The press release states that the ISO 14000 environmental management and greenhouse gas emission standards can assist entities to implement their sustainability and climate commitments. They can also support entities to develop disclosures that are in line with IFRS S2 ‘Climate-related Disclosures’.

The press release also notes that the ISO supports the work of the International Sustainability Standards Board (ISSB) to establish a truly global baseline of sustainability-related financial disclosures. This is because ISO Standards support consistent approaches internationally in the internal management of sustainability-related matters.

In addition, the ISO and the IFRS Foundation are committed to advancing capacity building initiatives that focus on supporting organisations to build internal expertise and understanding that advance practices and reporting.

For more information please click the press release on the IFRS Foundation website.

With this announcement, the Trustees intend to give clarity to the market about stability and continuity of the ISSB’s leadership. The press release states that the early reappointment reflects the Trustees’ appreciation for the ISSB delivering requirements designed to create a truly global baseline of sustainability disclosures. Under Mr Faber’s leadership, the ISSB will continue to engage with jurisdictions on regulatory adoption of its standards, support companies implementing the standards and other technical activities.   

The ISSB leadership also includes two Vice-Chairs. Sue Lloyd started in her role in March 2022, while Jingdong Hua commenced his role in October 2022. Their initial four-year terms continue into 2026.

For more information please click the press release on the IFRS Foundation website.

In the speech, Mr Liikanen confirmed the following three further commitments in the IFRS Foundation’s efforts to support efficient and resilient capital markets through robust sustainability-related financial disclosures:

• Implementing the IFRS Foundation’s capacity building programme so that developing and emerging jurisdictions are better placed to adopt and use IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures;
• Advancing jurisdictional adoption of IFRS S1 and IFRS S2 through bilateral dialogues with governments and regulators. To achieve this, the IFRS Foundation will continue to work closely with both the International Organization of Securities Commissions (IOSCO) and the Financial Stability Board who play essential roles in the adoption work; and
• Advancing new standard-setting initiatives to build out the global baseline of sustainability-related disclosures following feedback to the recent consultation on the ISSB’s future agenda.

Please click to access the transcript of the speech via the press release on the IFRS Foundation website.

The amendments add disclosure requirements and ‘signposts’ within existing disclosure requirements, that would ask entities to provide qualitative and quantitative information about supplier finance arrangements.

The Endorsement Criteria Assessment and Adoption Statement are available on the UKEB website.

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

The SMEIG will discuss the following topics:

• Second com­pre­hen­sive review of the IFRS for SMEs
  • Proposed revised Section 23 Revenue from Contracts with Customers
  • Impairment of financial assets — results of survey on SMEs’ exposure to credit risk
• Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard
  • Lack of exchangeability and supplier finance arrangements

The papers for the meeting are available on the IFRS Foun­da­tion’s website.

The Board will discuss the following:

• Power Purchase Agreements
• Main­te­nance and con­sis­tent ap­pli­ca­tion
• Management Commentary
• Second com­pre­hen­sive review of the IFRS for SMEs Standard
• Dis­clo­sure ini­tia­tive — Sub­sidiaries without public ac­count­abil­ity: Dis­clo­sures
• Provisions
• Climate-related risks in the financial statements
• Work plan update
• Rate-reg­u­lated ac­tiv­i­ties
• Addendum to the Exposure Draft Third Edition of the IFRS for SMEs Accounting Standard

The full agenda for the meeting can be found here. We will post any updates to the agenda, our com­pre­hen­sive pre-meet­ing summaries, as well as observer notes from the meeting on this page as they become available.

Both IFRS Foundation and third-party educational material is available in the hub, with the latter comprising more than 100 resources developed by third-party organisations. Additional content will be included over time in response to market needs and emerging practices. Resources already available in the hub include an introduction to IFRS S1 and IFRS S2, a guide for transitioning from TCFD recommendations to the new standards, and a set of Frequently Asked Questions (FAQs).

While the hub has been designed to help companies preparing their IFRS S1 and IFRS S2 disclosures, it will also be a repository for auditors, investors, regulators and other stakeholders seeking to advance their understanding of the new standards.

The IFRS Foundation is focused on supporting the implementation of the standards through capacity building initiatives and is working with a number of partners to advance this work, such as the UN Sustainable Stock Exchange Initiative, the Association of Chartered Certified Accountants (ACCA), the Pan African Federation of Accountants (PAFA), the United Nations Development Programme (UNDP) and the International Federation of Accountants (IFAC).

