ACCA Strategic Professional · Strategic Business Reporting (International) · Analysis and interpretation of financial and non-financial information and measurement of performance
Orion Ltd, an IFRS reporter, is drafting disclosures on climate risk. Which statement is correct under IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information?
IFRS S1 requires disclosure of sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance or cost of capital over the short, medium or long term. It targets investors' decisions, not every stakeholder matter, and does not allow omission merely because disclosure is unfavourable.
- AAn entity discloses information on sustainability-related risks and opportunities that could reasonably be expected to affect its cash flows, access to finance or cost of capital in the short, medium or long termCorrect
- BAn entity discloses all sustainability matters affecting any stakeholder, regardless of effect on enterprise value
- CAn entity must disclose sustainability information only in the notes to the financial statements
- DAn entity may omit information on risks if the disclosure would be commercially unfavourable
Explanation
IFRS S1 requires disclosure of information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's prospects, meaning cash flows, access to finance or cost of capital over the short, medium or long term. It is investor focused, not all-stakeholder. It is reported as part of general purpose financial reporting, not only in the notes, and it has no general exemption for unfavourable news.
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