25 October 2023
ESMA32-1283113657-1041
Report
The Heat is On: Disclosures of Climate-Related Matters in the Financial
Statements
Photo: Eduardo Damasio
1
Table of Contents
Table of Extracts from 2022 Annual Financial Reports
Executive Summary .............................................................................................................. 2
1 Background .................................................................................................................... 4
2 Objectives ...................................................................................................................... 5
3 Scope and Methodology ................................................................................................. 6
4 Selected Topics .............................................................................................................. 8
4.1 Significant judgements, major sources of estimation uncertainty and accounting policies ..... 8
4.2 Impairment of non-financial assets ........................................................................................ 18
4.3 Useful lives of tangible and intangible assets ........................................................................ 27
4.4 Provisions .............................................................................................................................. 30
4.5 Other Accounting Topics ....................................................................................................... 34
5 Conclusion ....................................................................................................................38
Annex I: List of Selected Issuers ..........................................................................................39
Section
Example
Page
Themes
Significant
judgements,
major sources
of estimation
uncertainty and
accounting
policies
9
CO
2
emissions, Research & Development
(R&D)
10
Sensitivity analysis, Provisions
11
Impairment test, Useful lives of intangible
assets, Provisions
13
CO
2
emissions, Sensitivity analysis
14
CO
2
emissions, Provisions
16
CO
2
emissions
Impairment of
non-financial
assets
19
Impairment test, CO
2
emissions
20
Impairment test, Sensitivity analysis
21
Impairment test
21
CO
2
emissions, Sensitivity analysis
22
CO
2
emissions, Sensitivity analysis
23
CO
2
emissions, R&D, Sensitivity analysis
24
Impairment test
25
Impairment losses
Useful lives of
tangible and
intangible
assets
28
Useful lives intangibles, R&D
28
Regulated activities
29
Useful lives of tangible assets
Provisions
31
GHG emission rights, renewable and energy
savings certificates
32
Provisions for mining damage
32
CO
2
emissions
Other
accounting
topics
35
Share-based payments
36
Segments
2
Executive Summary
In 2022, ESMA communicated its strategic priorities for the 2023-2028 period. Amongst these priorities,
ESMA announced its commitment to enable sustainable finance by promoting high quality sustainability
disclosures. While financial reporting was not explicitly referred to in the areas where immediate action was
required, ESMA and European national enforcers (enforcers) have identified climate-related matters as a
European common enforcement priority (ECEP) for the last three years.
As this is a nascent area, ESMA understands that assessing how climate-related matters impact financial
reporting can be a challenge for issuers, auditors and users, particularly when such impacts are indirect or
relate to sectors which do not appear to be immediately exposed. Althou
gh ESMA considers that
International Financial Reporting Standards (IFRS) are fit for purpose and provide sufficient
basis for
issuers to account for and to disclose climate-related matters in financial statements, real life illustrations
of disclosures may assist issuers to better communicate such impacts and investors and other stakeholders
to better understand them and take them into account when making informed decisions.
This report aims to assist and to enhance
the ability of issuers to provide more robust disclosures and
create more consistency in how climate-related matters are accounted for in financial statements drawn up
in accordance with IFRS. The report focuses on disclosures related to climate matters included in the 2022
annual financial statements of European non-financial corporate issuers. However, ESMA points out that
the report does not set out best practices or prescribe the way in which the disclosure of climate-related
matters should be made in the financial statements.
The first three sections outline the background, objectives as well as scope and methodology of this report.
The report focuses on topics for which it is likely that climate-related matters have a higher impact. The
examples of disclosures included in the report provide practical illustrations on how climate-related matters
may be presented in IFRS financial statements. In doing so, ESMA highlights, in each example, key
aspects and provides insights that
explain why such disclosures may be useful to users of financial
statements. Finally, each section includes ESMA’s observations on areas of continued focus.
Finally, ESMA highlights that
this report does not address disclosures prepared in accordance with
sustainability reporting requirements (notably, their compliance, understandability, relevance, verifiability,
comparability, and faithful representation) and to which extent the actions taken or planned by the selected
issuers are sufficient to tackle climate change or lead issuers towards a sustainable path.
Next Steps
ESMA expects issuers (including their management, supervisory boards and audit committees) and
auditors to consider the illustrative examples of this report when considering
how to assess and disclose
the degree to which climate-related matters play a role into the preparation and auditing of IFRS financial
statements. Particularly, ESMA encourages issuers to consider the observations in the areas for continued
focus that accompany the disclosure excerpts presented in this report, and not to concentrate excessively
on the facts and circumstances presented by the examples (which are highly specific to the entities).
Finally, ESMA stresses that the
guidance addressing climate impacts is not exhaustive and is developing
at a fast pace. Issuers should closely follow the developments of standard setters in this area, and their
connection with sustainability reporting.
3
List of Acronyms
AFR
Annual Financial Report, comprising the audited financial statements, the management
report (including the non-financial information statement) and management’s
responsibility statement
CGU
Cash Generating Unit
CO
2
Carbon Dioxide
ECEP
European Common Enforcement Priorities
EEA
European Economic Area
EFRAG
European Financial Reporting Advisory Group
ESEF
European Single Electronic Format
ESMA
European Securities and Market Authority
Enforcers
National Enforcers in the European Economic Area
ESRS
European Sustainability Reporting Standards
EU ETS
European Union Emissions Trading Scheme
IAS
International Accounting Standards
IASB
International Accounting Standards Board
ISSB
International Sustainability Standards Board
IFRS
International Financial Reporting Standards
IFRS IC
International Financial Reporting Standards Interpretations Committee
Issuer
Legal entity whose securities are admitted to trading on EEA regulated markets
NCA
National Competent Authority
OAM
Official Appointed Mechanism
P&L
Statement of Profit or Loss
R&D
Research & Development
ViU
Value-in-Use
Disclaimer
This report has been compiled by ESMA in joint work with enforcers. The descriptions and disclosure extracts in this report
do not constitute guidelines, best practices, or illustrations of a single approach on how to disclose the impact of climate-
related matters in an issuer’s IFRS financial statements. The report presents disclosure examples solely based on the
extent to which the examples or parts thereof could be considered informative, understandable, and entity specific. Issuers
are ultimately responsible for compliance with IFRS principles.
Given that, in most cases, ESMA and enforcers did not carry out an examination of the information included in the
examples, these examples should not be taken as an indication of the compliance of the underlying information with IFRS.
ESMA and enforcers neither provide a view nor do they endorse how the issuers from whom disclosure extracts have been
included in the present report have applied IFRS standards in the financial statements with regards to recognition,
measurement, and presentation requirements.
Finally, the report does not assess whether the roadmap or the actions that issuers plan to undertake are sufficient to
achieve their own climate-related targets, commitments or any other regulatory requirements set out at national, European
or international level. In this report, ESMA and enforcers do not make any assessment as to whether the issuer’s actions,
operations or activities should be labelled as sustainable or are sufficient to move towards a sustainable path.
NOTE: The extracts of the disclosures included in this report were drawn from the English-language PDF versions of the
2022 annual financial reports (AFR) publicly available on the issuers’ website, which are variants of the official versions
compliant with the ESEF Regulation – European Single Electronic Format (ESEF). Also note that, in multiple instances,
this English-language version of the AFR is a translation from the original language of the issuer’s AFR. In the event of any
discrepancy, the original language version prevails.
4
1 Background
1. The pervasive nature of climate change has sprouted increasing concerns from investors
about the economic ramifications on issuers’ prospects. Issuers are urged by investors,
governments and the public in general to assess climate-related matters that they are facing
and to reflect such impacts in the financial statements. While climate is not explicitly referred
to in IFRS, issuers must consider climate risks and opportunities when applying IFRS
standards. To this effect, the International Accounting Standards Board (IASB) recently re-
published an educational material: Effects of climate-related matters on financial statements
1
,
which highlights potential impacts and required disclosures to be provided in financial
statements to reflect the effects of climate related matters.
2. Disclosures of climate-related matters in financial statements have been an area of focus for
ESMA and enforcers. In the last three years, ESMA and enforcers have identified climate-
related matters as an ECEP, both in relation to financial and non-financial information
2
.
Issuers, auditors and audit committees have been asked to pay particular attention to the
topic and to ensure transparency on how climate-related matters affect an issuer’s
performance, financial position and cash flows.
3. At the end of March 2023, ESMA published its annual report on Corporate reporting
enforcement and regulatory activities
3
. Results of the 2021 ECEP showed that there is
significant room for improvement in relation to disclosures of climate-related matters in IFRS
financial statements. More recently, ESMA published a progress report on greenwashing
4
. In
light of these publications, ESMA urges issuers to continue enhancing the information that
they disclose to enable investors to make informed decisions, to prevent greenwashing and
to contribute to investor protection.
4. This report, building on the IASB’s educational material and ESMA’s ECEP statements, aims
to offer a practical and real-life illustration of how selected European non-financial corporate
issuers have reflected the effects of climate-related matters into their 2022 annual financial
statements. ESMA urges issuers to consider the examples of this report and the insights
provided by ESMA when preparing and auditing the 2023 annual financial statements.
5. Finally, ESMA notes that, as climate-related matters evolve over time, other areas not
addressed in this report or in the ECEP may become relevant. Similarly, climate-related
impacts, which in the past were considered immaterial, may become material or more acute.
It is, therefore, paramount that all relevant stakeholders (especially issuers) continue to
closely monitor the developments arising from climate-related matters
5
and to assess if, how
and with what intensity such developments affect their activities, operations and,
consequently, their financial reporting.
1
IASB Educational Document, Effects of climate-related matters on financial statements, July 2023. (republished).
2
ESMA32-63-1186, European common enforcement priorities for 2021 annual financial reports, 29 October 2021.
ESMA32-63-1320, European common enforcement priorities for 2022 annual financial reports, 28 October 2022.
ESMA32-63-193237008-1793, European common enforcement priorities for 2023 annual financial reports, 25 October 2023.
3
ESMA32-63-1385, 2022 Corporate Reporting Enforcement and Regulatory Activities Report, 29 March 2023
4
ESMA30-1668416927-2498, Progress Report on Greenwashing, 31 May 2023
5
The IASB has announced that it will explore ways to improve reporting of climate-related and other uncertainties in the financial
statements, such as developing educational materials, illustrative examples and targeted amendments to IFRS, please see here.
5
2 Objectives
6. The report identifies and highlights practical examples from selected issuers’ 2022 AFRs,
pertaining to disclosures of climate-related matters in financial statements, to illustrate
aspects of past recommendations and requirements published by ESMA, enforcers and the
IASB. The report aims to contribute to issuers’ developments of how to disclose climate-
related matters into IFRS financial statements, and by doing so, generally improve the quality
of their financial reporting. Although the report draws from other areas of the AFR when
illustrating connectivity (see also Scope and Methodology
), it does not focus on disclosures
in the sustainability report or the management report. In this respect, ESMA believes that the
financial statements should stand on their own: users of the financial statements should not
need to consult the non-financial information included elsewhere in the AFR to understand
the current financial impacts of climate-related matters.
7. Figure 1 provides a brief snapshot of what the report is aiming to achieve, and what it is not:
F
IGURE 1 – MAIN OBJECTIVES OF THE REPORT
8. The report aims to demonstrate potential (but not the only) ways to disclose climate-related
matters in the financial statements. Issuers should adapt their disclosures to their own
specificities, business models, activities, and characteristics. When doing so, issuers should
consider the notion of materiality included in IFRS and further illustrated by the IASB in its
IFRS Practice Statement 2 Making Materiality Judgements published in 2017
6
. This non-
mandatory guidance includes an overview of the general characteristics of materiality,
presents a four-step materiality assessment process and provides helpful guidance on how
to make materiality judgements in specific circumstances.
6
IASB, IFRS Practice Statement 2 Making Materiality Judgements, September 2017.
What the Report Is...
an educational illustration using selected
European disclosures examples related
to climate-related matters in IFRS financial
statements
a non-exhaustive reflection of IFRS requirements
that can be relevant for climate-related matters
a collection of examples of climate-related
disclosures demonstrating certain ECEP
recommendations
Enforcers' views on how issuers may provide
more relevant and transparent information
to the market in relation to climate-related matters
in IFRS financial statements
What the Report Is Not...
a 'template' to use for disclosures or 'checklist'
of areas to look into
an assessment of the quality of financial reporting,
notably, measurement, recognition and
presentation of the selected examples
a rating of 'best in class' to any of the selected
issuers or providing a quality stamp
regarding the financial statements as a whole
an exhaustive sample coverage -i.e.,
it cannot be extrapolated to any given European
issuer population (country, sector, industry)
a view on issuers' ability to comply with disclosed
climate-related targets, commitments or to any
climate-related requirements
an assessment of the quality, completeness
or relevance of issuers' sustainability disclosures
6
9. Nevertheless, ESMA emphasises that, in accordance with paragraph 7 of IAS 1 Presentation
of Financial Statements, information is considered material if omitting, misstating, or
obscuring it could reasonably influence decisions that the primary users of financial
statements make based on those financial statements. This implies that issuers, when
assessing materiality, should consider what primary users of financial statements consider
relevant for their decision-making process, which should comprise quantitative and
qualitative considerations.