Please click for:

• Press release on the IFRS Foundation website
• Access to the IFRS Sustainability Knowledge Hub on the IFRS Foundation website

The Policy Statement, which follows the FCA’s October 2022 consultation paper, introduces new measures which aim to protect consumers by ensuring that they are provided with all of the information necessary to make informed investment decisions.  The package of measures ultimately aims to provide greater transparency, consistency and trust in the market for sustainable investment products and seeks to minimise greenwashing by companies.  The package supports the delivery of the Government’s ambition for Sustainability Disclosure Requirements and labels, set out in the Roadmap to Sustainable Investing, published in October 2011.   

The final package of measures includes:

• An anti-greenwashing rule for all FCA authorised firms to reinforce that sustainability-related claims must be fair, clear and not misleading.
• Four sustainability investment labels to help consumers navigate the investment product landscape and enhance consumer trust.
• Naming and marketing rules for investment products, to ensure the use of sustainability-related terms is accurate.
• Consumer-facing information to provide consumers with better, more accessible information to help them understand the key sustainability features of a product.
• Detailed information in pre-contractual, ongoing product-level and entity-level disclosures, targeted at institutional investors and consumers seeking more information.
• Requirements for distributors (for example, platforms and advisers) to ensure that product-level information (including the labels) is available to consumers.

The anti-greenwashing rule applies to all FCA-authorised firms who make sustainability related claims about their products and services.  It will come into force from 31 July 2024.

The investment labels, disclosure, and naming and marketing rules apply to UK asset managers.  Firms can use investment labels from 31 July 2024 and the naming and marketing rules for asset managers come into effect from 2 December 2024.

The rules do not apply to portfolio management products and services yet. The FRC will consult on this in due course.

Ongoing product-level and entity-level disclosures for firms with assets under management greater than £50 billion will apply from 2 December 2025 with entity-level disclosures being extended to firms with assets under management greater than £5 billion from 2 December 2026.

Concurrently with the publishing of the Policy Statement, the FCA has also published a consultation on additional guidance related to the anti-greenwashing rule in response to feedback received to its October 2022 consultation.  The consultation closes on 26 January 2024.

A press release, the Policy Statement (PS23/16) and consultation on anti-greenwashing guidance are available on the FCA website.

The press release quotes the following statement by the banks, who are recognised for their vital role in fostering global economic development:

We welcome global initiatives to introduce sustainability reporting standards that complement existing financial reporting standards, and we support transparency and comparability of sustainability-focused disclosure, including the work of ISSB and the use of ISSB Standards by certain jurisdictions.

The IFRS Foundation expressed their gratitude for the continued collaboration with the multilateral development bank community towards shaping the introduction of global sustainability disclosure standards. The support of the community was instrumental in the prior introduction of IFRS Accounting Standards in regions such as Africa, South America, Eastern Europe and South East Asia.

For more information, see the press release on the IFRS Foundation website.

Background

The project on financial instruments with characteristics of equity was originally commenced as a joint IASB-FASB project addressing the distinction between liabilities and equity. The joint project saw a discussion paper discussion paper Financial Instruments with Characteristics of Equity published in February 2008, however, during their joint meeting in November 2010, the IASB and FASB decided to defer further work on this project. In December 2012, as part of its response to the Agenda consultation 2011, the IASB formally reactivated this project as an IASB-only research project. Board discussions were taken up in October 2014. In March 2017, the first phase of deliberations was concluded. A discussion paper DP/2018/1 Financial Instruments with Characteristics of Equity was published on 28 June 2018.

The objective of the project is to improve the information that companies provide in their financial statements about financial instruments they have issued, by:

• investigating challenges with the classification of financial instruments when a company applies IAS 32 Financial Instruments: Presentation; and
• considering how to address those challenges through clearer principles for classification and enhanced requirements for presentation and disclosure.

