ASTM E2718-21

Standard Guide for Financial Disclosures Attributed to Climate Change

SIGNIFICANCE AND USE
4.1 Uses—This guide is intended for use on a voluntary basis by a reporting entity that provides disclosure in its financial statements regarding financial impacts attributed to climate change. The degree and type of disclosure depends on the scope and objective of the financial statements. This guide is intended to apply to U.S. and international operations at the discretion of the reporting entity.8 The user should be aware that there may be contractual obligations, court decisions, or regulatory directives that may affect the flexibility in use of this guide. The user should also maintain an awareness of international regulations that may be relevant to disclosures, such as those of the International Accounting Standards Board and International Financial Reporting Standards.  
4.2 Principle:  
4.2.1 The following principles are an integral part of this guide and are intended to be referred to in resolving any ambiguity or dispute regarding the interpretation of financial disclosures regarding financial impacts attributed to climate change.  
4.2.1.1 Uncertainty Not Eliminated—Although a reporting entity, as of the time when its financial statements are prepared, may have evaluated the existence and extent of financial impacts attributed to climate change, there remains uncertainty with regard to the final resolution of scientific, technological, regulatory, legislative, and judicial matters, which could affect its financial impacts attributed to climate change. Where, as defined by the reporting entity, such uncertainties cannot be eliminated, the reporting entity shall provide its justification. In addition, the reporting entity shall provide estimates of the risks involved regarding uncertainties. Typically, this is accomplished through the development of reasonable scenarios or ranges to recognize and address uncertainties. While one or more climate change uncertainties may be unforeseeable for any reporting period, once recognized, subsequent reports will...
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 for climate change-related disclosures accompanying audited and unaudited financial statements. This guide encourages consistent and comprehensive disclosure of financial impacts attributed to climate change.  
1.2 Objective—The objective of this guide is to determine the conditions warranting disclosure and the content of appropriate disclosure.  
1.3 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.

General Information

• Status: Published
• Publication Date: 31-May-2021
• ICS: 03.060 - Finances. Banking. Monetary systems. Insurance
• 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: E2718 − 21
Standard Guide for
1
Financial Disclosures Attributed to Climate Change
This standard is issued under the fixed designation E2718; 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.
5
1. Scope 2.4 International Accounting Standards Board:
IAS 37, IFRS 13
1.1 Purpose—The purpose of this guide is to provide a
series of options or instructions consistent with good commer-
3. Terminology
cial and customary practice for climate change-related disclo-
3.1 Definitions:
sures accompanying audited and unaudited financial state-
3.1.1 asset impairment—formal devaluation of the book
ments. This guide encourages consistent and comprehensive
value of an asset, stated for example, in US generally account-
disclosure of financial impacts attributed to climate change.
ing principles in ASC 350, GASB 42.
1.2 Objective—The objective of this guide is to determine
3.1.2 climate change—any change in climate over time
the conditions warranting disclosure and the content of appro-
whether due to natural variability or as a result of human
priate disclosure.
6
activity. Intergovernmental Panel on Climate Change
1.3 This international standard was developed in accor-
3.1.3 constructive obligation, n—concept that past practice
dance with internationally recognized principles on standard-
creates a valid expectation on the part of a third party.
ization established in the Decision on Principles for the
Development of International Standards, Guides and Recom-
3.1.4 environmental liabilities, n—asset retirement
mendations issued by the World Trade Organization Technical obligations, accrued liabilities, commitments, contingencies,
Barriers to Trade (TBT) Committee.
and guarantees associated with any natural conditions or
man-made incidents, including terrorism, that pose an unac-
2. Referenced Documents
ceptablerisktohealth,safety,property,ortheenvironmentthat
2
would be the subject of an enforcement action or other legal
2.1 ASTM Standards:
action. (ASC 410, 440, 450, 460, GASB 49, IAS 37)
E2137 Guide for Estimating Monetary Costs and Liabilities
for Environmental Matters
3.1.5 financial impacts attributed to climate change
E2173 Guide for Disclosure of Environmental Liabilities
—material financial impacts on a company’s performance,
E2725 Guide for Basic Assessment and Management of
operations, assets, and liabilities attributed to climate change
Greenhouse Gases
effects, including but not limited to real or expected risks of
E3032 Guide for Climate Resiliency Planning and Strategy
physical damage to facilities, regulatory costs and incentives,
3
2.2 Financial Accounting Standards Board:
and shifts in the market for products and services (including
Accounting Standard Codification Topics 350, 410, 440, stranded assets).
450, 460, 820
3.1.5.1 Discussion—In this guide, the short form designa-
4
tions of ‘financial impact’ and ‘impact’ are also used to
2.3 Governmental Accounting Standards Board:
designate this specific concept.
Statements 42, 49, 72, 83
3.1.6 financial statement(s)—include, but are not limited to,
statements associated with shareholder reporting, periodic
1
ThisguideisunderthejurisdictionofASTMCommitteeE50onEnvironmental
reports, registration statements, loans, mergers, acquisitions, or
Assessment, Risk Management and CorrectiveAction and is the direct responsibil-
divestitures. Financial statements may include statements out-
ity of Subcommittee E50.05 on Environmental Risk Management.
Current edition approved June 1, 2021. Published August 2021. Originally
side of SEC filings.
approved in 2010. Last previous edition approved in 2016 as E2718–16. DOI:
3.1.7 greenhouse effect, n—thetrappingofthesun’swarmth
10.1520/E2718–21.
2
For referenced ASTM standards, visit the ASTM website, www.astm.org, or in a planet’s lower atmosphere, due to the greater transparency
contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM
of the atmosphere to visible radiation from the sun than to
Standards volume information, refer to the standard’s Document Summary page on
the ASTM website.
3
Available from Financial Accounting Standards Board (FASB) https://
5
www.fasb.org/ Available from International Accounting Standards Board, https://
4
Available from Governmental Accounting Standards Board (GASB) https:// www.ifrs.org/
6
www.gasb.org/ The Intergovernmental Panel on Climate Change (IPCC) https://www.ipcc.ch/
Copyright © ASTM International, 100
...