3 Scope and Methodology
10. This report addresses the following key topics:
F
IGURE 2 – SELECTED TOPICS
11. The report focuses on areas where the implications of climate-related matters are expected
to be the most material for the preparation of financial statements. However, the list is not
intended to be exhaustive. Issuers should assess if climate-related matters affect other areas
or topics when preparing their financial statements.
12. The following figure summarises the main principles used by ESMA and enforcers to select
disclosure excerpts from issuers’ financial statements for the purposes of this report.
F
IGURE 3 – HIGH-LEVEL PRINCIPLES USED FOR SELECTING DISCLOSURE EXTRACTS
The disclosure appears to be tailored to the issuer’s
specificities
Relevant information is put forward in a clear
and simple manner that is easy to follow
The information is organised in clear paragraphs
and appears to be presented in a suitable format
(narrative, tabular, etc.)
Assumptions and impacts are quantified to allow
investors to understand their effect
The information seems to be consistent across the
different areas of the financial statements without
compromising usefulness, yet avoiding repetition
7
The concept of connectivity
13. The concept of connectivity, as it relates to information included in financial statements and
non-financial reporting, is currently a topic of research and discussion across several
standard setters, most notably the IASB, the International Sustainability Standards Board
7
Note that the IFRS only allow cross-references to other sections of the AFR, including the management report, in the context of
IFRS 7 Financial Instruments Disclosures. Cross-references to other sections of the AFR can be used to avoid repetition or to link
to other information disclosed outside financial statements but they cannot be used for compliance purposes.
Significant judgements, major
sources of estimation uncertainty &
accounting policies
Impairment of non-financial assets
Useful lives of tangible and
intangible assets
Provisions Other accounting topics
Entity-specific
Simple and clear
Organised and well-formatted
Quantifications
Consistency within the financial
statements
7
(ISSB) and European Financial Reporting Advisory Group (EFRAG)
8
.
This ongoing work is
expected to set out a definition of connectivity and articulate criteria for ensuring
transparency, coherence and decision-usefulness of information across AFRs.
14. In the absence of a formal framework to assess connectivity and in order to identify examples
related to connectivity, ESMA and enforcers assessed the disclosures across issuers’ AFRs
against the following principles underpinning connectivity between financial statements and
non-financial information:
F
IGURE 4 – HIGH-LEVEL PRINCIPLES USED TO IDENTIFY CONNECTIVITY
9
Sample selection
15. The report includes disclosure extracts from the 2022 AFRs of non-financial corporate issuers
selected from nine sectors across nine EU/EEA countries. The report does not address
financial institutions. The nine industries or sectors were selected based on several criteria,
including but not limited to, the expected exposure to climate-related matters. However, other
industries, sectors or activities may be equally exposed to climate-related matters. Therefore,
ESMA urges issuers to assess their exposure to climate-related matters and adapt the
messages of this report to the specificities of their industries, sectors and activities.
16. Figure 5 below outlines the sectors of the issuers that were selected for the purpose of this
report (see also Annex I
):
FIGURE 5 – SECTORS OF SELECTED SAMPLE
17. Finally, the availability of an entity-issued version of the 2022 AFR in the English language
was a prerequisite
10
in the sample selection.
8
IASB and ISSB, Connectivity―what is it and what does it deliver?, 23 March 2023 and EFRAG, Connectivity between Financial
and Sustainability Reporting Information: Suggested scope and approach of EFRAG Research project, 8 February 2023
9
See also footnote 7
10
In multiple instances, the English-language version of the AFR is the issuer’s translation from the original language of the AFR.
In the event of any discrepancy, the original language version prevails.
Electricity Automotives Industrial
Transporta-
tion
Industrial
Metals &
Mining
Gas, Water
& Multi-
utilities
Oil, Gas
and Coal
Chemicals Construc-
tion &
Materials
Telecom-
munica-
tions
Is the information specific and useful
to the understanding of
the
financial statements or is it mere
ly
repeating the contents of the non-
financial section of the AFR?
Are there links within
and across the different components
of the AFR?
Is there complementarity between the
information included in the non-
financial section of the AFR and the
financial statements?
Do assumptions appear consistent
within and across the different
components of the AFR?
Consistency
&
Coherence
Complemen
tarity
Avoidance
of repetition
Cross-
referencing
8
4 Selected Topics
18. Each section starts with a snapshot of the relevant areas impacted by climate-related matters
and the applicable accounting requirements which ESMA’s study focused on, followed by
illustrations of related current disclosures.
19. The examples should be read together with the key areas for continued focus. These highlight
potential next steps for improvement, which may go beyond specific IFRS requirements
11
.
Such points stem from the review of a larger sample of extracts of 2022 AFRs (not exclusively
based on the examples included in this report) and the examinations carried out in the last
years by enforcers. Issuers, including those selected for this report, should consider the
examples as well as these points to further improve the quality and transparency of the
disclosures provided.
4.1 Significant judgements, major sources of estimation uncertainty
and accounting policies
4.1.1 Accounting requirements to consider
IAS 1 – Presentation of Financial Statements
Paragraphs 17c), 25-26, 31, 112, 122-124, 125-133
Climate-related matters may be relevant for multiple areas of an issuer’s financial
statements (especially for entities operating in the most impacted sectors). Such matters
may weigh in on an issuer’s significant judgements and major sources of estimation
uncertainty, as well as on uncertainty regarding going concern. IAS 1 outlines the
disclosure requirements behind such significant judgements and major sources of
estimation uncertainty.
Judgements and accounting policies
Issuers are required to disclose information about the significant judgements (apart from
those involving estimations) that an issuer’s management has made in the process of
selecting and applying accounting policies and that have the most significant effect on the
amounts recognised in the financial statements. Where issuers make significant climate-
related judgements, issuers should consider disclosing the impact of the climate matters.
Estimates and assumptions
IAS 1 requires disclosure of information about assumptions and other major sources of
estimation uncertainty at the end of the reporting period that have a significant risk of
resulting in a material adjustment to the carrying amounts of assets and liabilities within the
11
Notwithstanding the proscribed in paragraphs 31 and 112(c) of IAS 1 Presentation of Financial Statements.
9
next financial year. When climate risks may lead to a significant material adjustment,
issuers should consider providing additional disclosures about key assumptions to enable
users to assess the impact of such climate risks on the issuer’s financial position, financial
performance and cash flows.
Particularly, issuers are required to provide disclosures regarding major sources of
estimation uncertainty (for example, in sensitivity analyses), which explain how the issuer
has incorporated the uncertainties in the estimates supporting the financial statements and
the sensitivities disclosed.
Finally, issuers are reminded that IAS 1 also require them
to disclose information not
specifically required by IFRS standards and not presented elsewhere
in the financial
statements, when such information
is relevant to an understanding of the impacts of
particular transactions, other events and conditions, or of the financial statements.
4.1.2 From principles to practice: relevant examples from selected issuers
20. The following extracts illustrate some potential ways to disclose information regarding the
climate-related assumptions and significant judgements made which may result in a material
adjustment in either the short or long term.
21. Traton SE, an automotive company, disclosed the effects of climate change and transition to
electric mobility in its 2022 annual financial statements, allocating a separate sub-section to
the topic in the discussion of estimates and management’s significant judgements.
EXAMPLE 1 – TRATON SE
Pages 151-152
6. Estimates and management’s judgment
(…)
Business performance
(…)
Additionally, an expansion in electric mobility is also projected in all segments in the
five-
year planning (see also the “Effects of climate change” section). The cornerstone
for the electrification of the commercial vehicle industry in Europe was laid in 2022 with
the establishment of the Milence joint venture. The purpose of the joint venture, which the
TRATON GROUP established together with Daimler Truck and the Volvo Group, is the
development of a charging infrastructure for heavy-duty trucks and coaches. The planning for
MAN Truck &
Bus also includes the positive impact of the realignment program initiated in
2021. Another goal is to guide Navistar to new strength. The measures for doing this range
from using the powerful component and technology setup within the TRATON GROUP and
expanding the Financial Services business, all the way to further leveraging one of largest
independent dealer and service network in the North American market, to which Navistar
already has access. The fact that Volkswagen Truck & Bus is becoming more international was
also factored into the planning.
Overall, these assumptions led to an expected
improvement in the growth rates in the core markets and in operating return on sales
(adjusted) up to 2027 across all cash-generating units to which goodwill is allocated.
Effects of climate change
(…)
In the course of preparing the consolidated financial statements, in particular for the five-
year planning and hence the derivation of future cash flows for impairment testing, the
potential impact of future regulatory requirements, in particular of the associated
transition to electric mobility, was taken into account
. In Europe, for example, the
European Union has mandated a reduction in CO2 emissions for new heavy-duty commercial
ESMA emphasis added in Orange
Disclosure of information
regarding business performance
and the transition to electric
mobility; includes the qualitative
impacts that transition plans are
expected to have on the issuer’s
activity.
10
vehicles over 16t within the current decade in Regulation (EU) 2019/1242. Using a
standardized procedure, the CO2 emissions of the vehicles in question must be cut by
15% by 2025 and 30% by 2030, compared with a reference value from an observation
period running from July 2019 to June 2020. If these emissions targets are not met, it is
possible that penalties will be imposed. Additionally, China has also set targets for reducing
truck CO2 emissions, and Brazil has submitted proposals to reduce the fuel consumption of
heavy-
duty commercial vehicles. The TRATON GROUP is also exposed to a possible further
tightening of CO2 and oxides of nitrogen (NOx) emissions regulations in the USA. The
TRATON GROUP is preparing the electrification of
its product portfolio to reflect the
regulatory timetables for its brands. Our aim is for zero-emission vehicles to make up
around half of all sales across all segments and regions in 2030 — provided the necessary
regulatory mechanisms and infrastructure are in place.
It is technically challenging and expensive to adapt commercial vehicles to new emissions
standards. To meet European Union and North American targets, it is imperative to use new
technologies that reduce CO2 and exhaust emissions. TRATON is therefore investing to a
substantial extent in climate-
friendly alternative drive systems, primarily battery electric
commercial vehicles. The research and development expenses associated with the
technology shift toward electric mobility total €2.6 billion for the period 2021 to 2026. In
turn, TRATON is scaling back its investments in traditional drives to less than one-fifth of
product development costs in 2026.
No impact on the useful lives of capitalized
development costs or items of property, plant, and equipment was identified in light of
the observation period of regulatory requirements and because of the parallel
production of battery electric vehicles and vehicles with combustion engines in the next
few years. Liabilities resulting from em
ission limits being exceeded do not currently
play any role
. However, the increased development activity in the field of electric mobility
resulted in a corresponding increase in recognized (intangible assets) and nonrecognized (cost
of sales) development costs.
22. Naturgy Energy Group SA, a multi-utilities company, included a summary of climate-related
objectives incorporated into the issuer’s strategic plan and presented a rather structured set
of disclosures of the main estimates and accounting judgements made in relation to such
climate-related objectives as well as risks, by asset group.
EXAMPLE 2 – NATURGY ENERGY GROUP SA
Pages 39-42
k. Climate change and the Paris Agreement
(…)
The main estimates and accounting judgements
made by Naturgy's management and
directors when preparing the 2022 consolidated annual accounts related to the expected
effects of climate change and the energy transition are described below.
1. Recoverability of non-financial assets
As described in Note 2.4.6., the cash flow projections used in the non-financial asset
impairment tests are based on the best available forward-looking information and reflect the
investment plans in place in each CGU at the time for maintaining the CGUs' operating
capacity
. These projections are in line with Naturgy's strategy that takes into consideration the
objectives of the Paris Agreement and have therefore been prepared based on the range of
economic conditions that might exist in the foreseeable future in relation to climate
change and the energy transition. The projections have taken into account the expected
impact on wholesale and retail electricity market prices resulting from the entry into
operation of new renewable generation facilities and de
velopments in gas, oil and
emission allowance prices, as well as expected demand.
(…)
2. Group's main assets subject to climate change and energy transition risk:
Coal-fired power plants
As mentioned above, in 2022 and 2021 the Group has not generated any coal-fired
electricity due to the closure in the first half of 2020 of all Naturgy's coal-fired power
plants. These facilities are fully depreciated/provisioned at 31 December 2022. Their
decommissioning commenced following the closure and is expected to be completed by
the end of the first quarter of 2025.
Combined cycle gas power plants
Disclosure of challenges faced
(such as potential non-
compliance with commitments)
and issuer’s actions to overcome
such challenges by investing in
R&D (quantification of R&D costs
until 2026 to shift to electric
vehicles).
