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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Other current issues

Vantage Assurance is planning an engagement on Orrin plc's sustainability report, which uses the ISSB's IFRS S2 Climate-related Disclosures as its reporting framework. Which of the following is most consistent with IFRS S2?

IFRS S2 requires disclosure of climate-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance or cost of capital, covering governance, strategy, risk management and metrics and targets. It is investor-focused, not limited to environmental impact or local legal requirements.

  1. AThe entity discloses information about climate-related risks and opportunities that could reasonably be expected to affect its cash flows, access to finance or cost of capitalCorrect
  2. BThe entity discloses only the environmental impact of its operations on the planet, regardless of financial effects
  3. CThe entity discloses only historical emissions and excludes governance and risk management information
  4. DThe entity discloses information only where required by local environmental legislation

Explanation

IFRS S2 requires disclosure of climate-related risks and opportunities reasonably expected to affect prospects, including cash flows, access to finance or cost of capital, together with governance, strategy, risk management and metrics and targets. Option 2 describes an impact-only view, not the ISSB's investor-focused approach.

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