Accounting Standard AASB 2025-3 Amendments to Australian Accounting Standards – Contracts Referencing Nature-dependent Electricity: Tier 2 Disclosures
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Background
Tier 1 amendments
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In February 2025, the Board issued AASB 2025-1 Amendments to Australian Accounting Standards – Contracts Referencing Nature-dependent Electricity. Nature-dependent electricity contracts help entities to secure their electricity supply from sources such as wind and solar power. The amount of electricity generated under these contracts can vary based on uncontrollable factors such as weather conditions. AASB 2025-1 amends AASB 7 Financial Instruments: Disclosures and AASB 9 Financial Instruments to allow entities to better reflect these contracts in the financial statements. The amendments:
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clarify the application of the ‘own-use’ criteria to nature-dependent electricity contracts;
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permit hedge accounting if these contracts are used as hedging instruments; and
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add new disclosure requirements to enable users of financial statements to better understand the effect of these contracts on an entity’s financial performance and cash flows.
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These amendments arose from the issuance of International Financial Reporting Standard Contracts Referencing Nature-dependent Electricity (Amendments to IFRS 9 and IFRS 7) by the International Accounting Standards Board (IASB) in December 2024.