Disclosure includes judgements
and estimations used by the
management that are more
sensitive to climate risks, such as
future cash flows (reflecting
transition to e-mobility) and
reduction of carbon dioxide (CO
2
)
emissions.
ESMA emphasis added in Orange
Reference to the alignment of
cash flow projections with the
issuer’s strategy, including the
expected impact on electricity
prices of renewables.
11
In Spain, it is important to bear in mind that the operation of these plants is included in the
Integrated National Energy and Climate Plan (PNIEC), aligned with the European objective of
achieving climate neutrality by 2050 […] At 31 December 2022, the carrying value of these
fixed assets is Euros 1,942 million, of which Euros 994 million relates to combined cycle
plants
in Spain. The carrying value of the total combined cycle generation facilities in Spain is
estimated for 2030, 2040 and 2050 at Euros 522 million, Euros 219 million and zero,
respectively. The carrying value, excluding goodwill, of the combined cycle plants in Mexico is
estimated for 2030, 2040 and 2050 at Euros 613 million, Euros 289 million and zero,
respectively. The use of external proj
ections based on lower energy prices compared
with the assumptions used by Naturgy and indicated in Note 4 could have an impact on
the recoverability of the carrying value of these assets recognised in the balance sheet
at 31 December 2022. See the sensitivity analysis in Note 4 below.
Hydroelectric power plants
(…)
Renewable energy assets
At 31 December 2022,
the carrying value of these fixed assets is Euros 4,999 million, of
which Euros 4,141 million relates to assets in Spain. The main
perceived risk is the
potential negative future evolution of solar and wind resources, which are the key
variables in the performance of this line of business. There may also be reductions in the
remuneration arrangements for renewable energies and lower prices
in marginal
wholesale markets due to an increase in renewable production with reduced variable costs. In
the impairment tests for 2022, no changes in the remuneration arrangements yet to be
approved have been considered and the forecasts for solar and wind resources have
been taken into account.
Electricity and gas transportation and distribution assets
(…)
Supply
(…)
The Group considers that the opportunities arising from the decarbonisation of the global
economy (growth in renewables, investment in smart integrating grids, transport electrification,
green hydrogen, etc.) outweigh the risks.
23. With the aim of facilitating investor’s access to information regarding material climate-related
matters in financial statements, ESMA has also encouraged issuers to provide all information
related to climate matters in one single note or to map out where the different notes address
such matters. In one table, electricity company Enel S.p.A. summarises and references
information that was included across the annual financial statements and which covers areas
that are impacted or may be impacted by climate-related matters in the future.
EXAMPLE 3 – ENEL SPA
Pages 298; 326
2.1 Use of estimates and management judgment
(…)
With regard to the effects of climate change issues, the Group believes that climate change
represents an implicit element in the application of the methodologies and models
used to perform estimates in the valuation and/or measurement of certain accounting
items.
Furthermore, the Group has also taken account of the impact of climate change in the
significant judgments made by management. In this regar
d, the main items included in
the consolidated financial statements at December 31, 2022 affected by management’s use
of estimates and judgments refer to the impairment of non-financial assets and obligations
connected with the energy transition, including those for decommissioning and site
restoration of certain generation plants.
For further details on these items, see note 19
“Property, plant and equipment”, note 24 “Goodwill”, and note 40 “Provisions for risks
and charges”.
(…)
5. Climate change disclosures
(…)
Disclosure of the issuer’s
exposure to climate change and
energy transition risks, key
assumptions and sensitivity
analysis for each main asset
group.
ESMA emphasis added in Orange
Short summary mentioning how
climate change impacts the issuer’s
financial information.
12
Considering the risks related to climate change and the commitments established under the
Paris Agreement, the Group has decided to achieve the carbon neutrality objectives in
advance and reflect its impact on assets, liabilities, and profit or loss, highl
ighting its
significant and foreseeable impacts as required under the Conceptual Framework of the
international accounting standards. In this regard, in accordance with the provisions of the
document published by the IFRS Foundation on November 20, 2020, the Group provides
explicit information in the notes to these consolidated financial statements regarding
how climate change is reflected in our accounts.
(…)
Mapping of different notes
addressing climate change matters.
13
4.1.3 Adding perspective: Connectivity across the AFR in relation to
significant judgements, major sources of estimation uncertainty and/or
accounting policies
24. Air Liquide SA, a chemicals company, disclosed its commitments and strategy put in place in
relation to climate objectives in its non-financial statement of its 2022 AFR. Where those
commitments and strategy had or were expected to have in impact on financial information,
Air Liquide included such information inside its financial statements.
EXAMPLE 4 – AIR LIQUIDE SA
Pages 40; 310-311
Financial Statements
Non-financial Information
31.4 Transition Risk – Greenhouse Gas Emissions
(…)
Air Liquide’s actions to limit transition risk impacts include:
Scope 2 reduction:
- Related to the 424 large air gas production units or ASUs, (scope
2 emissions) mainly by using renewable electricity: the deployment of
the Group’s actions in the 10 countries with the greatest potential will
significantly reduce scope 2 emissions. Since 2018, Air Liquide has
already signed 13 renewable energy supply contracts
for an
estimated annual quantity of 1.724 GWh/y (in a full year after start-up
of renewable production units). As the ASUs are almost all electrified,
they do not require any specific investment for the transition,
because emission reduction will be managed through renewable
energy purchase.
- Energy costs, including renewable energy costs do not represent
any financial risk as they are 100% passed-
through to the
customer according to the terms of the 15 years or more contracts.
Scope 1 reduction:
- Related to the 62 large hydrogen production units or SMRs, (scope
1 emissions), by capturing CO
2
. Air Liquide masters a complete
portfolio of proprietary technologies for capturing CO
2
. Thus, advanced
Cryocap™ CO
2
capture technology equipment has been in industrial
operation since 2015 on a hydrogen production unit in France. The
Group
was recently selected for financing via European
subventions for two carbon capture projects on SMRs. Thus, the
decarbonization of the Group’s 10 largest SMRs will reduce scope
1 emissions by more than 40%. No dismantling of existing SMRs
before the end of the contract is necessary to achieve the Group’s
climate objectives.
- The innovation capacity and technological know-how of Air Liquide’s
teams enable the Group to offer cleaner and more sustainable solutions
to reduce its own emissions and those of its industrial customers. The
Group focuses on technologies for climate solutions and energy
transition. In 2022, Air Liquide had more than 350 patent families on
hydrogen.
The Group’s Innovation expenses amounted to 308
million euros in 2022, including more than 100 million dedicated
to climate.
- The demand for low-carbon industrial gas at a higher price is growing
and makes it possible to remunerate the investment necessary for the
decarbonization of Air Liquide’s assets, in particular for the production
of hydrogen, as well as any additional costs linked to the supply of
renewable electricity.
In addition, financing programs in the form of
subsidies or tax credits are also implemented in Europe and more
recently in the United States in order to support, during a transition
period, the decarbonization of existing industrial assets and new units
of production.
Therefore, there is no indication of impairment for the
related assets.
Assets and Climate Risks
The main Group assets that impact the CO
2
footprint are:
– 424 large Air Gas production Units
, oxygen and nitrogen in
particular, which do not generate direct emissions but require
electricity. The CO
2
emissions linked
to this electricity are
accounted for in Scope 2;
– 62 large
hydrogen production units, which consume Natural
Gas and emit CO
2
accounted for in Scope 1.
-
In the Large Industries business, each air gas or hydrogen
production unit is linked to a long-
term customer contract,
lasting 15 to 20 years. Assets are amortized over the duration
of the contract, which limits the risk of impairment.
- Solutions have already been implemented to decarbonize existing
production units:
– for air gases (Scope 2 emissions) mainly by using low-carbon
electricity: the deployment of actions in the 10 countries with the
greatest potential will significantly reduce Scope 2 emissions. Since
2018, Air Liquide has already signed 13 renewable power
purchase agreements for about 460 MW.
As these assets are
more than 95% already electrified, they do not require any specific
investment for the transition;
–
for hydrogen production units or “SMR” (Scope 1 emissions), by
capturing CO
2
. (…)
The Group was recently selected for
financing via European funds for two carbon capture projects
on SMRs. The decarbonization of the Group’s 10 largest SMRs
will reduce Scope 1 emissions by more than 40%. No
dismantling of existing SMRs before the end of the contract is
necessary to achieve the Group climate objectives (…)
-
Energy costs (electricity for air gases and natural gas for
SMRs) and those related to CO
2
emissions (e.g. ETS scheme in
Europe) are re-invoiced 100% to the customer in the frame of a
long-
term contract. The Group also applies this business model to
ESMA emphasis added in Orange
14
- Costs related to CO
2
emissions (ex ETS scheme in Europe) are
100% passed-through to the customer according to the terms of
the 15 years or more contracts. The Group also applies this business
model to the supply of low carbon industrial gas, therefore Air Liquide
does not bear the risk associated with energy and CO
2
costs.
The potential impacts of transition risk have been analyzed in the
context of the 2022 Group’s Financial Statements closing, based
on the above-mentioned facts and assumptions. No significant impact
has been identified, either on the useful life or on the value of the
assets, on the client portfolio or on the cash flows generated by
existing activities or on provisions for risks and charges.
the supply of low-carbon gas, so Air Liquide does not bear the risk
associated with energy and CO
2
costs. (…) The sensitivity study
shows that, depending on the geography and the context, a
price starting from 80 to 150 euros per tonne of CO2
encourages the customer to decide toward the supply of low-
carbon hydrogen. This
price can be explicit or integrated into
regulatory obligations on the carbon footprint of end products.
(…)
The potential impacts of the risk related to the energy
transition were analyzed as part of the closing of the Group’s
financial
statements (see note 31 to the Consolidated financial
statements –
page 309) and no significant impact was
identified, mainly for the reasons mentioned above. (…)
4.1.4 Focus on CO
2
Emissions Trading Schemes: relevant examples from
selected issuers
25. There is a lack of specific guidance under IFRS for how to account for carbon dioxide (CO
2
)
emission allowances under an emissions trading scheme or renewable energy certificates,
whether allocated for free, or traded. In the last ECEP Statement, ESMA has called for
transparency in the accounting treatment applied regarding carbon and greenhouse gas
emission trading schemes.
26. Equinor ASA, an energy company, described its accounting policies related to EU Emissions
Trading System (EU ETS) allowances and disclosed the assessment underpinning how it
had considered the impact of the allowances on its 2022 financial statements.
EXAMPLE 5 – EQUINOR ASA
Pages 140-143
Note 3. Consequences of initiatives to limit climate changes
Accounting policies - cost of CO
₂
quotas
Purchased CO₂ quotas under the EU Emissions Trading System (EU ETS) are reflected at cost
in Operating expenses as incurred in line with emissions. Accruals for CO₂ quotas required to
cover emissions to date are valued at market price and reflected as a current liability within
Trade, other payables and provisions. Quotas owned, but exceeding the emissions incurred to
date, are carried in the balance sheet at cost price, classified as Other current receivables, as
long as such purchased quotas are acquired in order to cover own emissions and may be kept
to cover subsequent years’ emissions. Quotas purchased and held for trading purposes are
carried in the balance sheet at fair value, and the changes in fair value are reflected in the
Consolidated statement of income on the line-item Other income.
(…)
Impact on Equinor’s financial statements
CO₂-cost and EU ETS carbon credits
Our oil & gas operations in Europe are part of the EU Emission Trading Scheme (EU ETS).
Equinor buys EU ETS allowances (quotas or carbon credits) for the emissions related to our
oil & gas production and processing. Currently we receive a share of free quotas according to
the EU ETS regulation. The share of free quotas is expected to be significantly reduced in the
future.
Total expensed CO
₂
cost related to emissions and purchase of CO
₂
quotas in Equinor
related to activities resulting in GHG emissions (Equinor’s share of the operating
Financial impacts broken down by CO
2
emissions scope
consistent with the disclosures of commitments presented in
the non-financial statements as well as with explanations for
(not) recognising any provision or financial impact.
ESMA emphasis added in Orange
Description of the accounting
policies applied in the treatment
of CO
2
quotas, mention of
consumption, acquisition and
free allocated quotas.
Information regarding which line
items in the balance sheet and
statement of profit or loss (P&L)
are affected by the accounting of
CO
2
costs.
