Strategic direction and balance of the ISSB’s activities (Agenda Paper 2)

Background

Within the ISSB’s request for information (RFI) Consultation on Agenda Priorities, the ISSB requested respondent feedback on the strategic direction and balance of the ISSB’s activities for the two-year period covered by its next work plan. 

The staff analysed the responses to the RFI on each potential activity for the ISSB and provided their recommendations, summarised below:

Beginning new research and standard-setting projects

Respondents who ranked this activity were evenly split between assessing it as higher vs lower priority. Regardless of the priority ranking, respondents generally agreed that beginning new research and standard -setting projects is important to the ISSB.

The staff acknowledges the feedback that successful implementation of IFRS S1 and IFRS S2 is critical to the establishment of a global baseline. Therefore, beginning new research and standard-setting may be slightly lower priority on the ISSB’s work plan.

Supporting the implementation of the ISSB standards

Most respondents noted this activity as the highest priority for the ISSB. This feedback was consistent across stakeholder types and geographies. Respondents called for the ISSB to work with policymakers, regulators, companies and investors across jurisdictions to facilitate global implementation. They also requested that the ISSB develop further educational material and work with other sustainability standard-setters and framework providers to support interoperability and avoid unnecessary burden of reporting.

The staff suggests this activity would also include work to maintain and enhance the SASB standards as well as the above activities. The staff believes this activity will require a substantial amount of the ISSB’s capacity.

Researching targeted enhancements to the ISSB standards

In July 2023, the ISSB clarified the scope of this activity to be focused on developing educational material on how to consider nature and social aspects of climate-related risks and opportunities when applying IFRS S2. Thus, the work related to this activity is already largely complete and as such the staff has not considered this as an independent activity for the work plan.

Enhancing the SASB standards

Respondent feedback on this topic was divided. Many respondents noted that the ISSB’s work to enhance the SASB standards will interact with its work to support the implementation of IFRS S1 and IFRS S2 as well as any new research and standard-setting.

As IFRS S1 relies on SASB standards as a primary source of guidance, the staff sees the maintenance and enhancement of SASB standards as critical to ensuring their applicability for global audiences. The staff suggests this activity would include pursuing opportunities to enhance interoperability of the ISSB’s industry-based materials with other relevant standard-setters, engaging with stakeholders and advancing legacy research and standard-setting projects inherited from the SASB board.

Core activities: Ensuring connectivity between the ISSB’s and IASB’s respective requirements, ensuring interoperability of the ISSB Standards with other sustainability standards and engaging with stakeholders

The RFI did not ask respondents to comment on the priority of core activities. However, many respondents did provide their feedback. Many respondents emphasised the importance of engagement, connectivity with the IASB and interoperability. These responses make clear how integral these considerations are as the ISSB advances its work. The staff comments on how these core activities are embedded within the other activities considered above.  

Staff recommendation

Regarding the level of focus placed on each of the above activities the staff recommended:

• A high level of focus on ‘supporting the implementation of IFRS S1 and IFRS S2’;
• A slightly lower, but equal level of focus on each ‘enhancing the SASB standards’ and ‘beginning new research and standard-setting projects’ when compared to ‘supporting the implementation of IFRS S1 and IFRS S2’;
• No specific level of focus on activities related to connectivity, interoperability and stakeholder engagement as these are all fundamental to the work the ISSB will perform in other activities; and
• Reserved capacity for flexibility in the ISSB’s work to allow for the consideration of emerging issues and to support the IASB on projects/activities, as necessary.

ISSB members were asked to vote on their agreement with the inclusion of these activities within their next work plan and the relative level of priority recommended by the staff.

ISSB discussion

One ISSB member requested clarification on the ISSB’s response to stakeholders who wished to see additional clarity over the ISSB’s overall strategy and future suite of standards. The staff responded that the ISSB plans to address these queries, clarify priorities and outline its strategy within the publication of the feedback statement. The staff further clarified that the feedback statement is the formal output of the agenda consultation which summarises the feedback received and the decisions made after the RFI. The staff will use the feedback statement to demonstrate how these decisions fit together and connect to the ISSB’s overall strategy.

One of the Vice-Chairs called out that the reserved capacity should also provide the ISSB with flexibility to address additional resources to support the implementation of IFRS S1 and IFRS S2, enhance the SASB standards and begin new research and standard-setting projects. Many ISSB members called out the importance of this flexibility and how the ISSB needs to be able to pivot on a dynamic basis, monitor the changing environment and respond to market needs.

The Chair commented on the staff’s reference on how the work to enhance the SASB standards will be interconnected with new research and standard-setting projects. ISSB members also discussed the interrelation between thematic and industry-based standards and how the ISSB’s continued enhancement of the SASB standards will work in tandem with their thematic research. Another ISSB member called out the importance of proportionality throughout their pursuit of all activities, with the SASB standard enhancement being a key element of considering proportionality.

ISSB decision

All 14 ISSB members voted in agreement with the staff’s recommended activities to be included in the ISSB’s new work plan and the recommended level of priority, with the amendment that the activity “reserved capacity for flexibility in the ISSB’s work to allow for the consideration of emerging issues and to support the IASB on projects/activities, as necessary” be placed above the activity “no specific level of focus on activities related to connectivity, interoperability and stakeholder engagement as these are all fundamental to the work the ISSB will perform in other activities”.