ASTM E2173-22

Standard Guide for Disclosure of Environmental Liabilities

SIGNIFICANCE AND USE
4.1 Significance—This guide provides additional guidance to preparers of environmental disclosures; these materials are needed to address changing audience needs, the increased regulatory and accounting complexity around environmental matters, and the emergence of a variety of long-term trends and factors, including but not limited to:  
4.1.1 Number and scope of domestic, and foreign environmental laws and their implementing regulations;  
4.1.2 Number and scope of treaties, as well as the implementing laws and regulations; parties in these treaties include multilateral organizations and indigenous peoples;  
4.1.3 Judicial decisions clarifying the impact of laws, regulations, and treaties;  
4.1.4 Costs of compliance with environmental regulations;  
4.1.5 Number of known chemical compounds (see Chemical Abstracts Service REGISTRYSM, which contains over 193 million unique organic and inorganic substances);  
4.1.6 Cost and accuracy of soil, sediment, air, soil vapor, surface water and groundwater testing equipment and procedures;  
4.1.7 Knowledge about benefits and effects of chemical compounds on human health, ecological receptors, and the environment;  
4.1.8 Number and efficacy of remedial technologies;  
4.1.9 Experience with assessing and remediating environmental conditions;  
4.1.10 Assumptions regarding impacts of environmental conditions, through modeling and other forecasting tools;  
4.1.11 Number of environmental, social and governance (ESG) metrics and their pace of adoption;  
4.1.12 Frequency and financial impact of counterparty failure; and  
4.1.13 Development of comparable accounting standards by other authorities; and  
4.1.14 Investor interest in the impact of these trends and factors on their investments.  
4.2 Uses—This guide is intended for use on a voluntary basis by a reporting entity that provides financial and qualitative disclosure regarding environmental liabilities. Disclosure is integrated with preceding elements of f...
SCOPE
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and customary practice in the United States for environmental liability disclosures accompanying audited and unaudited financial statements. This guide is consistent with Generally Accepted Accounting Principles (GAAP)2 issued by Financial Accounting Standards Board (FASB), as well as related statements, rules, regulations, and/or procedures issued by Government Accounting Standards Board (GASB), Public Company Accounting Oversight Board (PCAOB), Securities and Exchange Commission (SEC), and Federal Accounting Standards Advisory Board (FASAB). This guide is intended to be consistent with national and multinational issuers of accounting standards and practices, including International Accounting Standards Board (IASB).  
1.2 Objectives—The objectives of this guide are to:  
1.2.1 Identify the common terminology used in environmental disclosures,  
1.2.2 Explain the need for environmental disclosures,  
1.2.3 Define the conditions warranting disclosure, and  
1.2.4 Illustrate the report formats and content typically used in environmental disclosures.  
1.3 History of development of this guide—In 1993-1994, a group of insurance companies approached ASTM to request a best practice environmental cost estimation and disclosure standard, as they were experiencing high environmental remediation and asbestos claims from policyholders that were reporting no material liabilities in their annual reports. At the same time, asbestos and environmental liabilities were triggering bankruptcy more frequently, again with little prior disclosure by companies other than boilerplate legal language that costs were too uncertain or not estimable, or that such costs would not be material. Research by the ASTM standard working committee at the time found such shortcomings as (a) rarely attempting to identify a full portfo...

General Information

• Status: Published
• Publication Date: 31-Dec-2021
• ICS: 13.020.10 - Environmental management
• Technical Committee: E50 - Environmental Assessment, Risk Management and Corrective Action
• Drafting Committee: E50.05 - Environmental Risk Management

Standards Content (Sample)

This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the
Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.
Designation: E2173 − 22
Standard Guide for
1
Disclosure of Environmental Liabilities
This standard is issued under the fixed designation E2173; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope working committee at the time found such shortcomings as (a)
rarely attempting to identify a full portfolio of potential
1.1 Purpose—The purpose of this guide is to provide a
liabilities, (b) dividing liabilities into separate sites or claims to
series of options or instructions consistent with good commer-
avoid aggregated material outcomes that would require
cial and customary practice in the United States for environ-
disclosure, and (c) relying on “known minimum costs” or “no
mental liability disclosures accompanying audited and unau-
estimate” to forecast liabilities. This disclosure standard
dited financial statements. This guide is consistent with
2 (E2173), initially developed over a seven-year period with its
Generally Accepted Accounting Principles (GAAP) issued by
first approval in 2001, was created to cure these shortcomings
Financial Accounting Standards Board (FASB), as well as
by providing guidance for best practice disclosure, including
related statements, rules, regulations, and/or procedures issued
aggregation of liabilities before conducting a materiality test,
by Government Accounting Standards Board (GASB), Public
as well as disclosure of the major assumptions and evaluations
Company Accounting Oversight Board (PCAOB), Securities
underlying the disclosure. The companion referenced cost
and Exchange Commission (SEC), and Federal Accounting
estimation standard (E2137, which was split into a separate
Standards Advisory Board (FASAB). This guide is intended to
standard due to its broader applicability beyond disclosure
be consistent with national and multinational issuers of ac-
purposes) provided guidance on a hierarchy of cost estimation
counting standards and practices, including International Ac-
methodologies that explicitly address uncertainty and recom-
counting Standards Board (IASB).
mend alternative methodologies. Both E2137 and E2173 have
1.2 Objectives—The objectives of this guide are to:
been revised over time to reference and incorporate applicable
1.2.1 Identify the common terminology used in environ-
elements of new accounting standards and regulations, con-
mental disclosures,
sider applicable case law, and incorporate new best-practice
1.2.2 Explain the need for environmental disclosures,
examples and years of additional experience with cost estima-
1.2.3 Define the conditions warranting disclosure, and
tion and disclosure.
1.2.4 Illustrate the report formats and content typically used
1.4 This international standard was developed in accor-
in environmental disclosures.
dance with internationally recognized principles on standard-
1.3 History of development of this guide—In 1993-1994, a
ization established in the Decision on Principles for the
group of insurance companies approached ASTM to request a
Development of International Standards, Guides and Recom-
best practice environmental cost estimation and disclosure
mendations issued by the World Trade Organization Technical
standard, as they were experiencing high environmental reme-
Barriers to Trade (TBT) Committee.
diation and asbestos claims from policyholders that were
reporting no material liabilities in their annual reports. At the 2. Referenced Documents
3
same time, asbestos and environmental liabilities were trigger-
2.1 ASTM Standards:
ing bankruptcy more frequently, again with little prior disclo-
E1527 Practice for Environmental SiteAssessments: Phase I
sure by companies other than boilerplate legal language that
Environmental Site Assessment Process
costs were too uncertain or not estimable, or that such costs
E2091 Guide for Use of Activity and Use Limitations,
would not be material. Research by the ASTM standard
Including Institutional and Engineering Controls
E2137 Guide for Estimating Monetary Costs and Liabilities
for Environmental Matters
1
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
E2718 GuideforFinancialDisclosuresAttributedtoClimate
Assessment, Risk Management and CorrectiveAction and is the direct responsibil-
Change
ity of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved Jan. 1, 2022. Published April 2022. Originally
approved in 2001. Last previous edition approved in 2016 as E2173 – 16. DO
...

