This paper considers the growing trend of market participants entering into transactions linked to environmental, social and governance (ESG) factors to further promote sustainability goals. It aims to identify and illustrate how ESG factors impact accounting and reporting on embedded ESG features under US Generally Accepted Accounting Principles (US GAAP), and includes comparisons to International Financial Reporting Standards.
As ESG features become more pervasive in the market, alternative approaches to assessing ESG features could be introduced under US GAAP to alleviate the operational burden on companies when entering into green transactions. At present, ISDA members believe the existing accounting frameworks, as they relate to ESG-linked transaction activity, do not provide decision-useful information to users of the financial statements.
The paper proposes that ESG-related issues are better covered through qualitative sustainability disclosures that many entities are already reporting on.
Click on the attached PDF to read the full paper.
Documents (1) for Accounting Analysis for ESG-related Transactions and the Impact on Derivatives
Latest
ISDA Response to HMT, BoE on UK CCPs
On November 18, ISDA submitted its responses to the Bank of England (BoE) consultation on ensuring the resilience of central counterparties (CCPs) and the UK Treasury’s (HMT) two draft CCP statutory instruments (SIs). These consultations form part of the update...
Doubling Down on Appropriate Trading Book Capital
Throughout ISDA’s 40th anniversary year, we’ve been reflecting on the quest for greater consistency and efficiency that underpins everything we’ve achieved since 1985. It was at the heart of the original efforts to bring greater standardization to the nascent derivatives...
Determining Initial Reference Index for New Trades
On November 25, 2025, ISDA published a Market Practice Note (MPN) to recommend a specific methodology that market participants could elect to use for the purposes of determining the Initial Reference Index for certain new inflation derivative transactions given that...
ISDA Response to FCA on Fund Tokenization
On November 21, ISDA responded to the Financial Conduct Authority’s (FCA) consultation paper CP25/28 on progressing fund tokenization. In the response, ISDA focuses on the use of tokenized assets as both cleared and non-cleared derivatives collateral. Tokenization presents a significant...