Example note (for financial statements – climate-related disclosure)
Note title: Climate-related risks and their financial effects
The Company regularly assesses the climate-related risks and opportunities that may affect its operations. As at 31.12.2024, changes in climate policy, carbon pricing and environmental regulation may have significant effects on the Company's assets, liabilities and revenue.
During 2024, an additional tax expense of TRY 5 million in total was recognised for our production facilities subject to carbon tax. In addition, an impairment of TRY 12 million was identified on certain assets using carbon-intensive production technologies, and this amount was recognised in profit or loss for the period.
In line with our climate strategy, we have turned to renewable energy investments, and new investments of TRY 20 million were made in this context. 70% of these investments were financed through green finance instruments (green bonds, sustainability-linked loans).
The Company performs scenario analyses under IFRS S2 and carries out a risk assessment for the next 10 years based on 1.5°C and 4°C scenarios (see Appendix A).
Scenario analysis template
(For analysing the financial effects of climate change – for management reports or integrated reports)
| Parameter | Scenario 1: 1.5°C (carbon-constrained) | Scenario 2: 4°C (carbon-intensive) |
|---|---|---|
| Carbon tax ($/tonne) | 100 | 25 |
| Annual emissions (tonnes CO₂) | 30,000 | 50,000 |
| Total cost of emissions (TRY)* | TRY 90 million | TRY 37.5 million |
| Increase in energy costs (%) | 10% | 20% |
| Effect on operating profitability | -5% | -12% |
| Decline in asset values (TRY million) | 5 | 15 |
| Investment payback period | 6 years | 8 years |
* Calculated assuming $1 = TRY 30.
This table guides senior management in setting climate strategy. Where necessary, it is also integrated into cash flow projections.
Audit checklist (audit of climate-related financial reporting)
A. Governance and processes
Does the company have climate-related policies and targets?
Is the board of directors informed about these matters?
Are scenario analyses available?
B. Risk identification and measurement
Have physical and transition risks been identified?
How are these risks reflected in the financial statements?
C. Accounting and reporting
Have climate-related asset impairment tests been performed?
Are the assumptions used (carbon price, useful life, etc.) reasonable?
Have emission costs been reflected correctly?
Are climate-related income and expenses presented clearly?
D. Disclosures (notes)
Are climate-related disclosures transparent?
Has alignment with IFRS S2/TCFD been achieved?
Is the sustainability strategy consistent with the financial information?
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This publication is for general information only and is not a substitute for professional advice.