Results of the public comment period for the Methodology Exposure Draft (Agenda Paper 8)

This paper’s objective was to summarise the feedback the ISSB received with regard to the Exposure Draft Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates (Methodology ED). The Methodology ED proposed an approach to remove and replace jurisdiction-specific terms of references without significantly altering structure, sectors, industries, topics or metrics and therefore enhance internationally applicability to help preparers implement IFRS S1 (for details see our iGAAP in Focus newsletter).

This paper also set out the recommendations the staff made to the SASB Standards Board Advisor Group (SASB Standards Board Advisors) in response to the Methodology Exposure Draft feedback and the decisions taken by the SASB Standards Board Advisors.

The SASB Standards Board Advisors requested no decisions from the ISSB during this session.

Decisions of the SASB Standards Board Advisor Group

After careful review and discussion of the feedback received to the Methodology Exposure Draft, on 5 October 2023, the SASB Standards Board Advisors voted to:

• Make no further revisions to the methodology to enhance the international applicability of the SASB Standards
• Approve the revisions to the SASB Standards made in accordance with the methodology and informed by stakeholder feedback on the Methodology ED
• Make the updated SASB Standards effective for annual reporting periods beginning on or after 1 January 2025, with early application permitted
• Make available blackline documents detailing the approved revisions for a period of 30 days

The SASB Standards Board Advisors considered the need to re-expose the proposals applying the re-exposure criteria in paragraphs 6.25-6.27 of the Due Process Handbook. As noted above, the SASB Standards Board Advisors determined not to revise the methodology to enhance the international applicability of the SASB Standards proposed in the ED and have concluded that the revisions to the SASB Standards have been made in accordance with that methodology informed by stakeholder feedback. Accordingly, the SASB Standards Board Advisors are satisfied that re-exposure is unlikely to reveal any new information or concerns not already considered and that the SASB Standards should be finalised.

Blackline documents detailing the specific revisions to the SASB Standards were released on 11 October 2023 and are available via the project page on the IFRS Foundation website until 10 November 2023. Comments are not requested on the blackline documents; however, stakeholders can notify the ISSB of any “fatal flaws” identified.

Feedback outside the scope of the Methodology Exposure Draft

Respondents also raised issues about the SASB standards that were outside the scope of the methodology issues including: 

• Interoperability: Some respondents want the ISSB to continue its efforts to improve the interoperability of the SASB Standards' disclosure requirements with comparable Global Reporting Initiative (GRI) and European Sustainability Reporting Standards (ESRS) disclosure requirements to minimise preparer duplication of effort while applying anticipated GRI and ESRS sector-specific standards.
• Proposed transition reliefs: Some respondents suggested the SASB Standards be divided into ‘core’ metrics that are critically important across most jurisdictions and ‘expanded’ metrics that are likely to be useful only in a smaller set of specific jurisdictions. Some North American respondents requested that the ISSB develop transition reliefs for current SASB Standards reporters as they adopt the proposed revised metrics.
• Use of third-party references in the SASB Standards: Many respondents requested that the ISSB monitor, review and update third-party references in the SASB Standards. Some respondents noted that ‘paywall’ access (requiring a paid license for use) to specific third-party frameworks references in the SASB Standards might pose an undue cost burden for preparers and might bar adoption in specific jurisdictions in which such licensed references are unacceptable for use uin regulatory applications.
• Sustainable Industry Classification System® (SICS): Some respondents, including many in Asia-Oceania, expressed their view that the SICS is US-centric and expressed concerns about how the SASB Standards align with national or regional industry classification systems such as the Australian and New Zealand Standard Industrial Classification (ANZSIC) system, the European Union’s Nomenclature of Economic Activities (NACE) classification system, or the Global Industry Classification Standard (GICS).
• Future use of the SASB Standards: Many respondents indicated that the ISSB should provide stakeholders with greater clarity on whether, and how, the SASB Standards will be used by the ISSB over the long-term, and what the structure of an eventual set of IFRS Sustainability Disclosure Standards will be. A few respondents suggested the ISSB should not enhance the international applicability of the SASB Standards and instead focus on developing a set of industry-specific IFRS Sustainability-related Disclosure Standards.

ISSB discussion

ISSB members were very supportive of the paper the staff had prepared, and the decisions taken by the SASB Standards Board Advisors. Therefore, they expressed confidence that the application of the methodology and the associated removal or replacement of jurisdiction-specific terms of references reduces the potential barrier to using the SASB standards.

Some ISSB members raised certain aspects of the more general feedback the ISSB received. They primarily related to the relationship between IFRS S1 and the SASB Standards or the question whether the next topical standard (IFRS S3) will include industry-based requirements like IFRS S2 or not. However, as indicated above, these aspects are not within the scope of this project and will be discussed in the context of the feedback received in response to the agenda consultation.

The SASB Standards Board Advisor Group will finalise the amendments to the SASB Standards and present them for ratification by the ISSB in the December 2023 meeting.