This document is not an ASTM standard and is intended only to provide the user of an ASTM standard an indication of what changes have been made to the previous version. Because
it may not be technically possible to adequately depict all changes accurately, ASTM recommends that users consult prior editions as appropriate. In all cases only the current version
of the standard as published by ASTM is to be considered the official document.
Designation: E2173 − 16 E2173 − 22
Standard Guide for
1
Disclosure of Environmental Liabilities
This standard is issued under the fixed designation E2173; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (´) indicates an editorial change since the last revision or reapproval.
1. Scope
1.1 Purpose—The purpose of this guide is to provide a series of options or instructions consistent with good commercial and
customary practice in the United States for environmental liability disclosures accompanying audited and unaudited financial
2
statements. This guide is consistent with Generally Accepted Accounting Principles (GAAP) issued by Financial Accounting
Standards Board (FASB), as well as related statements, rules, regulations, and/or procedures issued by Government Accounting
Standards Board (GASB), Public Company Accounting Oversight Board (PCAOB), Securities and Exchange Commission (SEC),
and Federal Accounting Standards Advisory Board (FASAB). This guide is intended to be consistent with other national and
multinational issuers of accounting standards and practices, including International Accounting Standards Board (IASB).
1.2 Objectives—The objectives of this guide are to determine the conditions warranting disclosure and the content of appropriate
disclosure.to:
1.2.1 Identify the common terminology used in environmental disclosures,
1.2.2 Explain the need for environmental disclosures,
1.2.3 Define the conditions warranting disclosure, and
1.2.4 Illustrate the report formats and content typically used in environmental disclosures.
1.3 History of development of this guide—In 1993-1994, a group of insurance companies approached ASTM to request a best
practice environmental cost estimation and disclosure standard, as they were experiencing high environmental remediation and
asbestos claims from policyholders that were reporting no material liabilities in their annual reports. At the same time, asbestos
and environmental liabilities were triggering bankruptcy more frequently, again with little prior disclosure by companies other than
boilerplate legal language that costs were too uncertain or not estimable, or that such costs would not be material. Research by the
ASTM standard working committee at the time found such shortcomings as (a) rarely attempting to identify a full portfolio of
potential liabilities, (b) dividing liabilities into separate sites or claims to avoid aggregated material outcomes that would require
disclosure, and (c) relying on “known minimum costs” or “no estimate” to forecast liabilities. This disclosure standard (E2173),
initially developed over a seven-year period with its first approval in 2001, was created to cure these shortcomings by providing
guidance for best practice disclosure, including aggregation of liabilities before conducting a materiality test, as well as disclosure
of the major assumptions and evaluations underlying the disclosure. The companion referenced cost estimation standard (E2137,
which was split into a separate standard due to its broader applicability beyond disclosure purposes) provided guidance on a
1
This guide is under the jurisdiction of ASTM Committee E50 on Environmental Assessment, Risk Management and Corrective Action and is the direct responsibility
of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved Oct. 1, 2016Jan. 1, 2022. Published November 2016April 2022. Originally approved in 2001. Last previous edition approved in 20112016 as
E2173 – 07E2173 – 16.(2011). DOI: 10.1520/E2173-16.10.1520/E2173-22.
2
This guide alone does not satisfy or include all disclosure requirements under GAAP, SEC, IASB, or any other agency or regulatory body. Appendix X1 provides some
examples of where such requirements are contained.
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
1

---------------------- Page: 1 ----------------------
E2173 − 22
hierarchy of cost estimation methodologies that explicitly address uncertainty and recommend alternative methodologies. Both
E2137 and E2173 have been revised over time to reference and incorporate applicable elements of new accounting standards and
regulations, consider applicable case law, and incorporate new best-practice examples and years of additional experience with cost
estimation and disclosure.
1.4 This intern
...