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: E2718 − 16 E2718 − 21
Standard Guide for
1
Financial Disclosures Attributed to Climate Change
This standard is issued under the fixed designation E2718; 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 for climate change-related disclosures accompanying audited and unaudited financial statements. This guide
encourages consistent and comprehensive disclosure of financial impacts attributed to climate change.
1.2 Objective—The objective of this guide is to determine the conditions warranting disclosure and the content of appropriate
disclosure.
1.3 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.
2. Referenced Documents
2
2.1 ASTM Standards:
E2137 Guide for Estimating Monetary Costs and Liabilities for Environmental Matters
E2173 Guide for Disclosure of Environmental Liabilities
E2725 Guide for Basic Assessment and Management of Greenhouse Gases
E3032 Guide for Climate Resiliency Planning and Strategy
3
2.2 Financial Accounting Standards Board:
Accounting Standard Codification Topics 350, 410, 440, 450, 460, 820
4
2.3 Governmental Accounting Standards Board:
Statements 42, 49, 72, 83
5
2.4 International Accounting Standards Board:
IAS 37, IFRS 13
3. Terminology
3.1 Definitions of Terms Specific to This Standard:Definitions:
3.1.1 asset impairment—formal devaluation of the book value of an asset, stated for example, in US generally accounting
principles in ASC 350, GASB 42.
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 Aug. 1, 2016June 1, 2021. Published September 2016August 2021. Originally approved in 2010. Last previous edition approved in 20102016
as E2718–10.–16. DOI: 10.1520/E2718–16.10.1520/E2718–21.
2
For referenced ASTM standards, visit the ASTM website, www.astm.org, or contact ASTM Customer Service at [e-mail]. For Annual Book of ASTM Standards
volume information, refer to the standard’s Document Summary page on the ASTM website.
3
Available from Financial Accounting Standards Board (FASB) https://www.fasb.org/
4
Available from Governmental Accounting Standards Board (GASB) https://www.gasb.org/
5
Available from International Accounting Standards Board, https://www.ifrs.org/
Copyright © ASTM International, 100 Barr Harbor Drive, PO Box C700, West Conshohocken, PA 19428-2959. United States
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E2718 − 21
3.1.2 climate change—any change in climate over time whether due to natural variability or as a result of human activity.
6
(Definition from the Intergovernmental Panel on Climate Change.) Intergovernmental Panel on Climate Change
3.1.3 constructive obligation, n—concept that past practice creates a valid expectation on the part of a third party.
3.1.4 environmental liabilities, n—asset retirement obligations, accrued liabilities, commitments, contingencies, and guarantees
associated with any natural conditions or man-made incidents, including terrorism, that pose an unacceptable risk to health, safety,
property, or the environment that would be the subject of an enforcement action or other legal action. (ASC 410, 440, 450, 460,
GASB 49, IAS 37)
3.1.5 financial impacts attributed to climate change —material financial impacts on a company’s performance, operations, assets,
and liabilities attributed to climate change effects, including but not limited to real or expected risks of physical damage to
facilities, regulatory costs and incentives, and shifts in the market for products and services (including stranded assets).
3.1.5.1 Discussion—
In this guide, the short form designations of ‘financial impact’ and ‘impact’ are also used to designate this specific concept.
3.1.6 financial statement(s)—include, but are not limited to, statements associated
...