The entity shall not reduce the understandability of its climate-related financial disclosures by obscuring material information with immaterial information or by aggregating material items of information that are dissimilar to each other.

An entity shall not aggregate information if doing so would obscure information that is material. Information shall be aggregated if items of information have shared characteristics and shall not be aggregated if they do not have shared characteristics. The entity might need to disaggregate information about climate-related risks and opportunities, for example, by geographical location or in consideration of the geopolitical environment. For example, to ensure that material information is not obscured, an entity might need to disaggregate information about its use of water to distinguish between water drawn from abundant sources and water drawn from water-stressed areas.

Law or regulation might specify requirements for an entity to disclose climate-related information in its general purpose financial reports. In such circumstances, the entity is permitted to include in its climate-related financial disclosures information to meet legal or regulatory requirements, even if that information is not material. However, such information shall not obscure material information.

An entity shall disclose material climate-related financial information, even if law or regulation permits the entity not to disclose such information.

An entity need not disclose information otherwise required by an Australian Sustainability Reporting Standard if law or regulation prohibits the entity from disclosing that information. If an entity omits material information for that reason, it shall identify the type of information not disclosed and explain the source of the restriction.

If an entity determines that information about a climate-related opportunity is commercially sensitive in the limited circumstances described in paragraph B35, the entity is permitted to omit that information from its climate-related financial disclosures. Such an omission is permitted even if information is otherwise required by an Australian Sustainability Reporting Standard and the information is material.

An entity qualifies for the exemption specified in paragraph B34 if, and only if: 

(a) information about the climate-related opportunity is not already publicly available; 

(b) disclosure of that information could reasonably be expected to prejudice seriously the economic benefits the entity would otherwise be able to realise in pursuing the opportunity; and 

(c) the entity has determined that it is impossible to disclose that information in a manner—for example, at an aggregated level—that would enable the entity to meet the objectives of the disclosure requirements without prejudicing seriously the economic benefits the entity would otherwise be able to realise in pursuing the opportunity.

If an entity elects to use the exemption specified in paragraph B34, the entity shall, for each item of information omitted: 

(a) disclose the fact that it has used the exemption; and 

(b) reassess, at each reporting date, whether the information qualifies for the exemption.

An entity is prohibited from using the exemption specified in paragraph B34 in relation to a climate-related risk or as a basis for broad non-disclosure of climate-related financial information.

[Not included]

Unless otherwise permitted by law, paragraph Aus20.1 requires that climate-related financial disclosures shall be for the same reporting entity as the related financial statements. For example, consolidated financial statements prepared in accordance with Australian Accounting Standards provide information about the parent and its subsidiaries as a single reporting entity. Consequently, that entity’s climate-related financial disclosures shall enable users of general purpose financial reports to understand the effects of the climate-related risks and opportunities on the cash flows, access to finance and cost of capital over the short, medium and long term for the parent and its subsidiaries.

Paragraph 21 requires an entity to provide information in a manner that enables users of general purpose financial reports to understand connections both between the items to which the information relates and between disclosures provided by the entity in its general purpose financial reports.

Connected information provides insight into connections between the items to which the information relates. For example: 

(a) if an entity pursued a particular climate-related opportunity and that resulted in an increase in the entity’s revenue, connected information will depict that relationship between the entity’s strategy and its financial performance; 

(b) if an entity identified a trade-off between two climate-related risks it is exposed to and took action on the basis of its assessment of that trade-off, connected information will depict the relationship between those risks and the entity’s strategy; and 

(c) if an entity committed to a particular climate-related target, but that commitment has not yet affected the entity’s financial position or financial performance because the applicable recognition criteria have not been met, connected information will depict that relationship.

Connected information includes: 

(a) connections between various types of information about a particular climate-related risk or opportunity, such as: 

(i) between disclosures on governance, strategy and risk management; and 

(ii) between narrative information and quantitative information (including related metrics and targets and information in the related financial statements). 

(b) connections between disclosures about various climate-related risks and opportunities. For example, if an entity integrates its oversight of climate-related risks and opportunities, the entity shall integrate the disclosures on governance instead of providing separate disclosures on governance for each climate-related risk and opportunity.

Drawing connections between disclosures involves, but is not limited to, providing necessary explanations and cross-references and using consistent data, assumptions, and units of measure. In providing connected information, an entity shall: 

(a) explain connections between disclosures in a clear and concise manner; 

(b) avoid unnecessary duplication if Australian Sustainability Reporting Standards require the disclosure of common items of information; and 

(c) disclose information about significant differences between the data and assumptions used in preparing the entity’s climate-related financial disclosures and the data and assumptions used in preparing the related financial statements.

