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This ISSB Update highlights preliminary decisions of the International Sustainability Standards Board (ISSB). Projects affected by these decisions can be found on the work plan. The ISSB's final decisions on IFRS® Sustainability Disclosure Standards are formally balloted as set out in the IFRS Foundation's Due Process Handbook.

The ISSB met on 15–16 November 2022 in Frankfurt.

Contents

Research and standard-setting

Taxonomy

Research and standard-setting

General Sustainability-related Disclosures (Agenda Paper 3) and Climate-related Disclosures (Agenda Paper 4)

The ISSB met on 15–16 November 2022 to redeliberate some of the proposals in its exposure drafts IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1) and IFRS S2 Climate-related Disclosures (draft S2).

Current and anticipated financial effects and connected information (Agenda Paper 3A and 4B)

The ISSB discussed respondent feedback on the requirements in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1) and IFRS S2 Climate-related Disclosures (draft S2) relating to the current and anticipated financial effects of sustainability-related risks and opportunities on financial performance, financial position and cash flows. The ISSB also discussed feedback on the requirements in draft S1 for disclosing connected information. To inform future staff recommendations, the ISSB discussed illustrative examples of disclosures that may arise from the application of these requirements.

The ISSB was not asked to make any decisions.

Next step

The ISSB will consider staff recommendations on the proposed requirements for current and anticipated financial effects and connected information, including the development of guidance to help entities apply the requirements.

Comparative information and updated estimates (Agenda Paper 3B)

The ISSB discussed the proposed requirement in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1) for an entity to disclose comparative information that reflects updated estimates.

The ISSB tentatively decided:

  1. to amend the proposed requirement set out in paragraph 64 of draft S1 to limit the requirement to revise comparative information to reflect updated estimates, so it would apply to estimates for the previous reporting period disclosed in that previous period, and would not apply to forward-looking estimates disclosed in that previous period;
  2. to provide illustrative guidance to help an entity apply the requirement. Such guidance may include:
    1. examples of situations in which an entity would be required and would not be required to revise comparative information to reflect updated estimates;
    2. examples and explanations of ways to present revised comparative information to reflect updated estimates; and
    3. explanations to distinguish three situations in which an entity would be required to revise comparative information: (1) to reflect updated estimates, (2) to reflect a redefined or replaced metric or target, or (3) to correct errors.

All 13 ISSB members agreed with these decisions.

Next steps

The ISSB will consider:

  1. clarifying the requirement in paragraph 64 of draft S1 by making specific drafting changes; and
  2. developing guidance to help entities to apply the requirement.

Timing of reporting (Agenda Paper 3C)

The ISSB discussed the proposed requirement in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1) for an entity to report its sustainability-related financial disclosures at the same time as its related financial statements.

The ISSB tentatively decided:

  1. to confirm the proposed requirement for an entity to report its sustainability-related financial disclosures at the same time as its related financial statements. All 13 ISSB members agreed with this decision.
  2. to introduce short-term transitional relief that would permit an entity to report its sustainability-related financial disclosures after its financial statements. Eleven of 13 ISSB members agreed with this decision.
  3. to permit an entity, as part of this transitional relief, to report its annual sustainability-related financial disclosures at the same time as its H1/Q2 earnings reporting. Twelve of 13 ISSB members agreed with this decision.

Next steps

The ISSB will continue to redeliberate the proposed requirement and consider staff recommendations on:

  1. how to articulate the short-term transitional relief to permit an entity to report its annual sustainability-related financial disclosures at the same time as its H1/Q2 earnings reporting; and
  2. how long this relief will be available after the effective date of S1.

Strategy and decision-making and climate-related targets (Agenda Paper 4A)

The ISSB considered feedback from respondents on the proposed requirements in IFRS S2 Climate-related Disclosures (draft S2) for an entity to disclose information about its strategy and decision-making, including its transition plans towards a lower-carbon economy and its climate-related targets.

The ISSB tentatively decided:

  1. to confirm and clarify the proposed requirements in paragraphs 13 and 23 of draft S2 for an entity to disclose how climate-related risks and opportunities affect its strategy and decision-making, its plans to transition towards a lower-carbon economy, and its climate-related targets. All 13 ISSB members agreed with this decision.
  2. to require an entity to disclose the assumptions it makes and the dependencies it identifies in developing its transition plans. All 13 ISSB members agreed with this decision.
  3. not to introduce a requirement for an entity to disclose the implications for its transition plans if its assumptions are not met. Twelve of 13 ISSB members agreed with this decision.
  4. to require an entity to disclose additional information about its climate-related targets, including:
    1. the scope of the entity’s targets. All 13 ISSB members agreed with this decision.
    2. the greenhouse gases and the emission scopes that are covered by the entity’s emission targets. All 13 ISSB members agreed with this decision.
    3. which international agreement on climate change the entity is referencing when applying the requirements in paragraph 23 of draft S2. All 13 ISSB members agreed with this decision.

Next steps

The ISSB will discuss further the proposed requirement in draft S2 for an entity to compare its climate-related targets to the latest international agreement on climate change.

The ISSB will continue to redeliberate the proposals in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1)

and draft S2.

Taxonomy

IFRS Sustainability Disclosure Taxonomy (Agenda Paper 7)

The ISSB met on 15 November 2022 to discuss feedback on the staff draft of a proposed IFRS Sustainability Disclosure Taxonomy based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (draft S1) and IFRS S2 Climate-related Disclosures (draft S2).

The ISSB was not asked to make any decisions.

Next step

The ISSB will consider staff research and feedback and will develop a proposed IFRS Sustainability Taxonomy for public consultation.