15
licences in addition to our land-based facilities) amounts to USD 510 million in 2022,
USD 428 million in 2021, and USD 268 million in 2020. A large portion of the cost of CO
₂
in
Equinor is related to the purchase of EU ETS quotas. The table below shows an analysis of
number of quotas utilised by Equinor’s operated licences and land-based facilities subject to
the requirements under EU ETS:
(…)
Effects on estimation uncertainty
(…)
Commodity prices
Equinor’s commodity price assumptions applied in value-in-use impairment testing, are
set in accordance with requirements in IFRS and based on management’s best estimate
of the development of relevant current circumstances and the likely future development of
such circumstances. This price-set is currently not equal to a price-set required to achieve
the goals in the Net Zero Emissions (NZE) by 2050 Scenario, nor a price-
set in
accordance with the Annou
nced Pledges Scenario as defined by the International
Energy Agency (IEA)
. A future change in the trajectory of how the world acts with regards to
implementing actions in accordance with the goals in the Paris agreement could, depending on
the detailed characteristics of such a trajectory, have a negative impact on the valuation of
Equinor’s property, plant and equipment in total. A calculation of a possible effect of using
the assumed commodity prices and CO
₂
prices in a 1.5ºC compatible NZE by 2050 Scenario
as estimated by IEA could result in an impairment of upstream production assets and
intangible assets around USD 4 billion before tax, see the sensitivity table below.
Similarly, we have calculated the possible effect of using prices according to the Announced
Pledges Scenario, a scenario which is based on all of the climate-related commitments
announced by governments around the Globe. Using this scenario, the world is expected
to reach a 1.8ºC increase in the year 2100, and this could result in an impairment of less
than USD 0.5 billion before tax using the same simplified model, see the sensitivity table
below.
(…)
Cost of CO
2
The EU ETS price has increased significantly from 25 EUR/tonne in 2020. The average
cost of EU ETS allowances was 81 EUR/tonne in 2022 (54 EUR/tonne in 2021). The price
is expected to remain high, in the region of 80 EUR/tonne for the next couple of years. Then
the price is expected to be 105 EUR/tonne in 2040 and thereafter increasing to 130
EUR/tonne in 2050.
As such, Equinor expects greenhouse gas emission costs to increase
from current levels and to have a wider geographical range than today, and a global tax on CO₂
emissions will have a negative impact on the valuation of Equinor’s oil and gas assets.
Currently, Equinor pays CO₂ fees in Norway, the UK, Germany and Nigeria. Norway’s Climate
Action Plan for the period 2021-2030 (Meld. St 13 (2020-2021)) which assumes a gradually
increased CO₂ tax (the total of EU ETS + Norwegian CO₂ tax) in Norway to 2,000 NOK/tonne
in 2030 is used for impairment calculations of Norwegian upstream assets.
Equinor’s response to this risk is evaluation of carbon intensity on both project and portfolio
level in our investment and divestment decisions.
We have also introduced an internal
carbon price, currently set at 58 USD/tonne and increasing towards 100 USD/ tonne by
the year 2030 and staying flat thereafter (in countries with higher carbon costs, we use the
country specific cost expectations), to be used in our investment decisions. This cost-scenario
is uncertain, but this extra cost serves as a placeholder for possible future CO₂ pricing systems,
making sure our asse
ts are financially robust in such a scenario. As such, climate
considerations are a part of the investment decisions following Equinor’s strategy and
commitments to the energy transition.
Climate considerations are also included in the impairment calculations directly by
estimating the CO
₂
taxes in the cash flows. Indirectly, the expected effect of climate change
is included in the estimated commodity prices where supply and demand are considered. The
CO
₂
prices also have effect on the estimated production profiles and economic cut-off
of the projects. Impairment calculations are based on best estimate assumptions. To
Assumptions regarding CO
2
emission costs by geographies in
impairment tests and sensitivity
analysis.
Potential impacts of +1.5°C
by 2050, and +1.8°C by 2100
on assets valuations and
sensitivities for different external
climate scenarios.
16
reflect that carbon will have a cost for all our assets, the current best estimate is considered to
be EU ETS for countries outside EU where carbon is not already subject to taxation or where
Equinor has not established specific estimates.
(…)
27. Solvay SA, a chemicals company, described its accounting policies regarding to the
treatment of CO
2
emission rights, presenting these as inventories or derivatives depending
on its use.
EXAMPLE 6 – SOLVAY SA
Page 317
NOTE F25 INVENTORIES
Accounting policy
Cost of inventories includes the purchase, conversion and other costs incurred in bringing the
inventories to their present location and condition. The cost of inventories is determined by
using the weighted average cost method.
(…)
CO
2
emission rights
With respect to the mechanism set up by the European Union to encourage
manufacturers to reduce their greenhouse gas emissions, carbon dioxide (CO
2
)
emission rights are granted to the Group for free. The Group is also involved in Clean
Development Mechanism (CDM) under the Kyoto protocol. Under these projects, the Group
has deployed facilities in order to reduce greenhouse gas emissions at the relevant sites in
return for Certified Emission Reductions (CER).
In the absence of any IFRS regulating the accounting treatment of CO
2
emission rights, the
Group applies the Trade/Production model, according to which CO
2
emission rights are
presented as inventories if they will be consumed in the production process within the
next 12 months, or as
derivatives if they are held for trading. Energy Services is involved in
CO
2
emission rights’ trading, arbitrage and hedging activities. The net income or expense
from these activities
is recognized in “other operating gains and losses” (a) for the
industrial component, where Energy Services sells the excess CO
2
emission rights
generated by Solvay or where a Group deficit is recognized, as well as (b) for the trading
component, where Energy Services acts as a trader/broker with respect to those CO
2
emission rights.
In light of its centralized CO
2
emission rights’ portfolio management, for emission rights that are
substitutable between subsidiaries, the Group’s financial statements reflect the Group’s net
position. If this net position is negative, a provision is recognized, measured based on the
market price of the CO2 emission rights at reporting date.
(…)
The CO
2
emission rights amount to €57 million at the end of 2022. €16 million are
included in the inventories (for 2022 obligations) and €41 million are reported under
Other non-current assets (for obligations after 2022). (…)
Inventory write-downs are included in cost of goods sold in the consolidated income statement.
Consideration of CO
2
prices as a
key assumption in value in use
calculations. Steady decrease of
Brent prices.
ESMA emphasis added in Orange
Indication of the impacts on the
financial statements and which
line items are affected.
Information regarding the
accounting policy for CO
2
emission rights.
17
4.1.5 Areas for Continued Focus
To keep in mind
See also…
a) Where it could be reasonably expected by users that climate-related matters may
have a financial impact on financial statements (such as the
recognition of
impairment losses or provisions, or the revision of the useful lives of assets),
issuers (in particular, those belonging to sectors most exposed to climate) should
consider disclosing the assessments made, assumptions used (including the
time horizon), and the conclusions reached. This information may need to be
provided regardless of whether such assessments lead to changes in the useful
lives of assets, to the recognition of impairment losses,
provisions or the
disclosure of contingent liabilities.
b) When it is expected that the commitments and plans announced (such as issuers’
commitments to Net Zero) will impact financial information, issuers should
consider disclosing inside the financial statements
the risks and major
sources of uncertainty related to these commitments and plans
with a
quantification of each element, as well as potential mitigating actions to
address any risks identified.
c)
Issuers should consider complementing the disclosures surrounding major
judgements and estimations with
information about material exposures to
climate-related matters. For example, issuers may consider
quantifying and
disclosing (i) the carrying amounts of assets (e.g.
, by main group of assets or
geographies) and/or liabilities and, where possible, separately distinguishing its
exposure due to physical and/or transition risks, (ii) which line items in the balance
sheet and/or the P&L are more likely to be affected if climate matters materialise
(iii) and whether sensitivity analyses are necessary.
d) Issuers should ensure consistency between (i) the judgements and estimates
disclosed in the financial statements and the related uncertainties
, (ii) the
information included in other notes to the financial statements (e.g., impairment
of non-financial assets) and (iii) the information
disclosed with regards to
climate-related risks and uncertainties in the management report
and the
non-financial statements (e.g., CO
2
emissions).
e) Given the lack of IFRS guidance regarding the accounting treatment on CO
2
licences, certificates and trading schemes, issuers should consider disclosing the
accounting policies used for the recognition (e.g., which IFRS standard they
apply), measurement
(e.g., how prices/costs are determined, use of
internal/external sources) and presentation
(which line items are affected in the
balance sheet and the P&L) of such topics. To this end, issuers should consider
disclosing the main movements during the year
(e.g., acquisitions, sales,
consumption) separately. In this respect and considering paragraph 32 of IAS 1,
2021 ECEP
2022 ECEP
2023 ECEP
2021 ECEP
2022 ECEP
2022 ECEP
2021 ECEP
2023 ECEP
2023 ECEP
18
issuers should not offset assets and liabilities (e.g., CO
2
quotas owned,
acquired and used) unless required or permitted by an IFRS.
f) Issuers are encouraged to provide all information required to be disclosed under
IFRS on climate-related matters in one single note or to map out
where the
such matters are addressed in different notes.
g) Finally, issuers should carefully consider providing a balan
ced and consistent
presentation of climate-related disclosures made in other areas of the AFR and
the climate-related assumptions and estimates
disclosed specifically in the
financial statements.
2021 ECEP
2022 ECEP
2021 ECEP
2022 ECEP
4.2 Impairment of non-financial assets
4.2.1 Accounting requirements to consider
IAS 36 – Impairment of Assets
Paragraphs 9-14, 30, 33, 44, 130, 132, 134-135
IAS 36 sets out the overarching principles and related requirements for when issuers
must estimate recoverable amounts to assess both the impairment of non-financial assets
such as property, plant and equipment, right-of-use assets, intangible assets, as well as
goodwill. At the end of each reporting period, issuers must assess whether there is any
indication of impairment. This assessment must take into
account any external
information related to significant changes in the operational environment (for example,
the introduction of emission-reduction legislation, changes on consumer’s behaviours) of
the issuer which could give rise to an adverse effect on the issuer.
Under IAS 36, value-in-use (ViU) measurement involves estimating future
cash flow
projections for an asset in its current condition to be derived from its continuing use. Cash
flow projections should be based on reasonable and supportable
assumptions that
represent the management’s best estimates of future economic conditions. This may
entail considering whether climate-
related matters may affect the underpinning
assumptions. Additionally, where applicable, IAS 36 also require disclosures of the events
and circumstances that led to the recognition of an impairment loss and details regarding
the key assumptions used in the estimation of assets’ recoverable amounts and possible
changes in those assumptions.
Furthermore, IAS 36 foresees specific sensitivity analysis requirements, particularly when
a reasonably possible change in a key assumption related to a CGU’s recoverable
amount can lead to the carrying amount of the CGU to exceed its recoverable amount.
19
4.2.2 From principles to practice: relevant examples from selected issuers
4.2.2.1 Impairment testing using value-in-use (ViU)
28. In the following example, electricity company Endesa SA provides information regarding the
assumptions used in impairment testing and a description on the impacts of climate matters
in impairment testing.
EXAMPLE 7 – ENDESA SA
Pages 237-240
f.2. Calculation of recoverable amount
(…)
In estimating value in use, Endesa prepares pre-
tax cash flow projections based on the
latest budgets available. These budgets include Endesa management’s best estimates of
the income and expenditure of the CGUs according to industry projections, past
experience and future expectations. These projections cover the next three years, while
future cash flows until the end of the useful life of the assets, taking into account the
residual value, if any, and applying reasonable growth rates that do not, in any case, increase
or exceed growth rates for the industry.
(…)
f.3. Main assumptions used in determining value in use
(…) the approach used to assign value to the key assumptions considered has taken into
account the following items and/or parameters:
(…)
-
Average rainfall and wind potential levels: forecasts are drawn up on the basis of the average
weather conditions
in a year, taking account of historical conditions series. However,
the actual rainfall and wind potential levels of the preceding year were used for the first
year of the projection, adjusting the average year accordingly. (…)
- Assumptions for energy sal
e and purchase prices are made based on complex specifically
developed internal forecast models.
The pool price is estimated taking into account
different scenarios regarding the expected trend or performance in a series of
determining factors such as the
costs and productions of the different technologies,
electricity demand, commodity prices and other market and macroeconomic variables,
and, as a result of these models, the most likely scenario is considered. For these
purposes, the performance of the ele
ctricity pool price primarily affects the Iberian Peninsula
Generation Cash Generating Unit (CGU) (…)
- Energy transition scenarios and climate change impacts used in the valuation models
(see Note 5.1). (…)
The key assumptions used to determine value in use under the impairment tests of non-
financial assets as at 31 December 2022 (2023–2025 Strategic Plan) are as follows:
f.4. Impairment test
(…)
At 31 December 2021, the recoverable amount of the assets of the Non-mainland
Territories (“TNP”) of the Balearic Islands, Canary Islands, Ceuta and Melilla were re-
estimated, taking into account, among other aspects, the expected situation of the
commodity markets (fuel and carbon dioxide (CO
2
) emission rights) and the costs
expect
ed to be recovered for these items in accordance with the planned regulation, as
well as the estimated changes in the structure of future generation and their effects on
thermal generation. As a result of this re-estimation, an impairment of the Cash Generating
ESMA emphasis added in Orange
Tabular presentation of some
quantified assumptions related to
climate risks (including CO
2
prices) throughout the three years
business plan.
