Cover Note (Agenda Paper 7)

In March 2022, the Chair and one of the Vice Chairs published the exposure drafts [draft] IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information ([draft] S1), and [draft] IFRS S2 Climate-related Disclosures ([draft] S2). In May 2022, the IFRS Foundation published a staff draft of a taxonomy for digital reporting representing the disclosure proposals in these two exposure drafts. The staff draft was accompanied by a Request for Feedback soliciting public feedback on staff recommendations on fundamental matters that need to be considered early to enable the ISSB to publish the IFRS Sustainability Disclosure Taxonomy on a timely basis.

The purpose of this meeting was to provide a summary of the feedback obtained during the feedback period.

The ISSB was not asked to make any decisions during this session. However, ISSB members were asked to comment on any feedback that is unclear, that provides new information, or that needs further research.

Summary of feedback on staff draft of IFRS Sustainability Disclosures Taxonomy (Agenda Paper 7A)

Many respondents to the Request for Feedback expressed support for the development of the digital taxonomy for sustainability-related financial information—seen as improving accessibility of information in a cost-efficient way (overall feedback was broadly consistent with responses to digital reporting questions in [draft] S1 and [draft] S2). However, respondents suggested additional efforts are needed for the successful implementation:

• Many highlighted the need for cooperation with stakeholders for consistent, global implementation—especially with regulators and standard-setters to ensure alignment with ongoing jurisdictional initiatives on sustainability disclosures
• Many suggested educational or supporting materials to help with consistent application, especially for the relatively new and complex areas for tagging, e.g. narrative reporting
• Some thought field testing would be useful for areas where taxonomy design decisions might depend on the reporting practice
• Implementation in phases—some suggested tagging numerical information or metrics first and narrative information at a later stage to relieve some pressure from stakeholders
• Ongoing taxonomy improvements via review of common reporting practice or providing an easy way to raise implementation issues, was suggested by a few respondents

The ISSB was asked whether they have any questions on the feedback summarised in this paper, whether any of the information provided is unclear and what other comments ISSB members have on the feedback received on the staff draft of the IFRS Sustainability Disclosure Taxonomy.

ISSB discussion

The digital taxonomy team began by clarifying that their approach to creating the taxonomy will be similar to the one previously used by the IASB with the goal being to ensure that the standards are translated into a technological system that mirrors the content of the disclosure requirements without overcomplication.

One ISSB member raised the question of the digital taxonomy team’s ability to create a comprehensive taxonomy without the full knowledge of future disclosure requirements. The taxonomy team responded that to address this issue they will be taking a step-by-step approach which will start simple.  This will allow the taxonomy to evolve overtime without hindering current usefulness.

Several ISSB members highlighted the importance of creating interoperability with other jurisdictions, for example the GRI taxonomy. One of the Vice Chairs indicated interoperability with the European Sustainability Reporting Standards (ESRS) could be integral to facilitating duality between the two standards; if similar tagging is used, stakeholders would be able to identify information relevant to both the global baseline and the ESRS. Going forward, the taxonomy team will keep interoperability front of mind to facilitate jurisdictional adoption.

Multiple ISSB members questioned potential connectivity between the accounting taxonomy and the sustainability taxonomy. It was noted that it will be important to tie together both the accounting and sustainability information, however, feedback was received that the taxonomy team should be wary of overcomplication when considering this connectivity. The use of examples to illustrate tagging between the accounting and sustainability taxonomies was highlighted as key to increasing usefulness.

Another ISSB member commented on the importance of considering the current target audience and use of the taxonomy to facilitate effective decision-making.

The Chair and other ISSB members discussed the importance of having the taxonomy finalised as soon as possible, following IFRS S1 and IFRS S2 issuance. Further, it was highlighted that partnering with jurisdictions to support the adoption of the taxonomy early in the process will be key. A taxonomy consultative group is currently being created by the ISSB as a next step in furthering the digital taxonomy’s creation.

The ISSB was not asked to make any decisions during this session.

Summary of content in the staff draft of the IFRS Sustainability Disclosure Taxonomy (Agenda Paper 7B)

This paper provided a summary of content in the staff request for feedback on the staff draft of the IFRS Sustainability Disclosure Taxonomy and was provided for background only. It was not discussed specifically.