Update on consultation on agenda priorities (Agenda Paper 2)

Background

During its December 2022 meeting, the ISSB decided to seek feedback in its Request for Information (RFI), to be issued in Q2 2023 on the following topics:

• Research projects on biodiversity, ecosystems and ecosystem services, human capital, and human rights
• A joint project with the IASB on connectivity in reporting building on the IASB’s Management Commentary project and the Integrated Reporting (IR) Framework (the “connectivity project’)

As the staff work to refine the specifics surrounding the RFI they highlighted the following recommendations to revise the scope and description of the connectivity project.

Staff recommendations

The staff recommended that, within the RFI:

• The scope of the connectivity project be expanded to be more broadly focused on ‘integration in reporting’ such that this project would support the pursuit of integrated disclosures beyond the requirements on connected information contained in S1 and S2 to create a new set of integrated information that creates a comprehensive, coherent, and concise view of how an entity creates, preserves or erodes value
• The requirements of S1 and S2 related to connected information be included to provide necessary context when considering the project on ‘integration in reporting’
• The project be rearticulated as an ISSB project that could be pursued jointly with the IASB, rather than presenting it only as a formal ‘joint project’
• The questions asked are framed in a manner that elicits input about how this project should be pursued (for example, whether the project should be pursued jointly with the IASB and the extent to which the basis should be the IR Framework or Management Commentary)

Further, the staff recommended that the RFI seek recommendations on the relative priority of the ‘integration in reporting’ project compared to the three sustainability-related research topics and the pace at which ISSB sustainability-related financial disclosure standards are built out.

ISSB discussion

Many of the ISSB members emphasised the importance of receiving feedback on how the ‘integration in reporting’ project should be prioritised compared to the three research projects and the continued development of the sustainability-related financial disclosure standards. They discussed the importance of explaining the trade-offs between priorities, what has already been accomplished within S1 and S2, and the scale of an integrated reporting project in order to provide appropriate context for feedback.

One of the Vice Chairs suggested that there may be a situation where the analysis of feedback is jointly performed by the IASB and ISSB staff. IASB members could provide their thoughts/comments on the feedback received to ensure both boards are able to discuss their opinions on the best approach to the integration of reporting.

Another ISSB member clarified that this project should be viewed as incremental to the standard-setting process, and not as optional. The staff responded that they will be clear within the RFI to demonstrate this is not a question of “either or” but rather a question of urgency within this first 2-year work term which will be informed by the RFI.

One ISSB member expressed concerns about integrated reporting and the understanding of the concept vs connectivity. Other ISSB members agreed that there should be clarity on the distinction within the RFI.

13 of the 14 ISSB members voted in favour of the staff recommendations to expand the connectivity project to focus on ‘integration in reporting’ and request specific feedback on how the ISSB should approach and prioritise this project.