Building on the TCFD recommendations and the industry-specific requirements of SASB Standards, the International Sustainability Standards Boards’ first proposed sustainability standards cover general sustainability-related financial information and climate-related disclosures. With the consultation period open until July, the intention is to finalise the standards by the end of the year.
The International Sustainability Standards Board (ISSB) have released the initial, and much-anticipated, proposed global sustainability standards:
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
- IFRS S2 Climate-related Disclosures
The ISSB is seeking feedback on the proposals over a 120-day consultation period which closes on 29 July 2022. This allows time in the second half of this year for the Board to consider the feedback on the proposals, with the intention of finalising the Standards by the end of the year.
The announcement explains some context behind the development of these Standards, referring to requests from G20 leaders, the International Organization of Securities Commissions (IOSCO) and others for enhanced information from companies on sustainability-related risks and opportunities.
Emmanuel Faber, Chair of the ISSB, says that the draft standards are “fully building upon the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and they also incorporate industry-specific requirements based on the SASB Standards”.
The proposals build on the prototypes prepared by a Technical Readiness Working Group (TRWG) created by the IFRS Foundation Trustees to provide recommendations to the ISSB on its formation. Those familiar with these prototypes may find the document comparing the TRWG’s recommendations with the exposure drafts particularly useful.
Similarly, the ISSB have prepared a document comparing TCFD’s recommendations with the climate-related disclosures Exposure Draft. Laura Woods, Technical Manager in the Financial Reporting Faculty at ICAEW, comments “Many of the jurisdictions in the process of, or who are already implementing, the TCFD framework may move quickly to adopt the international standards once they become available. This comparison document is important in smoothing the transition as it seeks to help stakeholders by highlighting the differences between the two sets of requirements”.
The ISSB have stated that it is working closely with other international organisations and jurisdictions to support the inclusion of a global baseline for sustainability disclosures into jurisdictional requirements. The intention is that the Standards produced by the ISSB will be compatible with jurisdiction-specific requirements to help the broader needs of stakeholders.
As part of the consultations, there are a number of questions for stakeholders to consider when providing feedback. These include questions concerning approach, clarity of proposed objectives, scope, core content, fair presentation, the definition of materiality and many more. Stakeholders are encouraged to respond to the specific questions, providing a clear rationale to comments and if applicable, include any alternatives the ISSB should consider.
Nigel Sleigh-Johnson, ICAEW’s Director of Audit and Corporate Reporting, says “The publication of these draft sustainability standards is a significant moment in the development of a global and consistent sustainability reporting framework. We look forward to working closely with the ISSB as it continues to develop its comprehensive set of sustainability disclosure standards.”
Looking beyond the initial Exposure Drafts, the ISSB simultaneously announced plans for how its work will build on the SASB Standards and industry-based standard setting processes. Through public consultation, the ISSB will be seeking feedback as to what should be next in their standard setting priorities, including feedback on further development of industry-based requirements.
ICAEW will be responding via comment letter to the ISSB and will seek members’ views in the coming weeks. If you have any comments on the proposals, please let us know at firstname.lastname@example.org.
Alternatively, to submit your views directly, visit the IFRS Foundations’ ‘projects open for comment’ page where there is an option to submit views via either a survey or comment letter.
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