IFRS9: Accounting for investments in ESG (Environmental, Social and Governance) bonds
James Estlin, Manager, Department of Professional Practice, KPMG UK looks at accounting for interest changes in ESG bonds.
ESG bonds are designed or structured to achieve or incentivise an ESG objective. The size of the global ESG debt market has increased significantly in recent years, with cumulative green bond issuances surpassing the $1tn mark at the end of 2020, according to data from the Climate Bonds Initiative (an international not-for-profit group aiming to promote sustainable investments). ESG bonds may be attractive to investors pursuing an ESG agenda. The bonds themselves come in different forms, including:
This article addresses the classification and measurement considerations for IFRS 9 reporters that purchase ESG bonds with KPI-linked interest step-up/down features, focusing on the question of SPPI-compliance (a concept explained below).
Continue reading
This content is not freely available. To access 'IFRS9: Accounting for investments in ESG (Environmental, Social and Governance) bonds' you need to be one of the following:
-
ACA student
-
This content is available to ACA students. If you want to start the ACA qualification there are several routes you can take
-
Business and Finance Professional
-
An internationally recognised designation and professional status from the ICAEW.
-
Financial Services Faculty subscriber
-
With so many changes going on in the industry, keeping up-to-date can be a challenge. Membership of the Financial Services Faculty will provide you with all the news and specialist technical support you need.
- Keep abreast of key issues affecting the industry with our monthly magazine FS Focus and regular e-bulletins.
- Specific support for: auditing and reporting; risk, regulation and capital management; financial planning and advice.
- Visit www.icaew.com/joinfsf for the latest pricing and to join online.
-
Financial Services Faculty: Banking
-
Expert analysis of trends and challenges in banking and technical resources in financial reporting, auditing and regulation.
-
Financial Services Faculty: Insurance
-
Expert analysis of trends and challenges across insurance services and technical guidance on new standards and regulation.
-
Financial Services Faculty: Investment Management
-
Expert analysis, specialist support and trusted technical guidance for investment management professionals.
-
Sustainability and Climate Change Community
-
Provides inspiration, insights and collective ambition for professionals delivering on sustainability and acting on climate change.