For example, in providing connected information an entity might need to explain the effect or likely effect of its strategy on its financial statements and financial planning, or explain how that strategy relates to the metrics the entity uses to measure progress against targets. Another entity might need to explain how its use of natural resources or changes within its supply chain could amplify or, in contrast, reduce its climate-related risks and opportunities. The entity might need to link the information about its use of natural resources or changes within its supply chain to information about current or anticipated financial effects on the entity’s production costs, its strategic response to mitigate those risks and its related investment in new assets. The entity might need to link narrative information to the related metrics and targets and to information in the related financial statements.

Other examples of connected information include: 

(a) an explanation of the combined effects of the entity’s climate-related risks and opportunities and its strategy on its financial position, financial performance and cash flows over the short, medium and long term. For example, an entity might face decreasing demand for its products because of consumer preferences for lower-carbon alternatives. The entity might need to explain how its strategic response, such as closing a major factory, could affect its workforce and local communities, and the effect of such a closure on the useful lives of its assets and on impairment assessments. 

(b) a description of the alternatives that an entity evaluated in setting its strategy in response to its climate-related risks and opportunities, including a description of the trade-offs between those risks and opportunities that the entity considered. For example, an entity might need to explain the potential effects of its decision to restructure its operations in response to a climate-related risk on the future size and composition of the entity’s workforce.

Information required by an Australian Sustainability Reporting Standard might be available in another report published by the entity. For example, the required information could be disclosed in the related financial statements. Material information can be included in an entity’s climate-related financial disclosures by cross-reference, provided that: 

(a) the cross-referenced information is available on the same terms and at the same time as the climate-related financial disclosures; and 

(b) the complete set of climate-related financial disclosures is not made less understandable by including information by cross-reference.

Information included by cross-reference becomes part of the complete set of climate-related financial disclosures and shall comply with the requirements of Australian Sustainability Reporting Standards. For example, it needs to be relevant, representationally faithful, comparable, verifiable, timely and understandable. The body(s) or individual(s) that authorises the general purpose financial reports takes the same responsibility for the information included by cross-reference as it does for the information included directly.

If information required by an Australian Sustainability Reporting Standard is included by cross-reference: 

(a) the climate-related financial disclosures shall clearly identify the report within which that information is located and explain how to access that report; and 

(b) the cross-reference shall be to a precisely specified part of that report.

In the interest of timeliness and cost considerations, and to avoid repetition of information previously reported, an entity may be required or choose to provide less information at interim dates than it provides in its annual climate-related financial disclosures. Interim climate-related financial disclosures are intended to provide an update on the latest complete set of annual disclosures of climate-related financial information. These disclosures focus on new information, events and circumstances and do not duplicate information previously reported. Although the information provided in interim climate-related financial disclosures may be more condensed than in annual climate-related financial disclosures, an entity is not prohibited or discouraged from publishing a complete set of climate-related financial disclosures as specified in this Standard as part of its interim general purpose financial report.

Paragraph 70 requires an entity to disclose comparative information in respect of the preceding period for all amounts disclosed in the reporting period.

In some cases, the amount disclosed for a metric is an estimate. Except as specified in paragraph B51, if an entity identifies new information in relation to the estimated amount disclosed in the preceding period and the new information provides evidence of circumstances that existed in that period, the entity shall: 

(a) disclose a revised comparative amount that reflects that new information; 

(b) disclose the difference between the amount disclosed in the preceding period and the revised comparative amount; and 

(c) explain the reasons for revising the comparative amount.

In applying the requirement in paragraph B50, an entity need not disclose a revised comparative amount: 

(a) if it is impracticable to do so (see paragraph B54). 

(b) if the metric is forward-looking. Forward-looking metrics relate to possible future transactions, events and other conditions. The entity is permitted to revise a comparative amount for a forward-looking metric if doing so does not involve the use of hindsight.

If an entity redefines or replaces a metric in the reporting period, the entity shall: 

(a) disclose a revised comparative amount, unless it is impracticable to do so; 

(b) explain the changes; and 

(c) explain the reasons for those changes, including why the redefined or replacement metric provides more useful information.

If an entity introduces a new metric in the reporting period, it shall disclose a comparative amount for that metric unless it is impracticable to do so.

Sometimes, it is impracticable to revise a comparative amount to achieve comparability with the reporting period. For example, data might not have been collected in the preceding period in a way that allows retrospective application of a new definition of a metric, and it might be impracticable to recreate the data. If it is impracticable to revise a comparative amount for the preceding period, an entity shall disclose that fact.

Paragraph 83 requires an entity to correct material prior period errors.