Suggested changes

The proposed amendments in exposure draft IASB/ED/2023/5 Financial Instruments with Characteristics of Equity (Proposed amendments to IAS 32, IFRS 7 and IAS 1) are:

• The effects of relevant laws or regulations on the classification of financial instruments:
  The IASB proposes to clarify that only contractual rights and obligations that are enforceable by laws or regulations and are in addition to those created by relevant laws or regulations are considered in classifying a financial instrument or its component parts. Moreover, a contractual right or obligation that is not solely created by laws or regulations, but is in addition to a right or obligation created by relevant laws or regulations shall be considered in its entirety in classifying the financial instrument or its component parts;
• The ‘fixed-for-fixed’ condition for classifying a derivative that will or may be settled in an issuer’s own equity instrument:
  The IASB proposes in respect of the fixed-for-fixed condition and when it is met that the amount of consideration to be exchanged for each of an entity’s own equity instruments is required to be denominated in the entity’s functional currency, and either is fixed or variable solely because of preservation adjustments or passage-of-time adjustments. The IASB also proposes clarifications on derivatives that give one party a choice of settlement between two or more classes of an entity’s own equity instruments and on contracts that will or may be settled by the exchange of a fixed number of one class of an entity’s own non-derivative equity instruments for a fixed number of another class of its own non-derivative equity instruments;
• The requirements for classifying financial instruments containing an obligation for an entity to purchase its own equity instruments:
  IAS 32 requires an entity to recognise a financial liability at the present value of the redemption amount (including when a variable number of another class of the entity’s own equity instruments is delivered). The IASB proposes to clarify which component of equity this amount is (not) removed from and how to measure the financial liability at the present value of the redemption amount through profit or loss. The IASB also proposes to clarify how an entity would apply the requirements if a contract containing an obligation for the entity to purchase its own equity instruments expired without delivery. Another clarification relates to the gross presentation of written put options and forward purchase contracts on an entity’s own equity instruments that are gross physically settled;
• The requirements for classifying financial instruments with contingent settlement provisions:
  The IASB proposes to clarify that some financial instruments with contingent settlement provisions are compound financial instruments with liability and equity components. The IASB also proposes that payments at the issuer’s discretion are recognised in equity even if the equity component of a compound financial instrument has an initial carrying amount of zero. In addition, the IASB proposes to clarify the term ‘liquidation’ and the term ‘not genuine’;
• The effect of shareholder discretion on the classification of financial instruments:
  The IASB proposes to clarify that whether an entity has an unconditional right to avoid delivering cash or another financial asset (or otherwise to settle a financial instrument in such a way that it would be a financial liability) depends on the facts and circumstances in which shareholder discretion arises. Judgement is required to assess whether shareholder decisions are treated as entity decisions. The IASB also proposes to describe the factors an entity is required to consider in making that assessment; and
• The circumstances in which a financial instrument (or a component of it) is reclassified as a financial liability or an equity instrument after initial recognition:
  The IASB proposes to add a general requirement that prohibits the reclassification of a financial instrument after initial recognition, unless paragraph 16E applies (reclassification of puttable instruments and instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation) or the substance of the contractual arrangement changes because of a change in circumstances external to the contractual arrangement. The IASB proposes requirements on how to account for such reclassifications.

The IASB proposes amendments to the objective and scope of IFRS 7 Financial Instruments: Disclosures in respect of equity instruments and other amendments to the Standard to improve the information disclosed.

The IASB also proposes amendments to IAS 1 Presentation of Financial Statements to require an entity to present additional information about amounts attributable to ordinary shareholders. These proposed amendments affect an entity’s statement of financial position, statement(s) of financial performance and statement of changes in equity. The IASB proposes that the amendments would apply retrospectively subject to specific transition reliefs.

Moreover, the IASB proposes amendments to the draft Accounting Standard Subsidiaries without Public Accountability: Disclosures (Subsidiaries Standard), which will be issued before the proposals in the ED are finalised. It will permit eligible subsidiaries to apply the recognition, measurement and presentation requirements in IFRS Accounting Standards with reduced disclosures

Comments on the proposed changes are requested by 29 March 2024.

Effective date

The IASB will decide on the effective date for the proposed amendments after exposure. The IASB proposes to require an entity to apply the amendments retrospectively. Earlier application would be permitted.

Additional information

Please click for:

• IASB press release
• Access to the exposure draft on the IFRS Foundation website
• Snapshot offering an overview of the proposals
• Short video with IASB member Zach Gast explaining the proposals
• Our related Need to know publication
• Our UK Accounting Plus project page on Financial instruments with characteristics of equity