Globally consistent accounting standards urged for carbon-related instruments
The research, titled Reality of accounting for carbon-related instruments, reviewed 300 companies in high-emitting sectors and found significant inconsistencies in how these instruments are treated in corporate financial reports.
Currently, there is no dedicated IFRS Accounting Standard for carbon-related instruments, leading companies to create their own accounting policies.
According to Professor Ioannis Tsalavoutas from the University of Glasgow, this discretion results in a lack of transparency and comparability, with inconsistent terminology and methodologies undermining confidence in sustainability claims.
To address this gap, ACCA and the University recommend developing a globally applicable accounting standard. This would guide companies on defining the scope, recognition, measurement, and disclosure of carbon-related instruments, ensuring faithful representation of their financial and environmental impact. They also suggest adopting a unified term—'carbon-related instruments'—to promote harmonized communication across markets.
ACCA has supplemented the report with two practical articles offering insights for decision-makers and finance teams, including workflows based on current IFRS standards and the broader implications for ESG reporting, tax risk, and reputation.
Aaron Saw, Head of corporate reporting insights, at ACCA, emphasized that quality information on these instruments is vital for stakeholders. ACCA calls on regulators, standard-setters, and finance professionals to engage with the findings, to build a more transparent and trustworthy carbon market.
Copyright Business Recorder, 2025
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