The ISSB welcomes the issuance of the IASB’s revised Management Commentary Practice Statement (Practice Statement). The Practice Statement is an important tool to support connected reporting. The Practice Statement will facilitate better connections between financial statements and sustainability-related financial disclosures. This is an important example of connectivity in the work of the IASB and the ISSB.
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information requires sustainability-related financial disclosures to be provided in a company’s general purpose financial report. However, it does not specify a particular location within that report—this enables a company to provide sustainability‑related financial disclosures prepared in accordance with ISSB Standards within management commentary.
ISSB Standards and the Practice Statement work well together. They both focus on meeting the information needs of primary users, share aligned conceptual foundations (that build on concepts from the Integrated Reporting Framework) and specify complementary requirements.
More specifically, the ISSB Standards and the Practice Statement are both designed to provide context to the financial statements and to explain matters affecting a company’s prospects over the short, medium and long term. A company could benefit from applying the ISSB Standards with the Practice Statement incorporating sustainability-related financial disclosures within its management commentary. For example, the company could use its processes for identifying sustainability-related risks and opportunities to identify sustainability‑related factors to report on in management commentary and could use ISSB Standards to help it identify material information about those factors and appropriate disclosures to meet the needs of primary users.
