ICAEW.com works better with JavaScript enabled.

ISSB consultations on sustainability disclosures: ICAEW responds

Author: ICAEW Insights

Published: 04 Aug 2022

ICAEW welcomes the two exposure drafts from the International Sustainability Standards Board on sustainability-related financial information and climate-related disclosures respectively.

In its responses to exposure drafts by the International Sustainability Standards Board (ISSB), ICAEW has welcomed efforts to develop disclosure requirements for sustainability and climate-related financial information, and has emphasised some critical points where improvements are necessary. 

ICAEW highlights the need for greater clarity and definition around terminology, such as ‘sustainability-related’ and ‘enterprise value’. This would help avoid confusion and ensure standards are applied consistently. Dr Nigel Sleigh-Johnson, Director of Audit and Corporate Reporting at ICAEW, says: “Clarity is a prerequisite if the new standards are to be effectively implemented and enforced. That applies not just to key terms and concepts, but also the process entities are expected to go through when applying the new standards.” 

The Institute also stresses that, while industry-based metrics are clearly valued by investors, the mandatory industry-based requirements, contained in an appendix, are not of sufficient quality to form a mandatory part of the Climate-related Disclosures Standard. “The industry-based requirements are not well aligned to the main body of the standard, nor have they been sufficiently internationalised,” explains Laura Woods, Technical Manager in ICAEW’s Financial Reporting Faculty. 

The materials encompassed by the proposed appendix, based on Sustainability Accounting Standards Board (SASB) Standards, have been subject to a rigorous due process prior to incorporation in the exposure draft. But not by the IFRS Foundation, or in an international context. The appendix is some 640+ pages long. “The 120-day consultation period is simply not enough time for IFRS Foundation stakeholders to properly review the material,” says Woods.

In its response letters, ICAEW raises concerns about the scalability of the standards and the practicalities of smaller entities implementing them. ICAEW suggests that the ISSB could consider an approach that categorises the disclosure requirements into three ‘buckets’: core disclosures, additional disclosures and supplementary disclosures. 

This approach would allow some jurisdictions to adopt the ISSB’s standards and reporting entities to begin their journey towards full compliance earlier than might otherwise be possible. This should encourage more widespread adoption. “An approach like this would recognise the steep learning curve that lies ahead for many preparers,” Sleigh-Johnson comments. “Much is sure to be learned through the early stages of implementation and through an iterative feedback process.”

The ISSB consultation closed on 29 July, but the debate will continue as the ISSB continues to work on these and other new standards. For further detail on ICAEW’s views of the ISSB exposure drafts, take a look at Mission critical matters for the ISSB, where links to the full responses can be found. If you have any comments or suggestions please contact laura.woods@icaew.com

Read about the government response to the ISSB exposure drafts

 

Recommended content

Podcasts
Accountancy Insights Podcast
Accountancy Insights Podcast

Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.

Find out more
Newsletter
A megaphone
Stay up to date

You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.

Sign up
Daily summaries
Three yellow pins planted into a surface in a row
News in brief

Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.

See more
Open AddCPD icon

Add Verified CPD Activity

Introducing AddCPD, a new way to record your CPD activities!

Log in to start using the AddCPD tool. Available only to ICAEW members.

Add this page to your CPD activity

Step 1 of 3
Download recorded
Download not recorded

Please download the related document if you wish to add this activity to your record

What time are you claiming for this activity?
Mandatory fields

Add this page to your CPD activity

Step 2 of 3
Mandatory field

Add activity to my record

Step 3 of 3
Mandatory field

Activity added

An error has occurred
Please try again

If the problem persists please contact our helpline on +44 (0)1908 248 250