9 Items for Noting

Appendix A: Sustainability Update

ISSB meetings

October meeting

A1. The ISSB met in hybrid, from Frankfurt, Germany, on 24-25 October 2023 to discuss:

1. Supporting the implementation of IFRS S1 and IFRS S2¹.
   1. The ISSB were provided with an update on development of educational material to support the implementation of IFRS S1 and S2. It was noted that staff were developing material to support nature and social disclosures (IFRS S2), interoperability with other relevant standards and current and anticipated financial effects.
   2. The ISSB recommended that the staff liaise with the International Accounting Standards Board (IASB) to benefit from their implementation experience. No decisions were required of the ISSB.
2. International Applicability of the SASB Standards².
   1. The ISSB discussed the SASB Standards Board Advisor Group's decisions in relation to feedback on the Exposure Draft Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates. It was noted that the SASB Standards Board Advisors were satisfied with the proposed amendments and considered that the SASB Standards could be finalised. No decisions were required of the ISSB.
   2. The ISSB noted stakeholder feedback which included comments on jurisdictional adoption, interoperability, and the future roadmap for SASB Standards. The ISSB advised that, as these areas were outside of the scope of the Exposure Draft it would consider this feedback as part of the Agenda Consultation at a future meeting.
   3. The SASB Standards Board Advisors plan to recommend finalised SASB Standards at the December 2023 ISSB meeting. The review period for the 'black line' amendments³ to the SASB Standards closes on 10 November 2023. The ISSB has requested to be advised of any 'fatal flaws' identified by stakeholders but will not be considering any further stakeholder comments. As noted in the October UKEB sustainability update, the IFRS Foundation Due Process Oversight Committee approved this approach.
3. Global Sustainability Standards Board (GSSB)⁴.
   1. Carol Adams, Global GSSB Chair, provided an update on the GSSB work programme for Global Reporting Initiative (GRI) Standards for 2023-2025. No decisions were required of the ISSB.

A2. The next ISSB meeting is scheduled to be held on 13-17 November 2023, in Beijing, China. Due to the timing of the ISSB meeting an update will be provided at the UKEB December 2023 meeting. The ISSB November 2023 agenda includes:

1. ISSB Consultation on Agenda Priorities: A summary of feedback from the public comment period for the Request for Information⁵. The paper excludes feedback on the proposed research project on integration in reporting as it will be presented at a future joint meeting of the ISSB and IASB.
2. IFRS Sustainability Disclosure Taxonomy: A summary of feedback and content on the Proposed IFRS Sustainability Disclosure Taxonomy⁶.

IFRS Foundation updates

A3. The ISSB has advised that the kick off meeting for the Transition Implementation Group (TIG) on IFRS S1 and IFRS S2⁷ will be held on 21 November 2023. The agenda includes operating procedures and TIG members⁸ observations on implementation to date. This group appears to be similar in operation to the IASB Transition Resource Groups (TRG).

A4. IFRS Foundation Monitoring Board met in Panama City in October 2023 and issued a media release⁹ encouraging the ISSB to seek input from investors, called for 'robust due process' and reiterated the importance of the work of the IASB as well as the need for 'collaboration between the IASB and the ISSB to facilitate connectivity between financial and sustainability reporting.'

A5. The ISSB presented a proposed adoption strategy¹⁰ at IFRS Advisory Council meeting on 7 November 2023. This is the next iteration of the ISSB ‘jurisdictional journey towards implementing IFRS S1 and IFRS S2 – Adoption Guide overview¹¹'. The adoption strategy will be formerly announced by the ISSB at COP 28 and is thought to include a range of potential 'end states' from local regulators requiring disclosure without any changes to allowing their use in a jurisdiction.

A6. The IFRS Foundation announced that the Brazilian Ministry of Finance and the Comissão de Valores Mobiliários (CVM) will incorporate ISSB Standards into the Brazilian regulatory framework¹².

