Educational material (Agenda Paper 9)

At this meeting, an update on the development of educational material on IFRS S1 and IFRS S2 was provided to the ISSB and the ISSB were not asked to make any decisions.

The staff intends to develop educational material that is anchored in and informed by stakeholder feedback. At the same time, the staff thinks it is necessary to find a balance between being proactive and responsive, while also developing a systematic approach to monitor, evaluate and respond to questions being raised by stakeholders. The education material can help further build a common understanding of IFRS S1 and IFRS S2 by summarising, explaining or illustrating disclosure requirements and how they might be applied, but not adding or changing requirements in the standards. Some factors that may influence the staff’s prioritisation or timing of a matter for the development of educational material are listed below:

• The relevance of the requests from stakeholders to the work of the ISSB and the IFRS Foundation
• Focusing efforts on developing educational material for those matters that will be most helpful to the greatest number of stakeholders at a given time
• The interactions and the synergies that may exist between matters relating to IFRS S1 and IFRS S2
• Appropriate balance between those matters for which educational material can be developed quickly and efficiently and those matters for which the staff will need more time to develop educational material
• Gradual maturity on market understanding of IFRS S1 and IFRS S2 that may require educational material being developed in multiple phases

The staff is currently developing educational material to explain and illustrate how preparers might apply some requirements in IFRS S2 to disclose information about some nature and social aspects of climate-related risks and opportunities. Educational material is also under development to support the interoperability of IFRS S1 and IFRS S2 with other relevant standards, including European Sustainability Reporting Standards (ESRS) and greenhouse gas (GHG) emissions disclosures in the Global Reporting Initiative (GRI) Standards.

The staff intends to develop educational material on the requirements on current and anticipated financial effects, including proportionality mechanisms. In addition, the staff has identified a short list of matters for which work to develop educational material is likely to be prioritised, as stakeholders have expressed a need for more support. These matters include:

• The requirements in IFRS S1 on identifying sustainability-related risks and opportunities, including using sources of guidance, and on disclosing material information about those risks and opportunities
• The requirements in IFRS S2 on the measurement and disclosure of GHG emissions, such as additional examples on the interaction between measurement approaches (equity share or control approach) and the requirement to disaggregate Scope 1 and Scope 2 GHG emissions between the consolidated accounting group and other investees

The staff aims to begin publishing educational material before the end of the year with additional materials being published throughout 2024 and beyond as needed.

ISSB discussion

ISSB members acknowledged the importance of balancing the timeliness and limited resources of developing educational material. However, they emphasised that the ISSB needs to take into account needs and concerns of certain groups of stakeholders. These groups of stakeholders may include market leaders in sustainability reporting, EU companies, companies in developing countries, small and medium-sized entities within the value chain, industries that are heavily impacted by sustainability issues, regulators, etc.

Also, ISSB members gave a number of recommendations for the development of educational material during the meeting, which included:

• Coordinating with the International Accounting Standards Board (IASB) and other experts or organisations in order to leverage their expertise
• Enhancing the transparency on selection of topics, e.g. why no educational material is developed for certain topics
• Checking against the existing disclosures made by entities applying the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations or the Sustainability Accounting Standards Board (SASB) Standards
• Providing translation into other languages
• Using plain language and less jargon
• Reserving resources to manage a potential huge number of requests after the effective date of IFRS S1 and IFRS S2

Lastly, a number of ISSB members showed appreciation for the development of the ISSB Knowledge Hub and suggested that the staff (i) adds sections for IFRS Sustainability Disclosure Taxonomy and (ii) points out the most helpful information in other sources (e.g. specific information under the GHG Protocol) to accelerate the stakeholders’ learning process.