(a). Affected balances may include:

• Tangible or intangible non-current assets: Certain assets used in operations that are considered non-sustainable, or that themselves do not conform to sustainability regulations, may be impaired, resulting in their carrying amount being written down. Even if they are not impaired, these assets may have a reduced economic life or residual value, with the result that depreciation is accelerated and the carrying amount reduced.
• Financial asset investments: Investments in the shares of other entities are measured at fair value in the statement of financial position. If investees operate in industries affected by sustainability issues, e.g., fossil fuel extraction, the fair value of their shares is likely to reduce.
• Inventory: Consumer opinion on sustainability issues, as well as legislation, has affected demand for certain goods, resulting in write-downs of inventory from cost to net realizable value.

(b). Investors are increasingly interested in sustainability issues because these affect an entity’s ability to generate financial value. The International Sustainability Standards Board (ISSB) was formed in 2021 to develop a series of sustainability disclosure standards to address these investor needs, whilst complementing IFRS Accounting Standards. To date, the ISSB has issued two standards. The first provides general disclosure requirements regarding sustainability issues. Subsequent standards will apply these to more specific topics, and the second standard issued addresses specific climate-related issues. The standards require disclosure of both risks and opportunities related to sustainability, i.e., potential negative impacts arising from sustainability issues that may affect an entity and potential positive impacts arising from sustainability issues. Disclosures on these are made in relation to governance, strategy, risk management, and metrics. The disclosure of sustainability metrics allows users to assess an entity’s performance against sustainability targets, and other disclosures allow them to understand the overall approach and management of sustainability issues.