If it had not been for the Covid-19 pandemic, the dominant theme of 2020 would most likely have been climate risk. The far reaching impact of environmental, social and governance (ESG) has, however, not gone unnoticed and the International Accounting Standards Board (IASB) recently published an article examining the impacts of climate-related matters on financial statements.

An ESG framework, as recommended by the G20, includes disclosure requirements that should be enforced by various regulators. Climate-related effects on business are numerous and can manifest themselves in different ways such as:

1. Physical risk