Such errors include: the effects of mathematical mistakes, mistakes in applying the definitions for metrics or targets, oversights or misinterpretations of facts, and fraud.

Potential reporting period errors discovered in that period are corrected before the climate-related financial disclosures are authorised for issue. However, material errors are sometimes not discovered until a subsequent period.

If an entity identifies a material error in its prior period(s) climate-related financial disclosures, it shall disclose: 

(a) the nature of the prior period error; 

(b) the correction, to the extent practicable, for each prior period disclosed; and 

(c) if correction of the error is impracticable, the circumstances that led to the existence of that condition and a description of how and from when the error has been corrected.

When it is impracticable to determine the effect of an error on all prior periods presented, the entity shall restate the comparative information to correct the error from the earliest date practicable.

The Conceptual Framework for Financial Reporting (as amended to December 2021) and the Framework for the Preparation and Presentation of Financial Statements (as amended to March 2020) (the Conceptual Frameworks) were issued by the AASB. They describe the objective of, and the concepts that apply to, general purpose financial reports. One purpose of the Conceptual Frameworks is to assist the AASB to develop Australian Accounting Standards for preparing financial statements based on consistent concepts.

Climate-related financial disclosures are part of general purpose financial reports. The qualitative characteristics in the Conceptual Frameworks, therefore, apply to climate-related financial information. However, the nature of some of the information required to meet the objective of this Standard differs in some respects from the information provided in financial statements.

Climate-related financial information is useful if it is relevant and faithfully represents what it purports to represent. Relevance and faithful representation are fundamental qualitative characteristics of useful climate-related financial information. The usefulness of climate-related financial information is enhanced if the information is comparable, verifiable, timely and understandable. Comparability, verifiability, timeliness and understandability are enhancing characteristics of useful climate-related financial information.

Relevant climate-related financial information is capable of making a difference in the decisions made by primary users. Information may be capable of making a difference in a decision even if some users choose not to take advantage of it or are already aware of it from other sources. Climate-related financial information is capable of making a difference in decisions made by users if it has predictive value, confirmatory value or both.

Climate-related financial information has predictive value if it can be used as an input to processes employed by primary users to predict future outcomes. Climate-related financial information need not be a prediction or forecast to have predictive value. Climate-related financial information with predictive value is employed by primary users in making their own predictions. For example, information about water quality, which can include information about the water being polluted, could inform the expectations of users about the ability of an entity to meet local water-quality requirements.

Climate-related financial information has confirmatory value if it provides feedback about (confirms or changes) previous evaluations.

The predictive value and confirmatory value of climate-related financial information are interrelated. Information that has predictive value often also has confirmatory value. For example, information for the current year about greenhouse gas emissions, which can be used as the basis for predicting greenhouse gas emissions in future years, can also be compared with predictions about greenhouse gas emissions for the current year that were made in past years. The results of those comparisons can help a user to correct and improve the processes that were used to make those previous predictions.

Information is material if omitting, misstating or obscuring that information could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of those reports, which provide information about a specific reporting entity. In other words, materiality is an entity-specific aspect of relevance. The materiality of information is assessed in the context of an entity’s climate-related financial disclosures and is based on the nature or magnitude of the item to which the information relates, or both.

Climate-related financial information represents phenomena in words and numbers. To be useful, the information must not only represent relevant phenomena, it must also faithfully represent the substance of the phenomena that it purports to represent.

To be a faithful representation, a depiction would be complete, neutral and accurate. The objective of general purpose financial reports is to maximise those qualities to the extent possible.

A complete depiction of a climate-related risk or opportunity includes all material information necessary for primary users to understand that risk or opportunity.

Climate-related financial information shall be neutral. A neutral depiction is one without bias in the selection or disclosure of information. Information is neutral if it is not slanted, weighted, emphasised, de-emphasised or otherwise manipulated to make it more likely that primary users will receive that information favourably or unfavourably. Neutral information is not information without purpose or without influence on behaviour. On the contrary, relevant information is, by definition, capable of making a difference in users’ decisions.

Some climate-related financial information—for example, targets or plans—is aspirational. A neutral discussion of such matters covers both aspirations and the factors that could prevent an entity from achieving these aspirations.

Neutrality is supported by the exercise of prudence. Prudence is the exercise of caution when making judgements under conditions of uncertainty. The exercise of prudence means that opportunities are not overstated and risks are not understated. Equally, the exercise of prudence does not allow for the understatement of opportunities or the overstatement of risks.

