The Effect of Climate Change Disclosure under IFRS-S2 on the Going Concern of Iraqi Listed Banks
DOI:
https://doi.org/10.33095/1fd8m424Keywords:
IFRS S2, Climate Change, Going Concern, Banks.Abstract
In recent years, increasing concerns regarding the implications of climate change and associated environmental risks on global financial stability have led both investors and stakeholders to demand more comprehensive disclosures on how economic entities impact the environment and climate. Also, the climate-related risks influence their operational sustainability and future cash flow generation. This study aims to investigate the effect of climate change disclosures according to IFRS-S2 on the going concern status of Iraqi listed banks. The research involves a sample of 30 banks listed on the Iraq Stock Exchange from 2018 to 2023.
The study employed an analytical survey method combined with a binary scoring approach to evaluate banks' climate change disclosures in alignment with IFRS-S2, by examining their annual reports, suitability reports and published policies. The banks' going concern status was assessed using the amended to banks Altman Z-score model. Linear regression analysis was utilised to assess the relationship between climate change disclosures and going concern status.
The findings demonstrate that climate-related disclosure compliance explains approximately 4% of the variability in banks' going concern status. The most significant positive impact on banks' going concern was found in strategies that align with IFRS-S2, particularly those integrating climate risks and opportunities into business practices. In contrast, disclosures related to metrics and targets under IFRS-S2 showed no significant impact on banks' going concern, primarily due to limited and inadequate disclosure regarding metrics and targets among the sampled banks.
Downloads
References
Aibar-Guzmán, B., Raimo, N., Vitolla, F., & García-Sánchez, I. M. (2024). Corporate governance and financial performance: Reframing their relationship in the context of climate change. Corporate Social Responsibility and Environmental Management, 31(3), 1493–1509. https://doi.org/10.1002/csr.2649
Ahmed Shams Al-Din*, N., & Nema Ali, S. (2024). Environmental and climate changes and their effects on the agricultural sector in Iraq. Journal of Economics and Administrative Sciences, 30(143), 275-286. https://doi.org/10.33095/b04fna75
Alexander, D., & Nobes, C. (2020). Financial Accounting an International Introduction (7th Edition). Pearson Education Limited
Ali Mohammed Ridha Al-Kamoosy , A., & Ahmed Mohammed Al-Ani , S. (2024). The Effect of Ownership Structure on the Going Concern Companies Listed in the Iraqi Stock Exchange. Journal of Economics and Administrative Sciences, 30(143), 549-564. https://doi.org/10.33095/mhcwq024
Alsaifi, K., Elnahass, M., & Salama, A. (2020). Carbon disclosure and financial performance: UK environmental policy. Business Strategy and the Environment, 29(2), 711–726. https://doi.org/10.1002/bse.2426
Alshahrani, F., Eulaiwi, B., Duong, L., & Taylor, G. (2023). Climate change performance and financial distress. Business Strategy and the Environment, 32(6), 3249–3271. https://doi.org/10.1002/bse.3298
Alsheikh, A. H., & Alsheikh, W. H. (2023). The level of climate risk reporting performance and firm characteristics: Evidence from the Saudi Stock Exchange. Investment Management and Financial Innovations, 20(4), 359–374. https://doi.org/10.21511/imfi.20(4).2023.29
Altman, E. I., & Hotchkiss, E. (2006). Corporate Financial Distress and Bankruptcy: Predict and Avoid Bankruptcy, Analyze and Invest in Distressed Debt (Third Edition). John Wiley & Sons, Inc. https://doi.org/10.1002/9781118267806
Bahiyah Omar, N., Teknologi MARA Azlan Amran, U., Sains Malaysia Ruhaini Muda, U., Teknologi MARA Shah Alam Roshayani Arshad, U., Teknologi MARA Shah Alam Ramesh Nair, U., & Teknologi MARA Shah Alam, U. (2021). Corporate governance, climate change reporting, firm performance and moderating roles of absorptive capacity: Evidence from Malaysia. Academy of Strategic Management Journal, 20(Special Issue 6).