20
Units (CGUs) was recorded for each of the Non-mainland Territories (“TNP”) of the
Balearic Islands, Canary Islands, Ceuta and Melilla for a total amount of Euro 652 million
(see Notes 15 and 20.3).
Mainland coal-fired thermal power plants
At 31 December 2022, an impairment charge of 30 million Euro has been recognised for
the Los Barrios Port Terminal (Cádiz),
considering as a time horizon the current
concession of the Terminal, which ends in 2032. The request to extend the aforementioned
concession
until 2057, which is based on the investment in the execution phase of the Liquefied
Natural Gas (LNG) project at the Terminal, is pending resolution (see Notes 15 and 20.3). (…)
29. In the following example, industrial metals and mining company Imerys SA provides relevant
information on the exposure of assets to physical risks and how these risks were considered
in impairment tests.
EXAMPLE 8 – IMERYS SA
Pages 213; 238
Exposure to climate risks.
Given their geographic location, the Group’s entities may potentially be exposed to
physical risks related to climate change, such as flooding, heat waves, wildfires and
droughts. At December 31, 2022, the carrying amount of these sites represented 10.2% of
the Group’s consolidated assets (2.5% at December 31, 2021). Criteria for the identification
of these sites are described in Note 19.
(…)
Note 19 Impairment Tests
(…)
Furthermore, Imerys calculated its sensitivity to risks arising from climate change with
respect to the global warming scenario of +2°C by 2050, as projected by the International
Energy Agency (IEA) in its Stated Policies Scenarios published in the World Energy Outlook in
2019. Executive Management selected this scenario, which represents one of the three
trajectories modeled by the IEA, for the sensitivity tests as it is deemed to be reasonably
possible. Risks accounted for in this model are heat waves as identified by the S&P
Global Trucost Assessment, wildfires as identified by the FM Global Assessment and
the Angström index and drought as identified by the Water Risk Filter of the World Wild
Fund for Nature and the Deutsche Investitions- und Entwicklungsgesellschaft. Sites
included in the sensitivity exercise are those where risks are recognized as uninsurable
in the long term, based on the most recent information available at December 31, 2022
as well as those which are usually insurable, but are specifically recognized as
uninsurable due to specific climate conditions. On this basis, Executive Management has
estimated the frequency of planned closure for each site, as well as the corresponding
cash flow losses.
As summarized in the table below, the sensitivity calculated in the mid case scenario indicates,
in Performance Minerals, Asia Pacific (PMAPAC) excluding G&C, an impairment of -€12.5
million in the event of a 1.00% increase in the discount rate and an impairment of -€4.5
million in the event of a 1.00% decline in terminal growth rates. However, the sensitivity
calculated on risks and opportunities arising from climate change did not indicate any
impairment.
(…)
30. Telia Company AB, a telecommunications company, does not belong to a sector that
immediately appears to be most exposed to physical climate change or net-zero transition
risk. Nevertheless, the issuer disclosed the processes followed and assessments made when
verifying how climate-related matters impact key assumptions in the ViU calculations
considered in impairment test models:
Recognition of impairments due
to future evolution in the
commodity markets (fuel and
CO
2
emission rights) and the
non-renewal of the power plant.
ESMA emphasis added in Orange
Details of sensitivity analysis
performed to risks arising from
climate change with respect to
2°C by 2050.
Disclosure of the external
sources used and rationale for
selecting this source.
Quantitative information
regarding tangible assets’
exposure to climate risks.
21
EXAMPLE 9 – TELIA COMPANY AB
Page 165
Impairment testing
(…)
The key assumptions in the value in use calculations were sales growth, Adjusted EBITDA
margin development, the weighted average cost of capital (WACC), CAPEX-to-sales ratio
(CAPEX excluding Right-of-use assets), and the terminal growth rate of free cash flow.
CAPEX for Right-of-use assets has been considered in the impairment test model.
(…)
Approved forecasts consider potential significant climate related risks (as well as other
types of risks in Telia Company’s Risk Universe) and the group’s ongoing and future mitigating
activities.
Climate related risks are considered through, for example, the sales growth
forecasts which include offerings based on circular business models (e.g., pre-owned
phones, Device as a Service and buy back initiatives to enable reuse and recycling) and
product
s and services that enable our customers to reduce GHG emissions and energy
use (e.g., remote meetings, IoT and other data-driven services).
Further the EBITDA-margin and CAPEX-to-sales forecasts include impacts of higher energy
prices and Telia Company’s activities to manage the energy impacts and costs, including:
• increasing energy efficiency through new network hardware and power saving
features.
•managing power consumption through decommissioning legacy networks and
modernizing sites, for example copper-based access is replaced with mobile and fiber
connectivity and relevant units are placed outdoors to reduce the need of cooling and
• using renewable electricity when powering our operations covered by Guarantees of
Origins or secured through long-term Power Purchasing Agreements for solar and wind
and looking for alternatives to remaining fossil-based energy sources.
The CAPEX-to-sales forecasts are considering that investment decisions are preceded
by environmental screening of energy consumption, waste and GHG emissions, which
in turn affects for example product and service development and network construction. The
group-wide re-use and recycling program for network equipment is part of the forecasts.
(…)
4.2.2.2 Sensitivity Analysis
31. The following subsection provides illustrations on how climate risks were considered when
preparing sensitivity analyses as required by IAS 36.
32. In the following example, chemicals company Arkema SA provides information regarding the
assumptions used in sensitivity analysis in particular the potential impact that the increase of
CO
2
prices may have on EBITDA and consequently in the determination of the recoverable
amounts of different CGUs.
EXAMPLE 10 – ARKEMA SA
Page 323
8.5 Asset value monitoring
(…)
Sensitivity analyses
carried out at 31 December 2022, evaluating the impact of reasonable
changes in the basic assumptions – in particular the impact of a 1-point increase in the discount
rate, or of a change of minus 0.5 of a point in the perpetuity growth rate, or minus 10% in
EBITDA, or plus 20% in capital expenditure – confirmed the net carrying amounts of the
different CGUs, excluding the Hydrogen Peroxide CGU, for which the assumption of a
change of plus 20% in capital expenditure would lead to impairment losses of up to €20
million.
In addition, these EBITDA and capital expenditure sensitivity analyses include any
climate related impacts in terms of increases in the price per tonne of CO
2
and additional
investments enabling the Group to meet its target to reduce its Scope 1 and 2
ESMA emphasis added in Orange
Disclosures on how climate-
risks were considered in
impairment testing (narrative
information of sales growth
forecasts, energy costs), even
though the impact of climate
risks did not lead to an
impairment.
ESMA emphasis added in Orange
Sensitivity analysis to an
increase in CO
2
prices and
investments required to meet
CO
2
emission targets.
22
greenhouse gas (GHG) emissions and its Scope 3 emissions by 46% by 2030 relative to
2019. This target is supported by an increase in investments contributing to decarbonization,
which could reach €400 million by 2030 and which is included in the Group’s recurring
capital expenditure budget. (…)
33. In the following example, energy company ENI S.p.A. provides information regarding the
assumptions used in its sensitivity analysis in particular the potential impact that the increase
of CO
2
emission prices will have on the determination of the recoverable amounts of different
CGUs. It also establishes a link between their Net Zero Emission strategy and the
assumptions used in impairment testing.
EXAMPLE 11 – ENI S.P.A.
Pages 283-285
15 Reversals (Impairments) of tangible and intangible assets and right-of-use assets.
Sensitivity of outcomes to alternative scenarios.
The recoverability test of carrying amounts of Oil & Gas cash generating units (CGUs) is the most
important of the critical accounting estimates in the preparation of Eni’s consolidated
financial statements. This owes to the relative weight of the invested capital in the sector on total
consolidated assets.
Future expected cash flow
s associated with the use of Oil & Gas assets are based on
management’s judgment and subjective evaluation about highly uncertain matters like future
hydrocarbons prices, assets’ useful lives, projections of future operating and capital
expenditures, including CO
2
emission costs
relating to geographies where legal obligations
are present, the volumes of reserves that will ultimately be recovered and costs of
decommissioning Oil & Gas assets at the end of their useful lives.
Forecasts of
hydrocarbons prices adopted by Eni are based on the review of the
fundamentals of supply and demand in the long term, considering the possible evolution
of the global energy mix by 2050 in relation to the decarbonization commitments of the
countries and the EU in view of the achievement of the goals of the Paris Agreement, the pace
of the energy transition, global economic and demographic growth, the evolution of technologies
and the evolution in consumers’ preferences. These assumptions are reflected in the corporate
strategies and investment decisions, as well as being used in recoverability assessments of the
carrying amount of oil & gas projects.
(…)
Below are the main price assumptions
for assessing the recoverability of Oil & Gas assets,
expressed in 2021 real terms.
(...)
Considering
the subjectivity of the assumptions underlying the estimates of the VIU,
management has elaborated the following sensitivity analysis of the Oil & Gas CGUs values
to different scenarios: (i) a linear cut of -
10% of hydrocarbon prices in all the years of the
cash flows projections; (ii) the projections of hydrocarbon prices and CO
2
costs of the
decarbonization scenario Net Zero Emission 2050 (NZE 2050) elaborated by IEA. Those
sensitivity analysis included assets of all consolidated entities, joint ventures and associates,
excluding Vår Energi ASA, Azule Energy Holdings Ltd and an asset under arbitration procedure.
The results of the sensitivity test in terms of changes in the cumulated headroom of Oil & Gas
CGUs and potential pre-tax income statement impacts are provided below:
ESMA emphasis added in Orange
Sensitivity analysis to CO
2
prices and information of the
headroom versus carrying
amounts (ENI and IEA NZE
2050 scenarios).
Consistency (according
to the issuer) of CO
2
price
assumptions with the goals
of the Paris Agreement.
23
34. In the following example, constructions & materials company Saint-Gobain SA provides
information regarding the assumptions used in its sensitivity analysis and, in particular, the
potential impact that the increase of CO
2
prices has on the determination of the recoverable
amounts of different CGUs. It also indicates the sources for such price assumptions
estimations.
EXAMPLE 12 – SAINT-GOBAIN SA
Pages 277-278
Note 3 Climate issues
(…)
Basis of measurement applicable to assets incorporating the cost of emissions per
tonne of CO
2
The Group’s commitments to carbon neutrality were taken into account when carrying
out the sensitivity tests as part of the annual impairment testing of its cash-generating
units (CGUs).
(…)
For the European Union scope, the Group has calculated projected CO
2
emissions
reductions up to 2030 based on detailed roadmaps by activity, taking into account
historical business levels, a factor reflecting exposure to the risk of carbon leakage, and
a cross-sector adjustment factor, as well as the stock of CO
2
emissions allowances held
at the end of December 2022.
It should be noted that the annual sensitivity tests for 2022 also factored in the assumption
dated December 18, 2022 put forward by the European Council and Parliament regarding
carbon market reform, according to which free CO
2
emissions allowances granted to
industry under the European Union Emissi
ons Trading Scheme (EU ETS) would be
gradually phased out between 2026 and 2034 (100%), with 2.5% phased out by 2026, 5%
by 2027, 10% by 2028, 22.5% by 2029 and 48.5% by 2030.
These CO
2
emissions were valued on the basis of a euro price per tonne resulting from
a panel of 11 analysts as of November 11, 2022 (source: Carbon Market Pulse Limited, an
independent private company based in London).
ESMA emphasis added in Orange
Narrative information about the
specific regulations regarding
CO
2
emissions considers CO
2
prices used for Europe (external
source) and non-Europe (internal
source) between 2023-2030.
24
For the non-Europe scope, tonnes of CO
2
emitted were priced in the tests as from 2023
assuming a fixed price of €75 per tonne until 2030 and no government support schemes
such as CO
2
emissions allowances. This assumption of €75 per tonne is consistent with
the application of an internal carbon price set by Saint-Gobain, and is conservative in that few
countries outside Europe have so far defined a price per tonne of carbon.
In addition to the action plans rolled out at its production sites, the Group has set two internal
carbon prices:
• €75 per tonne for major industrial investment projects and investments related to a
change in energy source;
• €150 per tonne for R&D
investment in breakthrough technology, particularly “low carbon”
projects.
(…)
Sensi
tivity tests were carried on the Group’s assets across all of its industrial activities
(excluding Distribution and the recent Chryso/GCP and Kaycan acquisitions).
The discounted future cash flows, calculated on the basis of the three-year business
plan (2023-
2025) were extrapolated to 2029 and then impacted by the projected cost of
CO
2
emissions net of the free emissions allowances received. These discounted cash
flows were compared with the net value of the assets at December 31, 2022 (property, plant
and equipment, intangible assets and working capital).
