• Atmospheric CO2 /Parts per Million /Annual Averages /Data Source: noaa.gov

  • 1980338.91ppm

  • 1981340.11ppm

  • 1982340.86ppm

  • 1983342.53ppm

  • 1984344.07ppm

  • 1985345.54ppm

  • 1986346.97ppm

  • 1987348.68ppm

  • 1988351.16ppm

  • 1989352.78ppm

  • 1990354.05ppm

  • 1991355.39ppm

  • 1992356.1ppm

  • 1993356.83ppm

  • 1994358.33ppm

  • 1995360.18ppm

  • 1996361.93ppm

  • 1997363.04ppm

  • 1998365.7ppm

  • 1999367.8ppm

  • 2000368.97ppm

  • 2001370.57ppm

  • 2002372.59ppm

  • 2003375.14ppm

  • 2004376.96ppm

  • 2005378.97ppm

  • 2006381.13ppm

  • 2007382.9ppm

  • 2008385.01ppm

  • 2009386.5ppm

  • 2010388.76ppm

  • 2011390.63ppm

  • 2012392.65ppm

  • 2013395.39ppm

  • 2014397.34ppm

  • 2015399.65ppm

  • 2016403.09ppm

  • 2017405.22ppm

  • 2018407.62ppm

  • 2019410.07ppm

  • 2020412.44ppm

  • 2021414.72ppm

  • 2022418.56ppm

  • 2023421.08ppm

Partner Content

Cardano: IFRS brings forth a new era of sustainability considerations for pension funds

Michael Bushnell, managing director at Cardano Advisory takes a closer look at the updated ISSB standards to investigate how they could help pension schemes on their net zero journey

The International Sustainability Standards Board (ISSB) recently released two new International Financial Reporting Standards (IFRS) focused on sustainability – IFRS S1 and IFRS S2. These standards are designed to ensure that companies provide sustainability-related information alongside financial statements, all in the same reporting package. So, what do the standards entail and how will they help (or hinder) pension scheme trustees when preparing their own sustainable journey plan?

What are the standards?

The IFRS S1 and S2 are centred around four core elements: Governance; strategy; risk and opportunities management; and, metrics.

IFRS S1: General Requirements for Disclosure Sustainability-related Financial Information sets out the requirements for disclosing information about a company’s sustainability-related risks and opportunities. In particular, companies will need to:

  • Identify, disclose, and measure the widening spectrum of sustainability issues that may affect their performance to the primary users of general-purpose financial statements.
  • Identify and present a set of sustainability relates risks and opportunities for effective monitoring and reporting (i.e., business model, cashflow, ability to raise funding, cost of capital over the short, medium, and long term).
  • Select appropriate metrics and targets for sustainability reporting which are forward looking.

IFRS S2: Climate-related Disclosures sets out the requirements for disclosing information about a company’s climate-related risks and opportunities. In particular:

  • IFRS S2 differentiates climate-related risks across:
  • Physical risks (event-driven or intensity risk, longer-term changes, or chronic risks)
  • Transition risks
    • The standard also asks companies to look at their value chain to understand their Scope 3 emissions (as defined in the GHG Protocol) or, where companies activities include asset management, commercial banking or insurance, their financed emissions

    It is important to recognise that unlike traditional accounting standards, which are based on historical financial information, IFRS S1 and S2 require companies to apply judgement that is forward looking in nature. This is a significant change and may well draw out corporate strategy into the public sphere.

    Both IFRS S1 and S2 are effective from 1 January 2024 (in countries where they are adopted). However, there is a 12 month grace period in which companies may report only their climate related risks and opportunities, can continue to measure GHG using an alternative method other than the GHG Protocol and will also be granted relief from disclosing Scope 3 emissions.

    What do the standards mean for pension schemes & trustees?

    IFRS S1 and S2 are not expected to apply to UK pension schemes (though larger schemes will still be required to report on climate-related scenarios affecting assets, liabilities, and sponsor covenant under the TCFD framework). Defined benefit schemes of all sizes should continue to seek to understand how sustainability risks can impact their sponsor; in the rapidly evolving landscape of sustainability reporting, this may well require expert support from advisors and regulators.

    However, with the introduction of IFRS S1 and S2, sponsor disclosure across a broad range of sustainability-linked opportunities and risks should continue to improve. As a result, trustees will be able to develop a better understanding of the potential financial impact of sustainability-related factors on the sponsor’s ability to fulfil future benefit obligations. Trustees will also be able to make more informed decisions and align their long-term journey planning accordingly.

    By integrating sustainability risks into their decision-making processes and seeking appropriate expertise, trustees can effectively align their journey planning with their sustainability goals, contributing to a more resilient and sustainable future for pension funds and the global economy as a whole.

    Sponsored by Cardano

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