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December 6, 2022

IASB should look at carbon markets, says study

Imperial College Business School has published a report on how to evaluate carbon market products in financial accounting. It aims at filling the regulatory gaps deriving from “the widespread lack of understanding about carbon offsets as new financial instruments and investable assets” and laments that despite the standard-setter IFRS Foundation’s work on sustainability disclosures, these efforts have not yet included financial accounting.

Earlier this year, however, the chair of the IFRS’s International Sustainability Standards Board, Emmanuel Faber, told Sustainable Views that because of the ISSB’s work, “the language of sustainability will be connected with that of financial reporting.” Imperial College is suggesting a different route.

Presenting the report, the business school calls on the International Accounting Standards Board, also part of the IFRS Foundation, to take the lead to tackle transparency in global carbon markets. It adds that “the IASB, as the accounting standard-setting board of the IFRS Foundation, should retake the ‘Emissions Trading Schemes Project’ [which the IFRS closed a decade ago] and provide clear and consistent guidance on its carbon markets accounting rules.” It’s a fascinating subject.

Read the report


A service from the Financial Times