International Financial Reporting Standards (IFRS) might be “fit for purpose” and “sufficient” as a guideline for issuers when it comes to sustainable disclosures, but real-life examples will probably make things clearer in this nascent space. This was the motivation given for the publication of a recent report by the European Securities and Markets Authority (ESMA). Titled “The heat is on: Disclosures of climate-related matters in the financial statements”, it sets out to “enhance the ability of issuers to provide more robust disclosures”.

The report focuses on a selection of topics where ESMA has deemed climate-related matters to have a higher impact. Under one topic, which the report calls “Significant judgements, major sources of estimation uncertainty, and accounting policies”, ESMA reminds issuers that “when climate risks may lead to a significant material adjustment”, they should “consider providing additional disclosures about key assumptions to enable users to assess the impact of such climate risks on the issuer’s financial position, financial performance, and cash flows”.

To illustrate the topic, real-life examples from automotive firm Traton and Naturgy Energy Group were provided. Traton’s case involved disclosing the effects of climate change and its transition to electric mobility. Naturgy Energy presented a summary of the climate-related objectives incorporated into its strategic plan.


ESMA encourages issuers to “consider the illustrative examples of this report when considering how to assess and disclose the degree to which climate-related matters play a role into the preparation and auditing of IFRS financial statements”.