October 2022 ISSB meeting notes posted

  • ISSB meeting Image

28 Oct, 2022

The ISSB met in Montreal from 18-21 October. We have posted our comprehensive Deloitte observer notes for all projects discussed during the meeting.

The following topics were discussed:

Consultation on Agenda Priorities

The staff previously stated the ISSB’s intention to publish the RFI in Q4 of 2022. Due to the need to strongly emphasise foundational activities—and the importance of IFRS S1 and IFRS S2—the staff now expect to publish an RFI in the first half of 2023. The ISSB supported focusing on the work to build on the foundation established by IFRS S1 and IFRS S2, once finalised, and new research and standard-setting for stakeholder input to inform the IASB’s decisions on the future work plan.

General Sustainability-related Disclosures

This was the first decision-making session of the ISSB in relation to the exposure drafts (EDs). The IASB confirmed that information is provided to meet the information needs of the primary users of general purpose financial reporting who are “existing and potential investors, lenders and other creditors”, in alignment with the IASB’s Conceptual Framework and decided to remove “enterprise value” from the objective and from the definition of materiality which would create alignment with the IASB’s Conceptual Framework but not fundamentally change the focus of the required disclosures. Additional resources and language would clarify the concept of enterprise value and the scope of sustainability-related financial information required. The ISSB also decided to introduce a requirement to disclose the process of identifying and disclosing material information and/or materiality judgments and  decided not to use the term “significant”.

Climate-related Disclosures

The ISSB confirmed the requirements for an entity to disclose: its absolute gross Scope 1 and Scope 2 greenhouse gas (GHG) emissions generated during the reporting period, including separate disclosure for the consolidated accounting group and unconsolidated investees; and its Scope 3 GHG emissions, considering the 15 Scope 3 GHG emissions categories described in the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard. The ISSB will consider ways to help entities meet the Scope 3 disclosure requirements, such as deferring the effective date for this disclosure or developing additional guidance. The ISSB decided to proceed with the proposal that entities use the GHG Protocol Corporate Standard. However, entities that have been using a different measurement method would be permitted to do so during a transition period, or while a jurisdiction requires use of that other method.

General Sustainability-related Disclosures and Climate-related Disclosures

The ISSB decided to make some drafting changes that the staff think would improve the interoperability with proposals published in Europe and the US. The ISSB confirmed the use of the TCFD pillars for structuring the core content in IFRS S1 and IFRS S2 and confirm the meaning of the global baseline. In addition to the recommendations in the other papers, the ISSB decided to confirm that time horizons not be defined for short, medium and long term; that disclosures be required about the effects of climate-related risks and opportunities on the entity’s financial position, financial performance and cash flows for the reporting period (i.e. the current effects); that disclosures are not required to be reported separately for physical risks, transition risks and climate-related opportunities; that separate disclosures be required about assets subject to physical and transition risks and climate-related opportunities, in the form of metrics; the disclosures proposed in relation to climate resilience; to add a requirement to disclose whether and how an entity uses climate-related scenario analysis to inform the identification of climate-related risks and opportunities; and use the term “carbon credit” instead of “carbon offset”.

Industry-based Materials

The ISSB will begin alignment around the strategy for integrating industry-based materials into IFRS Sustainability Disclosure Standards, including the role of the SASB Standards in [draft] IFRS S1, the industry-based requirements in Appendix B of [draft] IFRS S2, improving the international applicability of the SASB Standards, the ISSB’s upcoming consultation on agenda priorities and advancing SASB projects inherited by the ISSB. All ISSB members supported that IFRS S2 should maintain the requirement that entities provide industry-specific disclosures. They also supported that the ISSB classify the content in Appendix B as illustrative examples, while stating the intention to make Appendix B mandatory in the future, subject to further consultation.

Please click to access the detailed notes taken by Deloitte observers for the entire meeting.

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