The Financial Accounting Standards Board (FASB) on May 25 added a project to its technical agenda on environmental credits. The unanimous decision came two months after the Securities and Exchange Commission (SEC) proposed new climate-related disclosure requirements that include company business strategies for use of energy credits.
This is an evolving area where there is diversity in practice in accounting, and there are new incentives and credits for companies to invest in certain areas that lead to ambiguity. Companies and their auditors are challenged by the lack of accounting guidance, and companies’ decisions to enter these transactions can also be affected.
