ESRB publishes report on climate-related risks in financial statements

The European Systemic Risk Board (ESRB) has published a report Climate-related Risks and Accounting.
This report analyses how climate-related risks are addressed in IFRS Accounting Standards and reflected in financial statements prepared in accordance with IFRS Accounting Standards, from a financial stability perspective.
The report identifies four issues for financial stability as below:

The incomplete incorporation of climate-related risks in market prices can cause assets to be overestimated or liabilities to be underestimated;
The effect of climate-related risks on the initial and subsequent valuation of non-financial assets and liabilities;
The incorporation of climate factors into the models used to estimate expected credit losses under IFRS 9 Financial Instruments or expected cash flows from insurance contracts according to IFRS 17 Insurance Contracts;
Disclosures.

The report suggests some amendments to IFRS Accounting Standards related to climate-related risks, such as, enhancement of the materiality principle in IAS 1 Presentation of Financial Statements; the addition of climate factors to the list of indicators of impairment under IAS 36 Impairment of Assets; clarification on how IAS 37 Provisions, Contingent Liabilities and Contingent Assets should be applied in view of climate-related-risks and additional disclosures requirements.
The report also recommends that the work on the accounting treatment of pollutant-pricing (i.e., carbon-pricing) mechanisms should be prioritised.
The report may be accessed here.