Bui, B., Houqe, M. N., & Zaman, M. (2020). Climate governance effects on carbon disclosure and performance. British Accounting Review, 52(2). Https://doi.org/10.1016/j.bar.2019.100880
Denna, P. (2023). The Impact of Extreme Climate Events on Financial Performance: Evidence from Manufacturing Firms in Europe [MSC]. Universidade Católica Portuguesa & Bocconi University.
EY. (2023). Applying IFRS—Introduction to IFRS S1 and IFRS S2, 85.
García-Sánchez, I. M., Aibar-Guzmán, B., Raimo, N., Vitolla, F., & Schiuma, G. (2024). Climate governance, growth opportunities, and innovation in addressing climate change: Empirical evidence from emerging countries. Finance Research Letters, 70. https://doi.org/10.1016/j.frl.2024.106328
Gkouma, O., Filos, J., & Chytis, E. (2018). Financial crisis and corporate failure: The going concern assumption Findings from Athens stock exchange. Risk Market Journals Journal of Risk & Control, 5(1), 141–170.
Gündüz, Ç. (2025). The Impact of Climate Change on Financial Performance of the Electricity Industry: The Case of Türkiye. Ekonomi Politika ve Finans Arastirmalari Dergisi, 10(1), 92–106. https://doi.org/10.30784/epfad.1588558
Hammond, P., Opoku, M. O., Kwakwa, P. A., & Amissah, E. (2023). Predictive models of going concerns and business failure. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2226481
Hammond, P., Opoku, M. O., Kwakwa, P. A., & Berko, D. (2023). Comparison of going concern models with and without corporate governance. Cogent Business and Management, 10(2). https://doi.org/10.1080/23311975.2023.2234152
He, Y., & Xiao, Y. (2024). Climate Risk and Corporate Performance. Proceedings of the 5th International Conference on Economic Management and Big Data Application (ICEMBDA 2024), Advances in Economics, Business and Management Research 313, 289–299. https://doi.org/10.2991/978-94-6463-638-3_29
Hendriksen, E. S., & Van Breda, M. F. (1992). Accounting Theory (5th Edition). McGraw-Hill.
IFRS S2. (2023). IFRS S2: Climate-related Disclosures. https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures/
Jabbar Mohammed*, M. (2024). The Influence of Credit Risk Using Derivative Financial Instruments on the Performance Commercial banks. Journal of Economics and Administrative Sciences, 30(140), 544–560. https://doi.org/10.33095/yrj09342
Jones, C. (2020). Going Concern and Other Uncertainties. Innovation. https://www.2020innovation.com/files/documents/file-downloads/Going-Concern-and-Other-Uncertainties-NOTES.pdf
Kalogiannidis, S., Kalfas, D., Patitsa, C., & Chalaris, M. (2024). Relationship between Climate Change and Business Risk: Strategies for Adaptation and Mitigation: Evidence from a Mediterranean Country. WSEAS Transactions on Environment and Development, 20, 276–294. https://doi.org/10.37394/232015.2024.20.28
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate Accounting (17th Edition). John Wiley & Sons, Inc.
Liu, Y., Dong, K., Nepal, R., & Afi, H. (2025). How do climate risks affect corporate ESG performance? Micro evidence from China. Research in International Business and Finance, 76. https://doi.org/10.1016/j.ribaf.2025.102855
Loohuis, D. (2022). The Impact of Carbon Emissions on Corporate Financial Performance. [MSc]. University of Twente.
Luan, L., Wang, J., Guo, K., & Ji, Q. (2022). Climate Risk and Enterprise Performance -Micro-evidence from Chinese A-share listed companies. Procedia Computer Science, 214(C), 983–990. https://doi.org/10.1016/j.procs.2022.11.268
Meneses Cerón, L. Á., van Klyton, A., Rojas, A., & Muñoz, J. (2024). Climate risk and its impact on the cost of capital—A systematic literature review. Sustainability, 16(23), 10727.
