Please click for more information and registration in the press release on the EFRAG website.

In March 2022, the ISSB issued two EDs, IFRS S1 (ED/2022/S1) and IFRS S2 (ED/2022/S2).  The FRC strongly supports the development of high-quality global standards for sustainability reporting and welcomes the opportunity to provide comments on the ISSB's first Exposure Drafts.  The comment letters highlight some overarching comments for consideration in relation to the EDs including areas such as:

• clarification on the use of non-mandatory guidance, structure of S1 and the architecture of IFRS Sustainability Disclosure Standards, clarity of the standard, connectivity, and basis of preparation (IFRS S1)
• the current industry-based requirements, consistency between the assumptions used in climate-related reporting and those used elsewhere in the financial statements, connection to IFRS S1 and clarity of the standard (IFRS S2).

Whilst emphasising that there is a clear and urgent need for IFRS Sustainability Disclosure Standards, the FRC highlights that a balanced approach is needed to ensure the standards are published timely without compromising on the quality and due process required to ensure the standards are of high quality, drive high quality reporting and are globally accepted.   

A press release and the comment letters (IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures) are available on the FRC website.

The statement notes that the standards being developed by the ISSB provide a unique opportunity. They can support global convergence of sustainability-related disclosure, create a common reporting baseline, and help mainstream sustainability-related issues into regular business strategy and management.

However, they also warn that a narrow interpretation of enterprise value could mean that ISSB standards could leave out important sustainability risks and opportunities and that the ISSB standards could result in selective disclosure by reporting companies. 

The statement also includes proposed additional elements to consider for improving the standards:

• Including clear guidance on what constitutes appropriate sustainability analysis and management;
• encouraging entities to set sustainability targets;
• requiring geographically contextualized disclosures; and 
• adopting an explicit long-term time horizon. 

Please click to access the full statement on the UN website.

The press release on the IFRS Foundation website notes that the extra month is needed to finalise the remaining procedures necessary to complete the legal consolidation.

This support will help the IFRS Foundation to fully establish the ISSB within the Canadian sustainability ecosystem. In exchange, the IFRS Foundation has committed to scheduling initial ISSB meetings to be held in Montreal in October and December 2022 and hosting the inaugural ISSB Symposium in Montreal, with the dates to be confirmed.

Please click for additional information in the press release on the IFRS Foundation website.

In his speech, Mr Alder noted that by endorsing the standards, IOSCO would send a strong signal to its large membership of market regulators that they should examine how they might adopt the standards in their own jurisdictions.

While the critical step in evaluating the ISSB standards and finally endorsing them would be to consider the degree to which and how they can be adopted in practice, there were also more detailed points to be considered by IOSCO as well:

• the ISSB standards should be compatible and connected with existing accounting and financial reporting standards — serving as a “bridge”;
• they should act as a common base for jurisdiction-level requirements, making them interoperable with one another using a building blocks approach;
• they should provide the degree of consistency necessary to enable markets to reliably price sustainability-related risks and opportunities and support capital allocation; and
• they should form the basis for the development of a credible assurance framework.

Mr Alder stressed that he firmly believed the ISSB was the most credible mechanism for achieving the above and creating a baseline for climate disclosure standards.

Mr Alder also commented on the relationship between sustainability disclosures and traditional financial statements and noted this had become increasingly important. He suggested that the ISSB should work closely with the International Accounting Standards Board (IASB) to consider how preparers could be encouraged to develop the factors relevant to calculating enterprise value from a quantitative perspective, and to consider how that calculation might connect to traditional financial statements. The overall aspiration was to bridge the divide between conventional financial disclosures and ISSB sustainability disclosures centred on the concept of enterprise value, so that in combination they paint the full picture.

Please click for the full summary on the SFC website.

The new members were appointed for a three-year term beginning 1 July 2022. SMEIG members can serve up to three terms.

Please click for the IASB press release announcing the appointments.

The declaration mentions the work and progress of the International Sustainability Standards Board (ISSB) and highlights the need of sustainability disclosures for mobilising private sector finance to support the transition to a sustainable economy. It notes:

We welcome the inauguration of the International Sustainability Standards Board’s (ISSB) and its progress of work on the global baseline of sustainability reporting standards. We support mandatory climate-related financial disclosures and look forward to the recommendations of the Taskforce on Nature-related Financial Disclosures.

Please click to access the full statement on the G7 website.

The 11 proposed AQIs would provide stakeholders with a range of comparable indicators on perceived culture within an audit firm, audit quality inspection results, staff workloads, and the level of partners’ involvement in individual audits.

Responses to the consultation are requested by 18 August 2022.

A press release and the consultation document, are available on the FRC website.

Below is an analysis of all changes made to the work plan since our last analysis on 30 May 2022.

Standard-setting projects

• Climate-related disclosures — Feedback on the exposure draft will now be discussed in Q4 2022 (previously H2 2022)
• Disclosure initiative — Subsidiaries without public accountability: Disclosures — The IASB decided to publish a final accounting standard as next project step (no date given)
• Disclosure initiative — Targeted standards-level review of disclosures — Following the discussion received on the exposure draft, the IASB will decide on the project direction in Q3 2022
• Dynamic risk management — After deciding on the future direction of the project, the IASB will publish an exposure draft as next project step (no date given)
• General sustainability-related disclosures — Feedback on the exposure draft will now be discussed in Q4 2022 (previously H2 2022)

Maintenance projects

• Contractual cash flow characteristics of financial assets — This project has been moved from the standard-setting agenda to the maintenance agenda
• Lack of exchangeability — The entry of when a decision on the project direction is to be expected has been removed
• Non-current liabilities with covenants — After discussing the feedback received, the IASB decided to publish a final amendment as next project step in Q4 2022
• Supplier finance arrangements — Feedback on the exposure draft will now be discussed in July 2022 (previously June 2022)

Research projects

• Goodwill and impairment — A decision on the project direction is now expected in Q4 2022 (previously H2 2022)
• Post-implementation review of IFRS 10-12 — The project has been concluded by publishing a feedback statement and has therefore been removed from the work plan

Other projects

• IFRS Sustainability disclosure taxonomy — Feedback on the staff request for feedback will be now be discussed in Q4 2022 (previously H2 2022)
• IFRS Taxonomy update — 2022 General improvements and common practice — This project has been renamed from 2021 to 2022

The above is a faithful comparison of the IASB and ISSB work plan at 30 May 2022 and 27 June 2022. For access to the current work plan at any time, please click here.