Building on the its 2020 thematic review on climate change, the objective of this project is to learn more about the processes through which companies develop their scenario analyses, how these processes shape the outcomes produced and how those outcomes in turn influence companies’ strategic planning and decision making. The over-riding purpose of the project and associated research is to inform FRC's future regulatory strategy and delivery.

As the use of scenario analysis in climate-related reporting is a relatively recent development, the project will investigate both climate and non-climate applications of scenario analysis, covering a broader range of companies. 

The project will be carried out by Alliance Manchester Business School (AMBS), University of Manchester, which will survey FTSE 350 companies initially with a questionnaire, followed by in-depth interviews with relevant teams and individuals from a representative sample of companies. The extent of scenario reporting in 2020/21 annual reports will also be analysed.

The AMBS team invite expressions of interest from individuals and teams within FTSE 350 companies who would like to participate and in particular those with recent experience of conducting scenario analysis, climate-related or otherwise. 

The online questionnaire has been launched and interviews will take place during May, June and July 2021.

The press release and invitation to participate are on the FRC website. Further information on the survey is available on the FRC website.  

The agenda for the meeting is sum­marised below:

Agenda papers from this meeting are available on the IASB's website.

In May 2020, the IASB amended IFRS 16 to provide lessees with a practical expedient that relieves a lessee from assessing whether a COVID-19-related rent concession is a lease modification. 

In March 2021, the IASB issued Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16). This amendment extends the date a lessee is permitted to apply the practical expedient by a year from payments due on or before 30 June 2021 to payments due on or before 30 June 2022.

This amendment has now been adopted for use in the UK. It is effective for annual reporting periods beginning on or after 1 April 2021. Earlier application is permitted, including in financial statements not authorised for issue (or signed) at 31 March 2021.

The adoption statement for the amendment is available on the UK Endorsement Board (UKEB) website. 

The UKEB has also updated its adoption statement report which is available on its website here.

The topics for discussion are as follows:

• Draft Due Process Handbook - Overview, Introductory sections, Influencing processes.
• IFRS 17 Insurance Contracts
• IASB Agenda consultation Work plan
• Post Implementation Review of IFRS 10, 11, 12 – Comment letter to IASB
• Business Combinations Under Common Control – Work plan and Draft comment letter
• Rate Regulated Activities– Project plan

The meeting, agenda papers and details of how to register are available on the UKEB website.

The meeting recording can be found on the UKEB website here.

Participants of the roundtables emphasised the importance of continuing the pace and building on the existing momentum to deliver the urgent improvements needed in sustainability reporting and especially supported establishing an International Sustainability Standards Board (ISSB) under the IFRS Foundation. There was a clear willingness among participants to work collaboratively with IOSCO and the IFRS Foundation to deliver this vision. There was also broad-based agreement that, building on existing initiatives, the ISSB would be able to deliver high-quality international sustainability-related reporting standards in a timely manner. Roundtable participants also identified some important matters for IOSCO to consider before recommending to its members that ISSB standards be used for cross-border offerings or when setting sustainability reporting requirements at the domestic level.

A report of the key messages received during the roundtables is now available on the IOSCO website.

The exposure draft contains proposed guidance for the IASB when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits that result from applying the proposed guidance to those standards.

In its draft comment letter EFRAG

• supports the objective of the project to improve the relevance of disclosures and to develop a more rigorous methodology for the IASB to define objective-based disclosure requirements;
• agrees, in particular, with the proposal to work closer with users of financial statements and other stakeholders early in the standard-setting process;
• notes that the proposed approach introduces a radical change from the existing guidance by making minimum requirements an exception and is concerned that it would expose preparers to second guessing, would make review of such disclosures and enforcement of the requirements more difficult for auditors and regulators and may ultimately not lead to the intended changes and improvement to information relevance;
• encourages the IASB to further consider the interactions between its proposed approach and several other aspects.

Comments on EFRAG's draft comment letter are requested by 15 October 2021. For more information, see the press release and the draft comment letter on the EFRAG website.

The press release also notes that EFRAG will conduct field-testing of the IASB proposals and will issue shortly an invitation for companies to participate in its field test activities. The IASB also recently announced that it will conduct field-testing of its ED.

Overall, we believe that these standards provide sound principles and relevant guidance supporting the judgements required to represent faithfully an entity’s interests in subsidiaries and joint arrangements. Except for the certain issues noted in the response, we believe that no significant changes are required to the relevant standards. We have indicated in our responses to the various questions in the PIR areas that may benefit from clarifications and/or additional illustrative examples.