Climate-related financial information shall be accurate. Information can be accurate without being perfectly precise in all respects. The precision needed and attainable, and the factors that make information accurate, depend on the nature of the information and the nature of the matters to which it relates. For example, accuracy requires that: 

(a) factual information is free from material error; 

(b) descriptions are precise; 

(c) estimates, approximations and forecasts are clearly identified as such; 

(d) no material errors are made in selecting and applying an appropriate process for developing an estimate, approximation or forecast; 

(e) assertions and inputs used in developing estimates are reasonable and based on information of sufficient quality and quantity; and 

(f) information on judgements about the future faithfully reflects both those judgements and the information on which they are based.

The usefulness of climate-related financial information is enhanced if it is comparable, verifiable, timely and understandable.

The decisions made by the primary users of general purpose financial reports involve choosing between alternatives; for example, selling or holding an investment, or investing in one reporting entity or another. Comparability is the characteristic that enables users to identify and understand similarities in, and differences among, items. Unlike the other qualitative characteristics, comparability does not relate to a single item. A comparison requires at least two items. Information is more useful to users if it is also comparable, that is, if it can be compared with: 

(a) information provided by the entity in previous periods; and 

(b) information provided by other entities, in particular those with similar activities or operating within the same industry.

Climate-related financial disclosures shall be provided in a way that enhances comparability.

Consistency is related to, but is not the same as, comparability. Consistency refers to the use of the same approaches or methods for providing disclosures about the same climate-related risks and opportunities, from period to period, both by a reporting entity and other entities. Comparability is the goal; consistency helps to achieve that goal.

Comparability is not uniformity. For information to be comparable, like things shall look alike and different things shall look different. Comparability of climate-related financial information is not enhanced by making unlike things look alike any more than it is enhanced by making like things look different.

Verifiability helps to give users confidence that information is complete, neutral and accurate. Information is verifiable if it is possible to corroborate either the information itself or the inputs used to derive it. Verifiable information is more useful to primary users than information that is not verifiable.

Verifiability means that various knowledgeable and independent observers could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation. Quantified information need not be a single point estimate to be verifiable. A range of possible amounts and the related probabilities could also be verified.

Climate-related financial information shall be provided in a way that enhances its verifiability. Verifiability can be enhanced by, for example: 

(a) including information that can be corroborated by comparing it with other information available to primary users about an entity’s business, about other businesses or about the external environment in which the entity operates; 

(b) providing information about inputs and methods of calculation used to produce estimates or approximations; and 

(c) providing information reviewed and agreed by the entity’s board, board committees or equivalent bodies.

Some climate-related financial information will be presented as explanations or forward-looking information. That information can be supportable, for example by faithfully representing fact-based strategies, plans and risk analyses. To help primary users decide whether to use such information, an entity shall describe the underlying assumptions and methods of producing the information, as well as other factors that provide evidence that the information reflects the actual plans or decisions made by the entity.

Timeliness means having information available to decision-makers in time to be capable of influencing their decisions. Generally, the older information is, the less useful it is. However, some information may continue to be timely long after the end of a reporting period because, for example, some users may need to identify and assess trends.

Climate-related financial information shall be clear and concise. For climate-related financial disclosures to be concise, they need: 

(a) to avoid generic information, sometimes called ‘boilerplate’, that is not specific to the entity; 

(b) to avoid duplication of information in the general purpose financial reports, including unnecessary duplication of information also provided in the related financial statements; and 

(c) to use clear language and clearly structured sentences and paragraphs.

The clearest form a disclosure can take will depend on the nature of the information and might include tables, graphs or diagrams in addition to narrative text. If graphs or diagrams are used, additional text or tables might be necessary to avoid obscuring material detail.

Clarity might be enhanced by distinguishing information about developments in the reporting period from ‘standing’ information that remains unchanged, or changes little, from one period to the next—for example, by separately describing features of an entity’s climate-related governance and risk management processes that have changed since the previous reporting period.

Disclosures are concise if they include only material information. Any immaterial information included shall be provided in a way that avoids obscuring material information.

Some climate-related risks and opportunities are inherently complex and might be difficult to present in a manner that is easy to understand. An entity shall present such information as clearly as possible. However, complex information about these risks and opportunities shall not be excluded from general purpose financial reports to make those reports easier to understand. Excluding such information would render those reports incomplete and, therefore, possibly misleading.

The completeness, clarity and comparability of climate-related financial information all rely on information being presented as a coherent whole. For climate-related financial information to be coherent, it shall be presented in a way that explains the context and the connections between the related items of information.

If climate-related risks and opportunities located in one part of an entity’s general purpose financial reports have implications for information disclosed in other parts, the entity shall include the information necessary for users to assess those implications.

Coherence also requires an entity to provide information in a way that allows users to relate information about its climate-related risks and opportunities to information in the entity’s financial statements.