As a result of the sensitivity tests performed based on the aforementioned assumptions,
no impairment would be recognized against the Group’s non-current assets, since the
headroom (€20.4 billion), i.e., the difference between discounted future cash flows and
the net value of the assets tested (€20.9 billion) is significantly positive. (…)
4.2.3 Adding perspective: Connectivity across the AFR in relation to
impairment of non-financial assets
35. In the following example, chemicals company BASF SE connects the assumptions used in
impairment tests with the information included in management report regarding sustainability.
EXAMPLE 13 – BASF SE
Pages 83; 164; 242-244
Financial Statements
Non-financial Information
14 Intangible assets
(…)
The fundamental transformation of the automotive industry will have a
significant impact on the emissions catalyst business, which belongs to
the Catalysts (excluding battery materials) cash-
generating unit.
Because there were no material changes in planning assumptions from
the previous year, the growth rate for perpetual annuity remained
unchanged at –0.7%. In the planning period, the
demand for
catalysts is still expected to remain stable as a result of higher
environmental standards. In the medium term, the transition from
combustion engines to electromobility will lead to a steady decline in
demand.
(…)
After determining the recoverable amounts for the cash-generating
units, the conclusion was that reasonable possible deviations from the
key assumptions
would not lead to the carrying amount of any unit
exceeding the respective recoverable amounts
except in the
Catalysts (excluding battery materials) and Surface Treatment
divisions, which are allocated to the Surface Technologies
segment.
(…)
A weighted c
ost of capital after taxes of 7.75% (2021: 6.63%) and an
EBITDA margin in the last detailed planning year as the basis for
calculating the final value of 29.60% were used for the annual
Surface Technologies
(…)
The segment’s sales decrease was mainly attributable to
significantly lower volumes in the Catalysts division’s precious metal
trading business. Volume growth in the chemical and refinery
catalysts businesses was unable to compensate for this. Sales
volumes were significantly higher in the Coatings division, mainly
d
ue to improved supply chain conditions in North America and the
government stimulus program in China.
(…)
Financial Opportunities and Risks
(…)
Impairment Risks
(…)
Climate policies are also causing fundamental changes in the
automotive industry, one of BASF’s key customer industries. The
transition to electromobility will have a long-term negative impact
on the emissions catalyst business. This development was
accounted for
in the adjustment of the growth rate for the
goodwill impairment test and did not lead to an impairment.
Other BASF businesses will benefit from this transformation; for
example, demand for innovative lightweight components and
battery materials will grow.
Sensitivity analysis considers
the impacts of CO
2
price forecasts
in cash flows up to 2029.
ESMA emphasis added in Orange
25
impairment test of the Catalysts (excluding battery materials) cash-
ge
nerating unit. The recoverable amount for this unit exceeded the
carrying amount by €179 million. The recoverable amount would be
equal to the unit’s carrying amount if the weighted average cost of
capital rose by 0.25 percentage points, the growth rate were 0.66
percentage points lower, or the EBITDA margin in the last detailed
planning year as the basis for calculating the final value were 1.07
percentage points lower.
36. In the following example, electricity company Uniper SE connects the assumptions used in
impairment tests and the recognition of impairment charges with the information included in
management report regarding its coal phase-out strategy.
EXAMPLE 14 – UNIPER SE
Pages 132; 220; 224
Financial Statements
Non-financial Information
(17) Impairment Testing in Accordance with IAS 36
(…)
Non-current assets:
Intangible assets, property, plant and equipment, including right-of-use
assets, and groups of these assets, as well as companies accounted
for under the equity method, are tested for impairment as indicated at
the level of the individual asset or the CGU. Impairment testing of the
aforementioned assets or CGUs is performed whenever there are
indications of impairment. In the European Generation segment, for
example, the tests are based on remaining useful life, which can
be shorter than the technical useful life specifically in coal-fired
power plants, due to measures taken in specific countries to
mitigate climate change, and on other plant-
specific valuation
parameters. Uncertainties relating to a variable regulatory environment
are generally accounted fo
r by means of scenario evaluations.
Recoverable amounts were usually determined using the value in use.
(...)
Some of the coal phase-out pathways already adopted in specific
countries have been considered accordingly in the impairment
tests performed. In cases where Uniper sees the use of fossil energy
sources ending early, this has been reflected accordingly. No fossil-
fuel power plants were modeled Group-wide from 2050 forward. In
the European Generation segment, a 50% reduction of Scope 1 and
Scope 2 emissions by 2030 (compared with 2019 levels) and climate
neutrality by 2035 were applied in the modeling. In the Global
Comm
odities CGU, a 35% reduction of indirect (Scope 3) carbon
emissions by 2035 (compared with 2021 levels) and climate neutrality
(in terms of Scope 1 through Scope 3) from 2050 were planned and
modeled.
(…)
Full-Year Presentation for 2022
(…)
The most substantial individual impairment in the European
Generation segment in the 2022 fiscal year in terms of amount
related to the Datteln 4 hard-coal power plant and amounted to €87
million. Aside from the price-driven adjustments made in the context of
regular medium-term corporate planning that reflected the impact of the
Decarbonizing the Coal and Gas Business
In 2022, Uniper’s coal-based power production in Europe amounted
to 17.3 TWh, which is a decrease of 1.3 TWh from 2021. The
te
mporary security of supply measures has impacted Uniper’s
original coal exit path. Nonetheless, Uniper remains committed to
its decarbonization pledge: Aligned with its coal phase-out
strategy and relevant national legislations, Uniper will end
coal-fired power generation in the United Kingdom by 2024, in
the Netherlands by 2029, and in Germany by 2026 with the
divestment of the Datteln 4 hard-coal-fired power plant.
(…)
Quantification of the growth rate (e.g., negative in one segment) in the accounts.
Explanation that climate risks affect a business segment indirectly (i.e., the
issuer is a supplier of companies directly exposed to climate change).
ESMA emphasis added in Orange
26
increased cost of carbon and the costs incurred for climate
neutrality, among other factors, revised regulatory and legal as well as
political assessments resulted in these impairment losses at year-end.
(…)
4.2.4 Areas for Continued Focus
To keep in mind
See also…
a)
Depending on the sectors and significance of the environmental regulations,
issuers might need to consider reassessing if the CGUs (or a group of CGUs)
that have been used historically are still appropriate considering challenges and
opportunities arising from climate-related matters (such as the ones arising
from changes in business models).
b) Issuers should consider disclosing how climate-related matters were considered
in the estimation of future cash flows, discount or growth rates (for instance,
whether they expect that climate-related matters may lead to an increase of costs
in the future, such as increase of costs of energy, CO
2
prices,
or to potential
reductions of revenues). Issuers should consider explaining
the growth rate in
perpetual annuity or, where applicable, the discount rate
12
used, especially
when they belong to sectors or report
segments highly exposed or affected by
climate-related matters.
c) When determining the value in use, issuers should consider, as far as practicable,
providing quantified disclosures regarding key assumptions related to climate
matters (e.g., CO
2
prices per geography - Europe vs. outside Europe,
commodities prices). To this end, issuers should consider disclosing information
on how such key assumptions were determined. In this respect, greater weight
shall be given to external evidence (for example, an external vs. an internal
source of such key assumptions).
d) Issuers may consider using
multiple future scenarios when estimating the
future cash flows of a CGU (i.e., when considering scenarios linked to physical
risks on assets, such as the impact of +2
o
C, rainfall or drought projections). When
this is the case, issuers should consider providing disclosures on how these
assumptions/scenarios were incorporated in cash flows projections and
their respective probabilities of occurrence.
e) When issuers include capital expenditures arising from climate-related matters
in future cash flows used in the value in use impairment test, they should consider
2021 ECEP
2022 ECEP
2023 ECEP
2021 ECEP
2022 ECEP
2023 ECEP
2022 ECEP
2022 ECEP
12
When climate risks have been considered in the discount rate.
Disclosure highlights the link between the abandonment of coal-
fired power plants and the recognition of impairment.
27
explaining how such decisions reconcile with the provisions included in IAS 36
that forbid the inclusion of estimated cash flows expected to arise from future
restructuring, improvements or enhancements to assets.
f) Where relevant, issuers should consider including
sensitivity analyses
regarding key assumptions related to climate matters (e.g., CO
2
prices,
commodities prices). Whenever sensitivity scenarios deviate significantly from
market-
based scenarios (such as those published by IEA), issuers should
consider providing
explanations supporting the use of such diverging
elements
(e.g., why the issuer decided to use internal assumptions). In this
respect, issuers may also consider disclosing
sensitivity analyses and/or the
headroom of CGU(s) if the issuer would have used market-
based scenarios
and/or assumptions.
4.3 Useful lives of tangible and intangible assets
4.3.1 Accounting requirements to consider
IAS 16 – Property, Plant and Equipment / IAS 38 – Intangible
Assets
IAS 16: Paragraphs 7, 51, 73, 76 / IAS 38: Paragraphs 9-64, 102, 104, 118, 121, 126
As climate change is impacting the world on multiple dimensions, this may prompt issuers
to adapt or change business models, operations and research and development to
remain viable and relevant, all of which entails costs. Accounting for such adaptations or
changes, and accompanying expenditures, are guided by the requirements of IAS 16 and
IAS
38, which specify the accounting treatment for recognising costs as assets and
prompts the review of estimated residual (terminal) values and expected useful economic
lives of assets at least every financial year-end.
Climate-
related matters are also relevant considerations from the perspective of IAS 16
and IAS 38 given that they might in
cur potential changes to the amount of depreciation
or amortisation that is recognised in current or future periods. Since certain assets may
become obsolete, inaccessible or subject to legal restrictions as a result of climate
change, the estimated residual (terminal) value and expected lives of assets are therefore
potentially impacted. Issuers need to disclose this fact for each asset class, together with
the amount and nature of any change in the estimated residual (terminal) value and
expected lives of assets.
28
4.3.2 From principles to practice: relevant examples from selected issuers
37. In the following example, automotive company Mercedes Benz Group AG provides
information on how useful lives of certain assets have been impacted by the transition from
internal combustion engines to electric vehicles.
EXAMPLE 15 – MERCEDES BENZ GROUP AG
Pages 214; 228
Intangible assets
(…)
Other intangible assets with finite useful lives are generally amortized on a straight-line basis
over their useful lives (three to ten years). The amortization period for intangible assets with
finite useful lives is reviewed at least at each year-end.
Possible impacts from the
transformation of the automotive industry, such as the transition to electric drive
systems, are also taken into account.
Changes in expected useful lives are treated as
changes in accounting estimates. The amortization expense on intangible assets with finite
useful lives is recorded in functional costs.
As part of the periodic review of the useful lives of
intangible assets, the planned
transition to fully electric vehicles made it necessary to reassess the useful lives of the
capitalized development expenditure as of year-
end 2021 and to adjust them for
individual vehicle projects. This change in estimates has been applied from 1 January
2022. The positive effect on earnings before interest and taxes (EBIT) amounted to €0.2
billion in 2022. A positive effect on EBIT of €0.2 billion is also expected for 2023.
(…)
Consideration of sustainability related aspects in connection with the recognition and
measurement of assets and liabilities
(…)
Accounting estimates and management judgments in connection with sustainability-related
aspects are taken into consideration in particular in the accounting of assets and liabilities
described below:
The determination and review of the useful lives of the capitalized development costs are based
on the expected product life cycle. Changes in the originally envisaged product life cycles can
result from the transformation to all-
electric vehicles. Due to the resolutions regarding the
accelerated transformation new developments in the area of conventional powertrains are
reduced and already capitalized development expenditure will partly be used for longer.
(…)
In the same way, the useful lives of property, plant and equipment assets are regularly
reviewed in the light of the transformation to all-electric vehicles. This did not require
any material adjustments of the useful lives up to the reporting date as the production
facilities of the Group are basically flexible in use.
(…)
38. In the following example, electricity company Iberdrola SA provides information as to why
useful lives of certain assets have not been impacted by climate risks.
EXAMPLE 16 – IBERDROLA SA
Pages 56-57
Useful lives:
(…)
The IBERDROLA Group did not amend the useful life of its assets in financial year 2022,
insofar as, at the date of preparation of these financial statements, the roadmap for
achieving carbon neutrality for the carbon equivalent emissions of scopes 1 and 2 by
2030 has not been drawn up. Emissions from the production mix will be reduced, either by
investing in new renewables, or by offsetting any residual emissions.
(…)
It should also be borne in mind that some of the Group’s businesses, such as gas transmission
and distribution in the United States and the United Kingdom, as well as part of gas retail supply
ESMA emphasis added in Orange
(please see note D.32 of Mercedes Benz Group AG)
Quantitative disclosure
of the effect of reassessing
useful lives due to the transition
to electric drive systems.
ESMA emphasis added in Orange
Explanation as to why the useful
lives of certain assets were not
adjusted at the year-end.
