Summary of feedback on the Proposed IFRS Sustainability Disclosure Taxonomy (Agenda Paper 7A)

The purpose of this paper was to provide a summary of the feedback the ISSB received with regard to the IFRS Sustainability Disclosure Taxonomy proposed in July. The comment period ended on 26 September 2023. The proposed Taxonomy should allow digital reporting of sustainability-related financial disclosures and therefore reflects the disclosure requirements in IFRS S1 and IFRS S2 in the form of taxonomy elements with properties including references to related sections of the ISSB Standards or documentation labels that describe the meaning of each element.

The proposed Taxonomy is designed to facilitate:

• Investors to consume sustainability-related financial information digitally
• Regulators to require the digital reporting of sustainability-related financial information
• Preparers to implement digital reporting of sustainability-related financial information, enabling tagging without undue cost

Almost all respondents agreed the proposed Taxonomy appropriately reflects the requirements in IFRS S1 and IFRS S2 and will appropriately support preparers, investors and regulators by enabling the digital reporting of sustainability-related financial disclosures. Furthermore, stakeholders generally supported the aim for a simple taxonomy, designed to tag all information whilst minimising the need for multiple tagging, because it will help support the global implementation and consistent application of the Taxonomy.

Some stakeholder provided suggestions to help with its successful global implementation and consistent application, as follows:

• Some stakeholders supported the ISSB’s intention to monitor the market (implementation, usage and technology development) and refine and enhance the Taxonomy, if necessary, to reflect emerging practice
• Many said that interoperability with other sustainability-related taxonomies is important to minimise the reporting burden and to help investors compare digital information provided applying different sustainability-related frameworks
• Some suggested that the ISSB should make targeted improvements to the proposed Taxonomy. For example, by adding Taxonomy elements to tag values of metrics and targets more consistently
• Some suggested that the ISSB should provide implementation support with additional guidance to help with consistent application and improving the resulting quality information in a digital format

The ISSB was not asked to make any decisions during this session. However, ISSB members were asked to comment on any feedback that was unclear, that provided new information, or that needed further research.

ISSB members considered the paper the staff had prepared very helpful as it summarizes the feedback received very clearly. During the discussion, it was emphasized that the taxonomy will not make different reporting standards like the ISSB or ESRS interoperable, even though interoperability is an overall objective, and on which is currently worked on, but separately from this taxonomy project.

Another aspect the discussion focused on is the relationship between IFRS S1 and IFRS S2 and the associated level of granularity of tagging which is connected to the usage of multi tagging. Several ISSB member expressed their support that multi tagging, at least to some extent is needed, but with the right balance. This also relates to the role of IFRS S1 in the architecture of the IFRS SDS, which supports the need of multi tagging to avoid disconnecting IFRS S1 and S2.

Furthermore, some ISSB members expressed concerns how to tag entity- or sector-specific information. One potential solution would be to encourage users to use the SASB taxonomy, which will be updated in accordance with the due process, and extensions, consistent with the approach to identify sustainability-related risks and opportunities and the respective disclosures in IFRS S1.

The ISSB agreed with the recommended timeline to present the proposed changes to the Taxonomy considering the feedback received during the December 2023 ISSB meeting and to publish the final taxonomy in the first half of 2024. Even though there will be no formal approval by the ISSB in line with the due process, the ISSB members will be involved in the balloting process of the final Taxonomy.

Summary of content of Proposed IFRS Sustainability Disclosure Taxonomy (Agenda Paper 7B)

This paper provides a summary of the content of the proposed IFRS Sustainability Disclosure Taxonomy.