A7. The IFRS Foundation and the capital market regulators from Association of Southeast Asian Nations (ASEAN) announced an engagement protocol¹³. ACMF is currently assessing the feasibility of adopting IFRS Sustainability Disclosures Standards.

Other international updates

A8. On 18 October 2023, a vote by MEPs in the European Parliament rejected a resolution calling for limitations to be introduced on the European Sustainability Reporting Standards (ESRS), paving the way for final adoption¹⁴. The period for possible objection by the co-legislators on the ESRS Delegated Act ended on 21 October 2023 and the first set of 12 ESRS is now integrated into the European legal framework¹⁵.

A9. The European Securities and Markets Authority (ESMSA) published a report on disclosures of climate-related matters in the financial statements¹⁶. While ESMA notes that it considers IFRS fit for purpose for climate-related matters, it considers that 'real life illustrations of disclosures may assist issuers'.

A10. The Australian Accounting Standards Board (AASB) has published an Exposure Draft ED SR1 'Australian Sustainability Reporting Standards – Disclosure of Climate-related Financial Information¹⁷.' ED SR1 includes three proposed Australian Sustainability Reporting Standards (ASRS Standards) that include modifications to the ISSB Disclosure Standards. The modifications include limiting scope to climate reporting, not referencing SASB Standards and removing the duplicated content between IFRS S2 and IFRS S1.

A11. In October 2023 the California state Governor signed 'Climate Corporate Data Accountability Act' [SB 253] and ‘Greenhouse gases: climate-related financial risk' [SB 261] into law. ISSB Standards are acceptable framework for reporting under SB-261. US companies in scope conducting business in the state will be required to make quantitative and qualitative climate disclosures. There are no specific exceptions for groups with a non-US parent¹⁸.

A12. On 3 November 2023, the Hong Kong Stock Exchange (HKEX) announced that the Listing Rule amendments mandating climate disclosures had been postponed¹⁹. The implementation date has been delayed by a year to, 1 January 2025, as the HKEX "intends to take into account the recommended approaches to scaling and phasing-in of requirements available in the ISSB Adoption Guide when finalising the Listing Rule amendments".

UK updates

A13. The FRC has published Annual Review of Corporate Reporting 2022/23²⁰. In relation to climate-related reports the report suggests that 'companies are still at very different stages of maturity in their reporting'. It noted that it ‘was often difficult to determine the extent to which the impact of climate-related targets on the financial statements had been considered, due to lack of company-specific disclosures'.

A14. On 9 October 2023, the UK's Transition Plan Taskforce (TPT) published its Disclosure Framework²¹ and supporting Implementation Guidance. The Disclosure Framework builds on the recommendations provided by both TCFD and ISSB and aims to help companies deliver “gold standard” climate transition plans. The Framework applies the guiding principles of Ambition, Action and Accountability and is organised across five disclosure elements: Foundations; Implementation Strategy; Engagement Strategy; Metrics and Targets; and Governance.

A15. On 19 October 2023, the Department for Energy Security and Net Zero (DESNZ) launched a Call for Evidence on Scope 3 emissions in the UK reporting landscape²². The ISSB's Sustainability Disclosure Standards include requirements for entities to report their Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions. Currently, some of the largest UK entities are required to disclose their Scope 1 and Scope 2 emissions in their annual reports, in line with the Streamlined Energy and Carbon Reporting (SECR) framework, but Scope 3 emission reporting remains voluntary. The call for evidence seeks views on the costs, benefits and practicalities of Scope 3 reporting, as well as the existing SECR framework. The closing date for responses is 14 December 2023.

Appendix B: Due Process Compliance Statement: Post-implementation Review of IFRS 15 Revenue from Contracts with Customers

IASB's due process document

• Request for Information Post-implementation Review of IFRS 15 Revenue from Contracts with Customers
• Published: 29/06/2023
• Comment deadline: 27/10/2023

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.

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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