Deloitte comment letter on ISSB’s proposal on general requirements for disclosure of sustainability-related financial information

Published on: 20 Jul, 2022

We have commented on the ISSB's exposure draft ED/2022/S1 General Requirements for Disclosure of Sustainability-related Financial Information published in March 2022.

We strongly welcome the ISSB’s proposals for global standards for sustainability reporting. This should facilitate consistent, comparable and timely sustainability information for the capital markets. Given the urgency of addressing climate change and other sustainability matters, we encourage the ISSB to finalise and issue its first standards at the earliest opportunity.

We support the creation of a comprehensive global system for corporate reporting with the ISSB standards establishing a global baseline of requirements for reporting on sustainability matters relevant to enterprise value and allowing for interoperability with jurisdictional sustainability disclosure requirements. We welcome the establishment of the Jurisdictional Working Group and encourage the ISSB to intensify its collaboration with jurisdictions, most notably the European Commission, the European Financial Reporting Advisory Group (EFRAG) and the U.S. Securities and Exchange Commission (SEC). As the ISSB, EFRAG and SEC proposals have yet to be finalised, we consider that there is a window of opportunity to achieve a global baseline of sustainability reporting standards. Ongoing collaboration with the jurisdictions will also support the objective of maintaining high quality standards by acting as an additional mechanism for the provision of timely feedback to the ISSB on any challenges in practical application of the standards and contributing to timely post-implementation reviews.

We welcome the ISSB’s overall approach to standard-setting, which, in line with the direction set by the IFRS Foundation Trustees and consistent with the recommendations of the Technical Readiness Working Group (TRWG), builds on existing standards and frameworks and should allow for progress to be made at pace. Furthermore, this approach recognises that many companies have adopted or based their current disclosures on the existing frameworks and standards, including the TCFD recommendations which are already mandatory, or about to become mandatory, in some jurisdictions. In that regard, the explicit provision in the proposals that preparers may use other recognised standards as the basis for disclosures when there is not currently an IFRS Sustainability Disclosure Standard (SDS) is helpful and will facilitate adoption. We also believe that building on frameworks and standards which are already familiar to users will enable them more readily to understand the ISSB disclosures and incorporate them into their existing systems for analysis.

We support the ISSB’s inclusion of industry-specific requirements, based on the Sustainability Accounting Standards Board (SASB) Standards, into the proposals alongside the cross-sector standards. The SASB Standards have been found to be of particular value to investors. We therefore consider that they provide a good starting point for industry-based content within the architecture of the ISSB standards. However, we recognise that not all jurisdictions or entities are familiar with the SASB Standards and believe that there is a need for further education on the use and application of the requirements. We also recommend that further work is undertaken to ensure that the SASB metrics are appropriately internationalised through further testing outside of the U.S. environment.

We also highlight that the industry-specific metrics set out in the SASB Standards may not be complete in their coverage as the relevance of those metrics to a particular industry will change over time. We therefore encourage the ISSB to build on the established SASB Standards practice of including sufficient industry expertise in the standard-setting process.

We support the use of the four pillars set out in the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) as the basis for the core content of IFRS SDS. The pillars, governance, strategy, risk management, and metrics and targets, were selected by the TCFD for climate-related disclosures on the basis that they reflect how a business is run. We consider that this approach facilitates integration of consideration of sustainability matters into core business practices and will foster market acceptance.

In addition, we provided overarching comments related to:

  • Approach to general requirements standard
  • Hierarchy
  • Materiality
  • Boundaries of information to be reported
  • Disclosure of financial effects
  • Connected information
  • Reporting timing and location
  • Understandability of standards
  • Sustainability themes beyond climate
  • Proportionality

Please click to download our full comment letter below.


Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.