9 Items for Noting

Appendix A: Sustainability Update

ISSB update

September meeting

A1The ISSB met in Montreal, Canada on 14 September 2023 to discuss stakeholder feedback on the Exposure Draft (ED) Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates¹. The ISSB was not asked to make any decisions.

A2In October 2022, the Due Process Oversight Committee² approved the ISSB approach of issuing an ED on the proposed process and methodology for updating US-based references in the SASB standards for more internationally applicable references, rather than an ED containing a full mark-up of the proposed amendments.

A3ISSB staff noted that the balance of stakeholder feedback was supportive of the methodology and associated timeline. However, it was also noted that there were additional considerations raised by stakeholders which were outside the scope of the ED. The ISSB will consider this feedback in conjunction with stakeholder feedback on its Agenda Priorities consultation. Further details are expected at the October 2023 meeting.

A4The ISSB did not make any formal decisions but indicated their support for the proposed timeline:

1. October 2023: Board Advisors to publish blacklines for editorial review; ISSB meets to review SASB Board Advisor discussions;
2. November 2023: Board Advisors and staff finalise the removal of jurisdiction specific references in SASB Standards;
3. December 2023: ISSB ratifies finalised SASB Standards.

The next ISSB meeting is scheduled to be held on 23-27 October 2023, in Frankfurt, Germany.

Other IFRS Foundation updates

A5Members of Transition Implementation Group for IFRS S1 and IFRS S2 were announced by the ISSB³. The 'TIG' will provide a public forum for stakeholders to share implementation questions with the ISSB. The seventeen-member group will contain 13 preparers, four assurance providers and official observers.

Other international updates

A6EFRAG issued a Briefing Summary on the IASB's project Climate-related Risks in the Financial Statements⁴. Key findings noted '...an improving trend in the reporting of climate risk in financial statements, there are still several areas of concern including the disconnect between the information inside and outside the financial statements.'

A7EFRAG also published a summary of its symposium on the Connectivity between financial reporting and sustainability reporting information⁵. Panellists included the IASB Vice Chair Linda Mezon-Hutter and Jeremy Stuber, EFRAG Intangibles Advisory Panel member, IFRS CMAC member, CRUF (UK) Chair.

A8Jean-Paul Servais (FSMA and IOSCO Board Chair) keynote speech⁶ noted IOSCO's endorsement of ISSB Standards and intention to provide an extensive capacity-building programme for their implementation by 2024.

A9The International Federation of Accountants (IFAC) published and update report commenting on sustainability disclosure and assurance beyond the G20⁷. The report notes that sustainability information is being increasingly integrated with financial disclosures in annual reports.

A10The Taskforce on Nature-related Financial Disclosures (TNFD) finalised the framework for report nature-related risks⁸. The framework contains 14 recommendations which are consistent with ISSB Sustainability Disclosure Standards and the double materiality approach of Global Reporting Initiative (GRI). TNFD intend to track voluntary adoption from 2024 in a similar approach adopted by TCFD.

UK updates

A11On 5 October 2023, the Green Technical Advisory Group (GTAG) published its final advice⁹ to the UK Government on the design and implementation of a UK Green Taxonomy. The paper sets out options for achieving enduring governance arrangements for the UK Green Taxonomy. The GTAG recommends that HMG establish an Advisory Body to support implementation/ development of the taxonomy through executive action. This option was proposed as it can support both voluntary and mandatory approaches to disclosure. The paper also recommends that HMG commences the process of legislating for long-term statutory decision-making powers.

A12The Transition Plan Taskforce (TPT) has announced¹⁰ that it will launch the TPT best practice Disclosure Framework for climate transition on 9 October 2023. The Disclosure Framework builds on the recommendations provided by both TCFD and ISSB and aims to establish a standard for UK companies.

Appendix B: Draft Endorsement Criteria Assessment Supplier Finance Arrangements – Update on feedback received

Executive Summary

The purpose of this paper is to provide an update on feedback received to-date in relation to the UKEB's Draft Endorsement Criteria Assessment (DECA) Supplier Finance Arrangements.

Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) Draft Endorsement Criteria Assessment – Update on feedback received

Background

B1In May 2023 the IASB issued its final amendments Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7) (the Amendments). In accordance with its statutory functions, the UKEB commenced endorsement work to assess whether the Amendments should be adopted for use in the UK. As part of this endorsement project, the Board approved:

1. A Project Initiation Plan ¹¹ at its June 2023 meeting.
2. A Draft Endorsement Criteria Assessment ¹² (DECA) for public consultation at the July 2023 meeting, with a 90-day comment period. The comment period ends 18th October 2023.

B2The approved PIP included as a milestone a “Verbal update to the Board on feedback received on the DECA up to that date” to be presented at this (October 2023) Board meeting. However, this is now presented as a written update instead. A brief summary of feedback received is presented in the following paragraphs.

B3As noted in the July 2023 agenda paper¹³, the Secretariat performed stakeholder outreach activities ahead of the public consultation period and the results of that outreach were reflected in the DECA. A summary of the stakeholder outreach activities was presented in that agenda paper.

Feedback received to date

B4Feedback received during the public consultation period, up to the point of writing this paper, is summarised below:

1. Three formal written responses¹⁴. All three responses are from accounting firms and in all cases there is full support for endorsement of the Amendments in the UK.
2. Informal feedback from one preparer. During a one-to-one discussion they confirmed they are supportive of endorsement the Amendments. Although application challenges exist, they were not significant enough to prevent them from implementing the Amendments by the IASB's effective date. The preparer noted that any delays in the endorsement would present challenges for their financial reporting, given their reporting requirements mean they need to report under both UK-adopted IFRS and IFRS as issued by the IASB.
3. Informal feedback from three users¹⁵ of accounts.
   1. Two users of accounts expressed full support for the analysis presented in the UKEB's DECA and for endorsement of the Amendments in the UK.
   2. One user of accounts expressed concerns that the Amendments did not go far enough. This stakeholder was sceptical on the benefits that would result from the Amendments as issued by the IASB. The main reservation noted was that the Amendments require disclosures at specific points in time (e.g. at the beginning and end of the reporting period) and that might not fully reflect the overall magnitude of the arrangements during the period, in particular, for entities with seasonal businesses. It was noted that the stakeholder's organisation plans to submit a formal response to the UKEB's consultation.

UKEB Secretariat's observation: This concern has been previously considered by the Board and it is reflected in the DECA¹⁶ section 'Relevance and Reliability', page 13.

Appendix C: Due Process Compliance Statement: Post-implementation Review of IFRS 9 Impairment

General UKEB requirements: The UKEB adopts international accounting standards for use within the UK, in accordance with SI 2019/685 and applies its own processes before it decides to endorse and adopt a new or amended international accounting standard.

The Request for Information (Rfl) for the Post-implementation Review IFRS 9 Financial Instruments Impairment was published on 30 May 2023. The IASB comment period ends 27 September 2023.

Influencing process

Conclusion

This document sets out the main due process activities performed as part of the UKEB's due process to issue its comment letter in response to the IASB's Request for Information.

This project complies with the applicable due process steps, as set out in the UKEB Due Process Handbook at the time of writing.

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