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The International Sustainability Standards Board (ISSB) released the first two proposed sustainability disclosure standards in March 2022. Consultations are open until the end of July and the Board aims to finalise these standards by 2023.

Building on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the industry-specific requirements of Sustainability Accounting Standards Board (SASB) Standards, the ISSB’s first proposed sustainability disclosure standards cover general sustainability-related financial information and climate-related disclosures.

The proposed two IFRS standards are:

The ISSB welcomes views from stakeholders directly via either a survey or comment letter. ICAEW is responding to both consultations on behalf of its members.

ICAEW’s draft responses to these Exposure Drafts have been prepared with input from a wide range of member, committee and staff views:

If you have any comments on the ISSB proposals, or ICAEW’s draft responses, please contact laura.woods@icaew.com.

IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

Overview

IFRS S1 proposes overall requirements for disclosing sustainability-related financial information to provide primary users with a complete set of sustainability-related financial disclosures. The Exposure Draft includes proposals for definitions and requirements that are consistent with the IASB’s Conceptual Framework for Financial Reporting, IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. Proposals in the Exposure Draft would require an entity to disclose material information about all of the significant sustainability-related risks and opportunities to which it is exposed.

ICAEW view

ICAEW are very supportive of the proposals set out in IFRS S1 and of the development of a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs. We therefore welcome the publication of this Exposure Draft on general requirements for disclosure of sustainability-related financial information. However, we believe some refinement is needed if the ISSB is to achieve its aim of creating a high-quality, widely-applied, global sustainability reporting framework.

A summary of our initial key views in relation to the Exposure Draft is set out in this article: Sustainability reporting proposals: ICAEW initial views.

IFRS S2 Climate-related Disclosures

Overview

IFRS S2 sets out the proposed requirements for identifying, measuring and disclosing climate-related risks and opportunities. The Exposure Draft includes recommendations from the TCFD framework as well as industry-based disclosure requirements derived from the SASB Standards. The objective of the Exposure Draft is to require an entity to provide information about its exposure to all of its significant climate-related risks and opportunities.

ICAEW view

ICAEW are very supportive of the proposals set out in IFRS S2, particularly the decision taken to build on the work of the TCFD and its recommendations. We recognise climate-related matters to be of the highest priority when it comes to sustainability reporting and are pleased that the first topic-specific standard is on climate-related disclosures. We have some concerns, however, particularly around the industry-specific disclosure requirements which we believe should be non-mandatory.

A summary of our initial key views in relation to the Exposure Draft is set out in this Insight article.

Resources
TCFD disclosures Resources
TCFD disclosure

An overview of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and related resources.

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Hub
A dusky horizon with silhouettes of smoking industrial buildings and electricity pylons
Climate hub

Inspiration, information and practical resources to support the goals set out in the Paris Agreement and in the UN Sustainable Development Goals.

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Resources
Resources from across ICAEW on non-financial reporting.
Non-financial reporting

Resources and guidance on non-financial reporting, including the strategic report, director’s report and sustainability disclosures.

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