Please click to access the full comment letter.

In March 2021, the IASB issued the ED which contains proposed guidance for itself when developing and drafting disclosure requirements in IFRSs in future as well as proposed amendments to IFRS 13 Fair Value Measurement and IAS 19 Employee Benefits that result from applying the proposed guidance to those standards. The first webcast is scheduled for 19 May 2021 and will provide an overview of the Board’s proposals. For the con­ve­nience of par­tic­i­pants from different time zones, there will be two sessions of the webinar both dis­cussing the same topics:

• Wednesday 19 May 2021, 09:00–10:00 BST and
• Wednesday 19 May 2021, 15:00–16:00 BST.

Each session will last a maximum of 60 minutes and include a moderated ques­tion-and-an­swer session.

For more information, see the press release on the IASB’s website.

Mr Servais began his speech by explaining how financial markets and their regulators are a part of the solution to ensure the financial system is resilient in the face of climate-related risks and to support the transition to a sustainable economy. For the financial markets to play their role, the disclosure of comprehensive and comparable sustainability-related disclosure would be of paramount importance and since there are currently wide gaps in the disclosure requirements, the public authorities would need to step in.

He then discussed why and how IOSCO is involved:

1. IOSCO is involved because enterprise value reporting is part of its mandate to promote investor protection and IOSCO’s members can enforce sustainability reporting and help prevent greenwashing by market participants.
2. IOSCO is also involved because of its role in the oversight of the governance of the IFRS Foundation and will monitor the governance implications of the IFRS Trustees’ proposals on sustainability.
3. And IOSCO can play a critical role in adding momentum to the IFRS initiative and in fostering endorsement of the new standards around the world.

Mr Servais stressed that IOSCO encourages a “building blocks” approach to establishing a global sustainability reporting system and limiting undue fragmentation as much as possible. By working with standard-setters from key jurisdictions, the new IFRS sustainability board’s standards would provide a globally consistent and comparable sustainability-reporting baseline. The building blocks approach would then allow jurisdictions to go further and faster if they wish, while retaining cross-border comparability. He added:

In this respect, I believe there is consistency between the IFRS/IOSCO approach and the EU’s thinking on international cooperation. The EU cannot achieve the green transition alone. It needs other countries to share its ambition and work in the same direction. Greater international alignment on ESG-related disclosures will increase global transparency. It will also reduce the due-diligence costs for global investors and the administrative costs of companies operating globally.

Mr Servais then turned to the European Commission initiative and the proposal for a Corporate Sustainability Reporting Directive (CSRD). He welcomed that the Commission has clarified that-the EU standards should aim to incorporate the essential elements of globally accepted standards currently being developed and would build on and contribute to standardisation initiatives at global level. He noted that he expected the first IFRS standard in mid-2022 and welcomed that the draft Directive clarified that EU standards "should take account of any sustainability reporting standards developed under the auspices of International Financial Reporting Standards Foundation”.

Please click to access the full text of the speech.

As reported earlier, among the topics discussed at the meeting were non-financial reporting and the IASB agenda consultation. In addition, IASB Chair Hans Hoogervorst gave a farewell speech to IFASS participants.

The full list of topics discussed at the meeting was:

• EFRAG initiative on non-financial reporting
  • Overview of the current discussions at the EU level on sustainability reporting
• Disclosure initiative – Subsidiaries that are SMEs
  • Introduction of the forthcoming proposals
• Going concern
  • Presentations by Australia and New Zealand
• Issues surrounding separate financial statements
  • Presentations by Brazil, India, Italy, and Korea
• Future of Corporate Reporting
  • FRC discussion paper on the future of corporate reporting
• Post-implementation review of IFRS 10, IFRS 11 and IFRS 12
  • Presentation by India
• International financial reporting for non-profit organisations
  • Introduction to the IFR4NPO consultation paper issued in January 2021
• Agenda consultation
  • Introduction to the main areas of the forthcoming request for information
  • EFRAG presentation of its preliminary views on the IASB’s agenda consultation
• Business combinations under common control
  • Introduction, break-out sessions, and plenary session
• Message from IASB Chair

The next meeting is to be held on 29-30 September 2021; it will also be held by remote participation.

Please click for the full report from the meeting.