Document ID: chunk:federal_register_of_legislation:F2024L01472:body:0:p19
Version: federal_register_of_legislation:F2024L01472
Segment Type: other
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Character Range: 54717–57848

reports; and

               (b) primary users of general purpose financial reports (primary users, users of general purpose financial reports, users).

Appendix B
Application guidance
This appendix is an integral part of AASB S2 and has the same authority as the other parts of the Standard.

Climate resilience (paragraph 22)
B1 Paragraph 22 requires an entity to use climate-related scenario analysis to assess its climate resilience, using an approach that is commensurate with its circumstances.[2] The entity is required to use an approach to climate-related scenario analysis that enables it to consider all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort. Paragraphs B2–B18 provide guidance on how an entity uses scenario analysis to assess the entity's climate resilience. Specifically:
(a) paragraphs B2–B7 set out the factors the entity shall consider when assessing its circumstances;
(b) paragraphs B8–B15 set out the factors the entity shall consider when determining an appropriate approach to climate-related scenario analysis; and
(c) paragraphs B16–B18 set out additional factors for the entity to consider when determining its approach to climate-related scenario analysis over time.

Assessing the circumstances
B2 An entity shall use an approach to climate-related scenario analysis that is commensurate with its circumstances as at the time the entity carries out its climate-related scenario analysis (see paragraph B3). To assess its circumstances the entity shall consider:
(a) the entity's exposure to climate-related risks and opportunities (see paragraphs B4–B5); and
(b) the skills, capabilities and resources available to the entity for the climate-related scenario analysis (see paragraphs B6–B7).
B3 An entity shall assess its circumstances each time it carries out its climate-related scenario analysis. For example, an entity that carries out its climate-related scenario analysis every three years to align with its strategic planning cycle (see paragraph B18) would be required to reconsider for this purpose its exposure to climate-related risks and opportunities and the skills, capabilities and resources available at that time.

Exposure to climate-related risks and opportunities
B4 An entity shall consider its exposure to climate-related risks and opportunities in its assessment of its circumstances and when determining the approach to use for its climate-related scenario analysis. This consideration provides essential context for understanding the potential benefits of using a particular approach to climate-related scenario analysis. For example, if an entity has a high degree of exposure to climate-related risk then a more quantitative or technically sophisticated approach to climate-related scenario analysis would be of greater benefit to the entity and users of general purpose financial reports. Users of general purpose financial reports would be less likely to benefit from quantitative or technically sophisticated climate-related scenario analysis if the entity is exposed to few or relatively