A Judgement-Based Connectivity Framework Linking IFRS S2 Climate-Related Disclosures to IFRS Recognition, Measurement, and Disclosure Outcomes: An Illustrative Application

Increasing attention has been directed toward the consistency between sustainability disclosures and financial statements, giving rise to the concept of financial connectivity. A prevailing assumption in this debate is that climate-related risks and opportunities will directly translate into quantifiable impacts on financial statement amounts under International Financial Reporting Standards (IFRS). This study challenges that assumption by arguing that connectivity does not necessarily materialise through immediate recognition outcomes in financial statements. To address this gap, the paper develops a three-stage, judgement-based connectivity framework that links climate-related disclosures under IFRS S1 and IFRS S2 to recognition, measurement, and disclosure decisions under IFRS Accounting Standards. Rather than treating sustainability disclosures as direct valuation inputs, the framework evaluates each disclosed risk or opportunity through structured accounting judgements. The framework is illustrated using the 2024 climate-related disclosures of a listed manufacturing entity (Company A). The illustrative application suggest that significant climate exposures do not automatically result in recognised provisions under IAS 37. Instead, connectivity primarily operates through assumption-setting mechanisms embedded in existing measurement models, including impairment testing (IAS 36), asset life assessments (IAS 16), and deferred tax evaluations (IAS 12). The study makes three interrelated contributions: it reconceptualises financial connectivity as a structured judgement process rather than a numerical reconciliation exercise; it operationalises this reconceptualisation through a replicable step-by-step mapping framework that links IFRS S2 disclosures to specific IFRS recognition, measurement, and disclosure requirements without expanding existing accounting rules; and it clarifies that disciplined non-recognition may represent adherence to accounting integrity rather than a reporting deficiency. These contributions distinguish the framework from existing professional guidance by making the underlying judgement logic explicit and replicable within the scope of IFRS-based financial reporting.