Recognising the importance of disclosures that are globally comparable and useful for investor decision-making purposes, the guidance states that the UK SDS will only divert from the global baseline if ‘absolutely necessary for UK specific matters.’

The guidance also confirms that the UK Government will have responsibility for determining the extent to which disclosures are required for UK registered companies and limited liability partnerships, and that the Financial Conduct Authority (FCA) will be responsible for those decisions for UK listed companies.

Two committees have been established to support with the assessment and endorsement of the IFRS Sustainability Disclosure Standards as follows:

• The UK Sustainability Disclosure Technical Advisory Committee (TAC) who, supported by the Financial Reporting Council (FRC), will assess the IFRS Sustainability Disclosure Standards on a technical basis and will provide independent recommendations on endorsement to the Business and Trade Secretery, via the Department for Business and Trade (DBT).  The TAC secretariat has already published a call for evidence on IFRS S1 and IFRS S2. 
• The UK Sustainability Disclosure Policy and Implementation Committee (PIC) who will be managed and overseen by DBT and will provide advice on an endorsement decision to the Business and Trade Secretary, based on TAC and PIC’s recommendations. Subject to the outcome of an endorsement decision, PIC will also coordinate the implementation of UK SDS by the UK Government and the FCA.  PIC's membership will consist of UK government departments and regulators.

For more information, read the guidance on the UK Government's website.

The UKEB welcomes the opportunity to provide comments on the IASB's Request for Information.

The draft comment letter, which has been informed from in-house research, consultation with UKEB advisory groups and feedback received during stakeholder roundtables and interviews, considers that the IFRS 9 impairment requirements generally are working as intended and ensure more timely recognition of expected credit losses than under IAS 39 Financial Instruments: Recognition and Measurement. It highlights some areas where standard setting activity would improve IFRS 9, without causing significant cost and disruption to entities already applying the standard.

Comments on the draft comment letter are requested by 8 September 2023.

The press release, the draft comment letter and the invitation to comment are available on the UKEB website.

In its final comment letter, the UKEB:

• is very supportive of the ISSB’s objective to develop standards – in the public interest – that will result in a high quality, comprehensive baseline of sustainability disclosures focused on the needs of investors and the financial markets.
• believes that the next two-year period will be crucial to establishing the credibility and success of the ISSB global baseline.
• recommends that the ISSB focuses on consolidation. This requires ensuring smooth adoption and implementation of IFRS S1 and IFRS S2 and working with the International Accounting Standards Board (IASB) to deliver standards and guidance that produce connected information.

The final comment letter and the feedback statement are available on the UKEB website.

A summary of the programme for the conference is set out below:

Please click to access the detailed programme for the event on the IASB website.

The WSS meeting will be immediately followed by a meeting of the International Forum of Accounting Standard Setters (IFASS) on 26-27 September 2023.

Please click to access the updated alignment dashboard prepared for the September 2023 IPSASB meeting on the IPSASB website.

Non-financial information is essential information for investors and other stakeholders in understanding the drivers of risk, value creation and long-term prospects and how a company manages those matters through governance, strategy, risk management, and metrics and targets. The UK has demonstrated great leadership in narrative and non-financial reporting with the development of the strategic report which, in our view, is well-established and designed to provide useful information to investors and facilitate good practice in corporate reporting. However, recent years have seen numerous additions to the UK legal and regulatory framework which have not always been well integrated with existing requirements. We encourage the government to take this opportunity to make one clear, coherent set of changes to streamline the scoping thresholds and requirements that currently exist, with the goal of creating a more cohesive, focused, decision-useful system which continues to achieve policy aims while reducing complexity and confusion, supporting the introduction of the International Sustainability Standards Board (ISSB) standards, and reasserting the UK’s global leadership in corporate reporting.

We strongly support the ISSB’s international standards for sustainability reporting and in our view, it is essential that the ISSB standards are implemented in full in the UK without modification to help establish that global baseline. Following this, we recommend that the Financial Conduct Authority (FCA) and the Department for Business and Trade (DBT) should seek via consultation to establish whether the ISSB standards should be mandated for use by companies within their respective remits and, if so, the appropriate scope and whether any additional UK-specific requirements are necessary.

As a minimum, we believe that the ISSB standards should be mandatory for companies within the proposed definition of a “public interest entity” (PIE) as set out in the outcome of the government consultation Restoring trust in audit and corporate governance. However, we recognise that many companies that would not fall into the proposed PIE definition have already taken steps to be able to report in line with the streamlined energy and carbon reporting (SECR) regulations and the climate-related financial disclosure (CFD) regulations. Accordingly, we suggest that the government may wish to consider whether it would be beneficial to develop – or support the development of – a simplified standard that better reflects the needs of the users of such entities’ reports, in place of the SECR and CFD regulations. Such a standard could either be developed at UK level by the UK standard setter, or the government could encourage its development by influencing ISSB developments internationally.

We also strongly encourage the UK government to work towards seeking appropriate sustainability reporting equivalence decisions from other jurisdictions while ensuring that the needs of the UK capital markets are fully addressed and the global baseline of ISSB standards is preserved. This will increase interoperability and help facilitate growth by reducing unnecessary regulatory burdens on businesses operating across jurisdictions and maximising efficient flow of capital.

Finally, we encourage the government to move forward with plans to establish the Audit, Reporting and Governance Authority (ARGA) and set out clearly the terms and boundaries of its work. In our view, if ARGA is established with the appropriate internal structure and robust due process to facilitate appropriate levels of engagement with stakeholders and provide transparency around its activities, it should be granted standard-setting powers for corporate reporting, including non-financial reporting aspects such as the strategic report, directors’ report (if retained) and sustainability reporting for companies not reporting in line with ISSB standards as endorsed for use in the UK. The government would then assume the role of setting policy objectives at a higher level, resulting in a more agile reporting system where issues can be more swiftly identified and addressed, and reducing the risk that the current complex and confusing set of requirements will be repeated in future.

The full comment letter is available here.