This paper considers the growing trend of market participants entering into transactions linked to environmental, social and governance (ESG) factors to further promote sustainability goals. It aims to identify and illustrate how ESG factors impact accounting and reporting on embedded ESG features under US Generally Accepted Accounting Principles (US GAAP), and includes comparisons to International Financial Reporting Standards.
As ESG features become more pervasive in the market, alternative approaches to assessing ESG features could be introduced under US GAAP to alleviate the operational burden on companies when entering into green transactions. At present, ISDA members believe the existing accounting frameworks, as they relate to ESG-linked transaction activity, do not provide decision-useful information to users of the financial statements.
The paper proposes that ESG-related issues are better covered through qualitative sustainability disclosures that many entities are already reporting on.
Click on the attached PDF to read the full paper.
Documents (1) for Accounting Analysis for ESG-related Transactions and the Impact on Derivatives
Latest
A Financial Markets Revolution
Every financial center has its own unique features, but it was particularly fitting that ISDA’s recent Annual General Meeting (AGM) was held in Boston – not only a global hub for asset management and insurance, but also a city that...
ISDA AGM Studio: Nnamdi Okaeme & John Pucciarelli
Marking the 10‑year anniversary of the ISDA Standard Initial Margin Model (ISDA SIMM), Joel Clark, senior director, communications, at ISDA, speaks with Nnamdi Okaeme, ISDA’s head of SIMM, and John Pucciarelli, head of partnerships and director of industry engagement at...
Response on Legal Frameworks for Carbon Credits
On May 4, ISDA and the Association for Financial Markets in Europe (AFME) responded to the European Commission’s (EC) consultation on a legal framework for the inclusion of international carbon credits within the EU’s 2040 climate law framework. In the...
ISDA AGM Studio: Julia Hueckel and Chris Zuehlke
Julia Hueckel, director of global regulatory policy at Coinbase, and Chris Zuehlke, global head of Cumberland and partner at DRW, speak with Nicolette Cone, ISDA’s chief of staff and associate general counsel, on the rapidly evolving legislative framework for digital...