Michalisin, M. D., & Stinchfield, B. T. (2007). Climate Change Strategies and Firm Performance: An Empirical Investigation of the Natural Resource-Based View of the Firm. Journal of Business Strategies, 2(25), 123–150.
Mildawati, T., Agustia, D., & Soewarno, N. (2018). The Climate Change Strategy-the Company’s Performance: Examining the Mediating Role of The Disclosure of Climate Change in Indonesia. International Journal of Scientific and Research Publications, 8(1), 451.
Naseer, M. M., Khan, M. A., Bagh, T., Guo, Y., & Zhu, X. (2024). Firm climate change risk and financial flexibility: Drivers of ESG performance and firm value. Borsa Istanbul Review, 24(1), 106–117. https://doi.org/10.1016/j.bir.2023.11.003
Patnaik, S., & Fabrizio, K. (2023). A new framework for how firms can manage climate risks (Working Paper #7). https://www.brookings.edu/series/center-on-regulation-and-markets-working-papers/
Jasim Resen, E., & Sadiq AbdulRazzaq, M. (2022). An Evaluation of Environmental Performance According to The International Standard (ISO14001: 2015) in a Field East of Baghdad / A Case Study in the Midline Oil Company. Journal of Economics and Administrative Sciences, 28(134), 29-56. https://doi.org/10.33095/jeas.v28i134.2420
Rodriguez Jasso, A. F., García Flores, F., & Briseño García, A. (2023). Corporate governance and climate change: Policy, innovation, strategies, and legitimacy. CIENCIA Ergo-Sum, 31. https://doi.org/10.30878/ces.v31n0a5
Sebesta, J., & Brøndum, E. R. (2023). ESG, Climate, and Financial Performance Impact of ESG and Climate Action on Value and Profitability of High Carbon Emitting Companies. Copenhagen Business School and University of Copenhagen.
Spiceland, J. David., Sepe, J. F. ., & Nelson, Mark. (2013). Intermediate accounting (7th Edition). McGraw-Hill/Irwin Education.
TCFD. (2017). Final Report: Recommendations of the Task Force on Climate related Financial Disclosures. https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf
UNFCCC. (1992). United Nations Framework Convention on Climate Change United Nations. https://unfccc.int/files/essential_background/background_publications_htmlpdf/application/pdf/conveng.pdf
Wójcik-Jurkiewicz, M., & Karczewska, M. (2019). Assessment of the going concern value of a business entity by means of selected discriminative models. ASEJ Scientific Journal of Bielsko-Biala School of Finance and Law, 23(1), 1–7. Https://doi.org/10.5604/01.3001.0013.1644
Zhang, X., Zhang, M., & Fang, Z. (2023). Impact of Climate Risk on the Financial Performance and Financial Policies of Enterprises. Sustainability, 15(20), 14833. https://doi.org/10.3390/su152014833
Zhou, G., Liu, L., & Luo, S. (2022). Sustainable development, ESG performance and company market value: Mediating effect of financial performance. Business Strategy and the Environment, 31(7), 3371–3387. https://doi.org/10.1002/bse.3089
Downloads
Published
Issue
Section
License
Copyright (c) 2025 Journal of Economics and Administrative Sciences
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Articles submitted to the journal should not have been published before in their current or substantially similar form or be under consideration for publication with another journal. Please see JEAS originality guidelines for details. Use this in conjunction with the points below about references, before submission i.e. always attribute clearly using either indented text or quote marks as well as making use of the preferred Harvard style of formatting. Authors submitting articles for publication warrant that the work is not an infringement of any existing copyright and will indemnify the publisher against any breach of such warranty. For ease of dissemination and to ensure proper policing of use, papers and contributions become the legal copyright of the publisher unless otherwise agreed.
The editor may make use of Turtitin software for checking the originality of submissions received.