29
in Spain and the United Kingdom, for example, are regulated businesses. Any possible
withdrawal from these activities would require regulatory authorization. In addition, the role of
these assets in each country’s energy transition is uncertain and depends on the future
policies and measures adopted by governments or regulators. Therefore, their useful
life has not been changed in these financial statements either. Should any decisions be
taken by the regulator, such as shortening the useful life of these assets, the
IBERDROLA Group considers that the economic effects would not have a significant
impact, as the regulation would compensate the Group through tariffs, given that the
regulation itself guarantees the profitability of the investments made.
Consequently, in general, the IBERDROLA Group considers it impractical to accelerate
the depreciation of emitting assets, either because they are required as back-up or
because their useful life depends on actions by third parties beyond the IBERDROLA
Group’s control. Nor has it accelerated the timing of provisions for the closure or
decommissioning of facilities as a result of climate change. However, it will continue to
monitor the system’s needs and the decisions of governments and regulators to determine
whether it will need to accelerate the depreciation of these assets in the future.
39. In the following example, industrial transportation company Hapag-Lloyd AG provides
quantified information regarding the re-assessment of useful lives derived from the impact of
new environmental regulations.
EXAMPLE 17 – HAPAG-LLOYD AG
Page 163
Property, plant and equipment
(…)
The provisional assessment of the impact of new environmental regulations on the
economic viability and efficiency of some older vessels particularly affected by these
regulations resulted in a recalculation for these vessels in the third quarter of 2021 and
thus a shortening of their estimated remaining useful lives by one to five years. The
rules for implementing these provisions have now been clarified, permitting these
vessels to remain in use for longer. Therefore, these vessels are now to be
decommissioned later than had been assumed in the previous year. Due to the individual
extension of their useful life by one to three years, this improved EBIT both in the second
half and for the 2022 financial year as a whole in the amount of EUR 77.0 million. The
effect for Q4 2022 amounts to EUR 38.5 million. The effect will be reversed in the three
complete consecutive financial years from 2023 onwards. However, the general useful life of
vessels remains unchanged at 25 years.
(…)
4.3.3 Areas for Continued Focus
To keep in mind
See also…
a) Issuers should consider explaining how their
plans to reduce carbon emission
due to regulations have been incorporated in the assessment of assets’ useful
lives. For example, issuers should consider detailing to which extent issuers’
transition plans (or changes in business plans) to more environmentally friendly
alternatives affect an asset’s useful life (e.g., the issuer plans to prematurely
replace older assets with assets that are more environmentally friendly before the
original period of use has come to an end). Issuers might also consider disclosing
and quantifying the exposed assets.
b) Issuers should consider disclosing quantitative information about R&D costs
linked to environmental risks and opportunities and commitments
of the issuer
2021 ECEP
2022 ECEP
ESMA emphasis added in Orange
Quantitative disclosure of the
effect of reassessment of useful
lives of assets (shortening of
estimation by one year to five
years in 2021, revised in 2022
following clarification of national
legal framework).
30
(i.e., in the automotive industry, changing from fossil to electric drive systems). In
doing so, issuers are encouraged to disclose the amounts capitalised
in the
statement of financial position and expensed in the P&L and, where applicable,
link this information to potential changes in useful lives of the impacted assets.
c) Issuers may need to consider any
potential indirect impacts to the useful
economic lives of their assets, if changes in the supply chain
can be
anticipated (i.e., when the issuer is part of the supply chain of issuers highly
exposed to climate matters, its business may be indirectly affected by changes in
their customers).
4.4 Provisions
4.4.1 Accounting requirements to consider
IAS 37 – Provisions, Contingent Liabilities and Contingent
Assets / IFRIC 21 – Levies
IAS 37: Paragraphs 14-83, 85-86 / IFRIC 21: Paragraphs 8-21
The requirements of IAS 37 Provisions, Contingent Liabilities and Contingent Assets
ensure that issuers consider and use appropriate recognition criteria and measurement
bases for provisions, contingent liabilities and contingent assets. In addition, IAS 37
requires that issuers disclose sufficient information in the notes about any indications of
uncertainties relating to the nature, amount, or timing of any outflow. Climate-related
matters may
impact the recognition and measurement of provisions and the disclosure
of those provisions and any contingent liabilities.
I
ssuers should consider, in their assessment of the impact of climate on provisions and
contingent liabilities, the potential for any new contingent liabilities that may arise due to
potential litigation, re
gulatory requirements to remediate environmental damage,
additional levies or penalties related to environmental requirements as well as contracts
that may become onerous, or restructurings to achieve climate-related targets.
4.4.2 From principles to practice: relevant examples from selected issuers
40. In the following example, electricity company Électricité de France SA discloses information
on the recognition and movements of provisions related to climate matters. Specifically,
Électricité de France SA provides information regarding the measurement of provisions for
environmental schemes including provisions for greenhouse gas emission rights, renewable
energy certificates and energy savings certificates.
31
EXAMPLE 18 – ÉLECTRICITE DE FRANCE SA
Pages 107-108; 133
17.2 Other provisions (…)
(…)
Provisions related to environmental schemes
Provisions related to environmental schemes include provisions to cover
shortfalls in
greenhouse gas emission rights, renewable energy certificates and where relevant energy
savings certificates, based on the assigned obligations (see notes 5.5.4, 10.2, 20.1 and 20.2.1).
Through the renewable energy certificates scheme, the EDF group has an obligation to
surrender renewable energy certificates, particularly in the United Kingdom and
Belgium.
At 31 December 2022, a provision of €1,117 million was booked in connection
with the obligation to surrender renewable energy certificates at that date, essentially
concerning EDF Energy (United Kingdom) and Luminus (Belgium). A large portion of
these obligations is covered by purchases of certificates included in intangible assets
(see note 10.2).
One of the main features of the fourth period (2021-2030) of the European Union greenhouse
gas emission quota system (SEQE-EU or EU-ETS) is to achieve the emission reduction
targets set in the 2030 Climate and Energy framework, and the EU's contribution to the
Paris Climate Agreement adopted in 2015. One key step was accelerating annual quota
reductions to 43 million tonnes per year
. In the EDF group, the entities concerned by this
European system are EDF, Edison, Dalkia, PEI and Luminus.
Free emissions quota
allocations for the Group stopped in 2020.
The volume of emissions at 31 December 2022 stood at 18 million tonnes (17 million
tonnes for 2021). Actual greenhouse gas emissions amounted to €799 million at 31
December 2022 (€380 million at 31 December 2021) and are included in provisions in the
balance sheet.
In 2022, the Group surrendered 17 million tonnes in respect of emissions generated in
2021 under the EU ETS (in 2021 it surrendered 16 million tonnes in respect of emissions
generated in 2020). Now that Brexit has taken place, the United Kingdom is no longer a
member of the European system (EU ETS) and has set up its own system (UK ETS -
Emissions Trading Scheme).
The UK ETS, which uses a bidding system, covers the same
sectors as the EU ETS and operates under generally similar rules, with comparable accounting
treatment.
The volume of EDF Energy's emissions at 31 December 2022 stood at 0.1 million tonnes
(2 million tonnes for 2021). Actual greenhouse gas emissions amounted to €9 million at
31 December 2022 (€36 million at 31 December 2021) and are included in provisions in
the balance sheet.
In 2022, EDF Energy surrendered 2 million tonnes in respect of emissions generated in 2021
under the UK ETS (in 2021 it surrendered 3 million tonnes in respect of emissions generated
in 2020).
(…)
20.2.1 Provisions relating to environmental issues
Most of these provisions are provisions related to nuclear generation, which comprise
provisions for back-
end nuclear cycle expenses (management of spent fuel and radioactive
waste), provisions for plant decommissioning and provisions for last cores. (…)
They also include
provisions for environmental schemes including provisions for
greenhouse gas emission rights, renewable energy certificates and energy savings
certificates. At 31 December 2022, these pro
visions totalled €1,926 million (€1,572
million in 2021, see note 17.2).
ESMA emphasis added in Orange
Quantification of the impacts
of CO
2
emissions
(both in tonnes and euros).
Impacts of the renewable energy
certificates schemes on the
balance sheet (provisions).
Qualitative and quantitative
disclosures about different types
of environmental provisions.
Explanation of the main
movements of the year.
32
Contingent liabilities also exist in connection with environmental litigation, described in
note 17.3.5, such as the litigation following the sale of Ausimont (the Bussi site) to
Solvay 3 by Edison in 2002.
41. In the following example, multi-utilities company RWE AG discloses information on the
recognition and movements of provisions related to climate matters. In particular, RWE
provides information regarding the measurement of provisions such as discount rates,
interest accretion and sensitivity analysis.
EXAMPLE 19 – RWE AG
Pages 175; 177
(…)
Provisions for mining damage also consist almost entirely of non-current provisions and fully
covered the volume of obligations as of the balance-sheet date. They are reported at their
settlement amount discounted to the balance-sheet date. The cost estimates are based on
internal planning and estimates and are largely backed by external expert opinions.
In discounting the amounts used in the coming 30 years, we have oriented ourselves towards
the current market interest rates for risk-free cash investments. Since no market interest rates
are available for later periods, a sustainable, long-term interest rate is used to discount the
amounts used after the next 30 years. The average discount rate was 3.2 % (previous
year: 2.1 %). The majority of the provisions pertains to claims that are expected to materialise
over the next 30 years.
The average escalation rate based on current inflation
expectations was 2.2 % (previous year: 1.5 %). As a result, the real average discount rate
applied for mining purposes, which is the difference between the average discount rate
and the average escalation rate, amounted to 1.0 % (previous year: 0.6 %).
A decline of 0.1 percentage point in the real discount rate would increase the present
value of the provision by around €130 million, while an increase of 0.1 percentage point
would reduce the present value by around €120 million.
Excluding the interest accretion, additions to provisions for mining damage amounted to €2,260
million in the reporting period. These mainly include the additional costs for recultivation
of the Garzweiler opencast mine area due to the early phaseout of lignite-fired power
generation in 2030, the inflation-
driven increase in the obligatory volume and updates
of the cost estimates, of which €177 million was capitalised in the item ‘property, plant
and equipment’.
The interest accretion reduced provisions for mining damage by €730
million, of which €66 million was offset in ‘property, plant and equipment’.
42. In the following example, energy company Repsol SA discloses information on the
recognition and movements of provisions related to climate matters such as dismantling
provisions and CO
2
emissions allowances. In addition, Repsol SA provides information on
the expected maturity of the provisions.
EXAMPLE 20 – REPSOL SA
Pages 18; 48-49
3.5.2) Estimates and accounting judgments related to the risks and implications of
climate change, decarbonization and the energy transition
(...)
CO
2
emission allowances. In 2021, phase IV of the EU Emissions Trading System (EU-
ETS) Directive began in Europe for the period 2021-2030. This would mean a reduction
in the global number of emission allowances at an annual rate of 2.2% from 2021 to
2025. From then on, new rules, currently under discussion in the EU Parliament,
ESMA emphasis added in Orange
Sensitivity analysis based on the
real discount rate on provisions.
Cost estimates based on internal
planning and largely backed
by external opinions.
Quantitative description
of provisions for mining damage.
ESMA emphasis added in Orange
33
Council and Commission, will be applied to increase the reduction of CO
2
emissions
(in line with the new objective of a reduction of 55% in CO
2
emissions in the total
European economy by 2030 compared to 1990 – Fit for 55) and to address its social
impact. In this regard, at the end of 2022, a provisional tripartite agreement was
reached to increase the reduction of emissions by 2030 to 62% in the sectors covered
by this regime.
In 2022, Group companies were assigned free CO
2
allowances equivalent to 7.3 million
tons of CO
2
. The net expense for CO
2
emissions in 2022 was €493 million (mainly due
to CO
2
emissions from Industrial complexes in Spain). For further detailed information
on the recognition and valuation of CO
2
allowances, see Notes 15.1 and 16.
(…)
15.1) Provisions
At December 31, 2022 and
2021, the balance of these headings and the changes therein
are as follows:
(…)
The following table provides an estimate of maturities of provisions at year-end 2022:
Information regarding
the maturities of the provisions
in a table (including CO
2
consumption), the nature
of the risks (timing
and uncertainty).
