Industry-based Materials

Date recorded:

Industry-based Materials (Agenda Paper 6)

The objective of this paper is to:

  • Discuss and begin alignment around the strategy for integrating industry-based materials into IFRS Sustainability Disclosure Standards
  • Discuss the staff’s summary of and the staff’s draft plan for navigating decisions the ISSB will need to make regarding:
    • The role of the SASB Standards in [draft] IFRS S1
    • The industry-based requirements in Appendix B of [draft] IFRS S2
    • Improving the international applicability of the SASB Standards
    • The ISSB’s upcoming consultation on agenda priorities
    • Advancing SASB projects inherited by the ISSB

The ISSB’s input in this session will inform the staff’s recommendations in future papers related to these points.

The staff did not ask the ISSB to make any decisions in this meeting. While this paper contained a set of the staff’s initial recommendations regarding the points above, these recommendations were intended primarily to draw attention to the ways in which the ISSB’s decisions on these matters are interconnected.  

The staff’s draft plan for advancing industry-based materials

The staff’s draft plan, which includes the staff estimates of when different actions could be taken, is summarised as follows:

  • Q4 2022: The staff recommend maintaining the role of the SASB Standards in [draft] IFRS S1 as materials that shall be considered by preparers
  • Q4 2022: The staff recommend that the contents of Appendix B of [draft] S2 be made non-mandatory implementation guidance, and that the ISSB state its intention to make the topics and metrics mandatory in the future following additional research, consultation and revisions
  • Early 2023: The staff recommends including legacy SASB projects and the international applicability of SASB Standards as 'foundational' work in connection with the ISSB’s consultation on agenda priorities
  • Early 2023: Work is advanced by the ISSB on improvements to the international applicability of SASB Standards covering topics beyond climate
  • Mid 2023: The ISSB seeks public input on changes to address the international applicability of the SASB Standards on topics beyond climate
  • Mid 2023: If agreed as part of the work to build on the foundations of S1 and S2, the ISSB issues Exposure Drafts of proposed changes to five industry standards in connection with the three active SASB projects on which the SASB Standards Board previously released 'recommended changes'
  • Late 2023: the ISSB issues updates to the SASB Standards that improve their international applicability and states its intention to continue research, consultation and revisions to the SASB Standards to evolve them into industry-based requirements in the future.
  • 2024 and beyond: the technical staff engages in targeted research & consultations to pursue further improvements to the SASB Standards in alignment with the ISSB’s agenda priorities, including other active projects inherited by the ISSB
  • 2025: the ISSB issues exposure drafts of industry-based requirements derived from the SASB Standards as new IFRS Sustainability Disclosure Standards

ISSB discussion

It was noted that many jurisdictions struggled with the SASB metrics included in Appendix B of ED IFRS S2, however, they were not opposed to industry-based guidance per se. One of the main points raised was that SASB Standards were not developed with a view to be a global baseline. Instead, they are heavily based on US circumstances and particularities.

ISSB members seemed to agree that industry-specific climate-related disclosures should be included in IFRS S2. However, there was some discussion as to how this can be achieved. One of the Vice Chairs said that the ISSB needs to decide whether Appendix B should be mandatory guidance or whether it should just serve as an illustration of how industry-based climate-related disclosures can be developed. ISSB members agreed and said that a truly global baseline should also leverage other guidance and take into account feedback from stakeholders worldwide.

There was also some discussion about whether it was the ISSB’s remit to maintain the SASB Standards. Most ISSB members shared the view that the ISSB should be the steward of SASB Standards. One of the Vice Chairs noted that the Due Process Oversights Committee has approved that the ISSB can make changes to SASB Standards based on the comment letters received on ED IFRS S1 and S2. Eventually, the modified SASB Standards could be moved into IFRS Sustainability Disclosure Standards if that was the stakeholder desire. This way IFRS Sustainability Disclosure Standards could be developed quickly.

Some ISSB members challenged whether the term ‘internationalisation’ was appropriate for the work that is currently being done on SASB Standards. The Chair suggested that ‘ensuring international applicability’ might be a better term for what is currently happening.

ISSB decision

When asked by one of the Vice Chairs, all ISSB members supported that IFRS S2 should maintain the requirement that entities provide industry-specific disclosures. They also supported that the ISSB classify the content in Appendix B as illustrative examples, while stating the intention to make Appendix B mandatory in the future, subject to further consultation.

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