34
4.4.3 Areas for Continued Focus
To keep in mind
See also…
a) Issuers might consider whether regulations related to climate matters give rise
to constructive or present obligations and thus, to recognition of provisions
or disclosure of contingent liabilities. Please also refer to IFRS Interpretation
Committee (IFRS IC) discussions on negative low emissions vehicle credits
13
.
b)
Where provisions related to climate matters are recognised, issuers should
provide information on the measurement of such provisions (including
information on sources of such assumptions – external vs internal
, different
geographies), especially when such provisions require estimations of future prices
(such as CO
2
emissions).
c) Issuers are reminded that an obligation
stemming from possible new laws or
regulations introduced in relation to climate change (for example, new
environmental and decommissioning obligations) can arise
only when the
legislation is enacted. As such, issuers are encouraged to continue monitoring
government actions and introductions of or changes to regulations relating
to climate and consider whether these may give rise to specific conditions where
a provision must be recognised.
d) Issuers should consider disclosing sensitivity analyses
regarding key
assumptions related to climate matters used on the recognition or measurement
of provisions or contingent liabilities.
e) Issuers should also consider disclosing the maturities expected and timing
related to unwinding provisions recognised related to climate matters (in
particular, when such provisions may affect long term periods –
such as
decommissioning provisions).
2021 ECEP
2022 ECEP
4.5 Other Accounting Topics
Two further topics to consider, among many others
14
:
IFRS 2 – Share-based Payment
IAS 10 – Events After the Reporting Period
Because of the pervasive and ubiquitous nature of climate risks, issuers must pay
attention to multiple areas where climate-
related matters may be materially impactful.
Issuers should subsequently evaluate and, where material, be required to disclose the
assessment made as well as the potential or incurred effects of climate-related matters
in their financial statements.
13
Please refer to IFRS IC decision on negative low emissions vehicle credits—IAS 37, 20 July 2022.
14
IASB Educational Document, Effects of climate-related matters on financial statements, July 2023. (republished).
35
To illustrate some other areas where it may not be obvious that climate-related matters
may materially impact financial statements, ESMA identified disclosure
examples of
climate-related matters concerning (i) share-based payments and (ii)
events occurring
after the reporting period . In this respect, disclosure requirements relate to (i) whether
any of an issuer’s share-
based payment plans are dependent on the achievement of
specific climate-related targets, or (ii)
whether there are developments (i.e., market or
regulatory) occurring after the balance sheet date related to climate matters
that may
represent non-adjusting events.
43. In the following example, oil equipment & services company Technip Energies NV discloses
information on how climate-matters, including the achievement of the issuer’s climate
strategy and commitments, impact the remuneration of the Board of Directors and share-
based payments under IFRS.
EXAMPLE 21 – TECHNIP ENERGIES NV
Pages 269; 276
1.8. Other sources of estimation uncertainty (…) Climate-related matters
(…)
Share-
based compensation and remuneration policy applied to Executive Officer,
Executive Committee members, Senior Managers, and other key employees
The Compensation Committee of the Board of Directors has granted to the Executive Officer,
Executive Committee members, Senior Managers, and other key employees (e.g., technical
experts, high potentials) a Long-Term Incentive plan in the form of Performance Stock Units
(PSUs) and Restricted Stock Units (RSUs). The PSUs vesting is subject to the satisfactory
achievement of performance conditions. As of 2022, the performance conditions comprise
the total shareholder return (“TSR”), EPS and
a set of three weighted ESG indicators
directly derived from our ESG Roadmap to
support Technip Energies vision in
accelerating energy transition for a “better tomorrow” and to strengthen the alignment
with sustainable long-term value creation. One of these indicators is a climate-friendly
objective: 30% decrease in scope 1 and 2 greenhouse gas emissions between 2019 and
2025.
In addition, the Compensation Committee reviewed the Executive Director’s remuneration
and notably reinforced the weighting of the ESG component in the Short-Term Incentive
program with ESG KPIs derived from the Company’s ESG roadmap. These changes have
been introduced in 2022 and are described in section 6.6.1. Executive Director
remuneration. As compared to December 31, 2021,
the ESG business performance
indicators weighting increased from 15% to 25% to emphasize ESG performance and to
signal the Company’s commitment to embed sustainable, socially responsible and
ethical business practices.
(…)
Note 8. Share-based compensation
(…)
An E.S.G. performance metric, representing 25.0% of PSUs performance conditions, combines
3 Key Performance Indicators. They are evenly weighted and described below:
• E: reduce 30% on scope 1&2 GHG emissions by 2025 compared to 2019,
• S: 25% of women in leadership positions including ExCom by 2025,
• G: reduce by 2025 non-mandatory commercial intermediaries by 100%.
(…)
Under the 2022 Program, €21.0 million were authorized for awards.
A first grant of
1,659,182 shares (897,084 PSUs and 762,098 RSUs, representing €18.9 million at €11.36
(closing stock price at the grant date) was made on March 28, 2022. A second grant of 167,476
shares (94,792 PSUs and 72,684 RSUs) was performed on September 19, 2022 representing
€2.1 million at €12.60 per share (closing stock price at the grant date).
44. In the following example, electricity company Fortum Oyj discloses a significant event
occurring after the balance sheet date which is related to climate-matters. A new operating
ESMA emphasis added in Orange
Description explaining the link
between the share-based
compensation and the
remuneration policies related
to climate objectives.
36
licence will significantly impact the activity of the issuer in the future (including segment
reporting) and has an overall effect on the issuer’s financial and sustainability reporting.
EXAMPLE 22 – FORTUM OYJ
Page 109
39 Events after the balance sheet date
On 16 February 2023, the Finnish Government granted a new operating license for both
units at Fortum’s Loviisa nuclear power plant until the end of 2050. Over the course of
the new licence period, the plant is expected to generate up to 170 terawatt hours of
CO
2
-
free electricity. Investments related to the continuation of operations and lifetime
extension will amount to an estimated EUR 1 billion until 2050.
Over the past five years, Fortum has already invested approximately EUR 300 million in
refurbishing the Loviisa power plant
. The Loviisa power plant is the first nuclear power
plant in Finland. The power plant has two units: unit 1 started operating in February 1977,
and unit 2 in November 1980.
At the beginning of March 2023, the Fortum Board of Directors resolved on Fortum’s new
strategy. Fortum’s strategic priorities
are to deliver reliable clean energy and drive
decarbonisation
in industries in the Nordics. The strategy includes new financial and
sustainability targets:
• Updated financial guidance to ensure credit rating of at least BBB and optimal financial
flexibility for future growth: long-term financial net debt-to-comparable EBITDA of 2.0–
2.5 times.
• Disciplined growth in clean energy with capital expenditure of up to EUR 1.5 billion
during 2023–2025. Investment hurdles of project WACC + 150–400 basis points will be
applied and evaluated against the company’s climate and biodiversity targets.
(…)
• Fortum has brought forward its target to reach carbon neutrality to 2030 (Scopes 1,
2, 3) and will exit all coal already by the end of 2027. To reach carbon neutrality, Fortum
is committed to setting emission reduction targets based on the climate science (SBTi
1.5°C), assuming Russia exit. To measure progress, mid-point targets have been set
for specific emissions at below 20 g CO
2
/kWh for total energy production and at below
10 g CO
2
/kWh for power generation by 2028.
(…)
At the beginning of March 2023,
the Fortum Board of Directors resolved on revising the
financial segment reporting to match the new business structure and strategy. As of
the beginning of 2023, Fortum will report its financial performance in the following reporting
segments:
•
The Generation segment will include the Hydro Generation, Nuclear Generation,
C
orporate Customers and Markets and Renewables and Decarbonisation business
units.
• The Consumer Solutions segment includes the Consumer Solutions business unit.
• The Other segment includes the Circular Solutions business unit, Innovation and Venturing
activities, enabling functions and corporate management. (…)
4.5.1 Areas for Continued Focus
To keep in mind
See also…
a) Issuers are encouraged to consult IASB educational material
, which points to
areas (not addressed in this report) where effects of climate-related matters may
be relevant and material for financial statements (e.g., those relating to operating
segments, income taxes, financial instruments, or insurance contracts). As
applicable for all other selected topics, where material, issuers should quantify
IASB
Educational
Document
ESMA emphasis added in Orange
Changes on segments due
to new business structure
and strategy.
Quantification of the issuer’s
commitments regarding
investments directly related
to environmental targets.
37
and specify the various climate-related assumptions and impacts on financial
information derived from the application of other standards.
b) When share-based compensation and the remuneration policies are related
to climate objectives, issuers might consider providing: (i) detailed disclosures
as to how the assessment of remuneration of the Board of Directors and share-
based payments linked to climate objectives is conducted, for example which
ESG indicators are used, how the issuer determines that the objectives have been
fulfilled or not and (ii) which portion of the remuneration (quantification) relates
to the fulfilment of ESG criteria.
c) Issuers’ climate-related matters may lead to
changes in their business
activities
and also in the way those activities are reported to and monitored by
management
. Where this is the case, issuers should consider whether these
changes impact the identification of issuers’ operating segments in
accordance with the requirements of IFRS 8 Operating Segments. For example,
issuers should assess to which extent new segments should be created or if the
application of the aggregation criteria to existing segments should not be revised.
d) Climate-related activities may affect the nature, amount, timing and uncertainty
of entity’s revenue, impacting
, for example, how information about the entity’s
revenue is presented in and outside the financial statements
. This is also in
consideration of the upcoming European Sustainability Reporting Standards
(ESRS) requirements. Therefore, issuers should consider whether there is a need
to change the selection of categories used to disaggregate revenue and
whether further information should be disclosed.
e) Climate-related matters may additionally impact issuers' assessment of
expected credit losses calculated for financial assets subject to the impairment
requirements of IFRS 9 Financial Instruments. Entities should consider providing
explanations on how these matters were incorporated in their ECL calculations.
2021 ECEP
2021 ECEP
38
5 Conclusion
45. ESMA recommends that issuers (including their management, supervisory boards and audit
committees) and auditors consider the illustrative examples in this report when looking at
how to assess and disclose climate-related matters in IFRS financial statements. As climate
risks potentially impact all areas of an organisation, issuers should consider if the procedures
in place facilitate the internal interactions between its different departments. In this respect,
ESMA highlights the importance of audit committees and Boards in having an enhanced
supervisory role to ensure that this interaction is in place and is efficient.
46. ESMA recommends that issuers consider the observations in the areas of continued focus
that accompany the excerpts presented in this report, and not excessively concentrate on the
individual facts and circumstances presented in the examples (which are specific to the
concerned entities, and which are not intended to be read as applicable or satisfactory in all
circumstances and for all issuers).
47. ESMA and enforcers will continue to monitor the progress of issuers in this area and
document practices of disclosure of climate-related matters in IFRS financial statements as
they evolve, in the expectation that such material provides a useful and helpful tool to
stakeholders.
39
Annex I: List of Selected Issuers
As per the Objectives section, the inclusion of the following issuers in the report does not
constitute a form of validation, compliance check or quality control of the information reported
by the issuer, either from ESMA’s perspective or from that of enforcers. The extracts
presented are therefore reproduced solely for illustrative and educational purposes.
The extracts of the disclosures included in this report were drawn from the English-language
PDF versions of the 2022 AFRs publicly available on the issuers’ website. Note that these
versions are variants of the official versions compliant with the provisions of Commission
Delegated Regulation (EU) 2019/815 (the ESEF Regulation – European Single Electronic
Format), retrievable from the national databases (Officially Appointed Mechanisms, or “OAMs”
- the national mechanisms for centrally storing Regulated Information under the Transparency
Directive).
15
Also note that in multiple instances, this English-language version of the AFR is
an issuer’s translation from the original language of the AFR. In the event of any discrepancy,
the original language version prevails.
Efforts were made to provide accurate external links to the reports available on the issuers’
public websites, prior to the publication of the report. Note that the external links provided in
the table below will not be updated and in time may no longer function. To this end, please
refer to the official versions retrievable from the OAMs, as outlined above.
Country Issuer Name
Sector [Industry Classification
Benchmark]
Link to 2022 Annual
Financial Report
Belgium
Solvay SA
Chemicals
Link
Finland
Fortum Oyj
Electricity
Link
France
Air Liquide SA
Chemicals
Link
Arkema SA
Chemicals
Link
Électricité de France SA
Electricity
Link
Imerys SA
Industrial Metals and Mining
Link
Saint-Gobain SA
Construction and Materials
Link
Germany
BASF SE
Chemicals
Link
Hapag-Lloyd AG
Industrial Transportation
Link
Mercedes-Benz Group AG
Automobiles and Parts
Link
RWE AG
Gas, Water and Multi-utilities
Link
Traton SE
Automobiles and Parts
Link
Uniper SE
Electricity
Link
Italy
Enel SpA
Electricity
Link
Eni SpA
Oil, Gas and Coal
Link
Netherlands
Technip Energies NV
Oil, Gas and Coal
Link
Norway
Equinor ASA
Oil, Gas and Coal
Link
Spain
Endesa SA
Electricity
Link
Iberdrola SA
Electricity
Link
Naturgy Energy Group SA
Gas, Water and Multi-utilities
Link
Repsol SA
Oil, Gas and Coal
Link
Sweden
Telia Company AB
Telecommunications
Link
15
Hyperlinks to the OAMs are accessible from ESMA’s “Databases and Registers” website page, Corporate reporting (Transparency
Directive) header.