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30 January 2024

Appendix A: Sustainability Update

ISSB meetings

December 2023 meeting

A1. The ISSB met on 13–14 December 2023, in Frankfurt, Germany to discuss:

  1. ISSB Consultation on Agenda Priorities1
  2. IFRS Sustainability Disclosure Taxonomy2
  3. International Applicability of SASB Standards3

ISSB consultation on Agenda Priorities

A2. The ISSB discussed a summary of the feedback relating to the strategic direction and balance of the ISSB's activities; the suitability of criteria for assessing which sustainability-related matters (including topics, industries, and activities) to prioritise and add to the ISSB's work plan; and a proposed list of new research and standard-setting projects that could be added to the ISSB's work plan.

A3. It was noted that stakeholders were generally supportive of the planned activities and that users had emphasised that the ISSB's immediate priority was to ensure that IFRS S1 & S2 were globally adopted. Stakeholder feedback regarding the potential integration in reporting research project was not discussed as it will be considered jointly with the International Accounting Standards Board (IASB) at a joint meeting on 25 January 2024.

A4. No decisions were required of the ISSB. The ISSB will continue to discuss feedback on the Request for Information at future meetings.

IFRS Sustainability Disclosure Taxonomy

A5. The ISSB were provided with a summary of the feedback4 obtained on the proposed ISSB Taxonomy, which was published in July 2023 for public consultation. A summary of the content was also provided to aid discussions5. The agenda paper noted (page 30) that 'few' respondents considered it important to capture the connection between sustainability-related financial disclosures and financial statements. No decisions were required of the ISSB.

A6. The ISSB staff plan to make final recommendations to the Taxonomy at the ISSB December meeting and to publish the final taxonomy in H1 2024.

International Applicability of SASB Standards

A7. The ISSB ratified the amendments to the SASB Standards and Taxonomy, agreed that re-exposure was not necessary and confirmed they were satisfied due process requirements had been met. The amended standards were published in December on the SASB website6.

A8. The SASB Standards are a source of guidance for applying IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. They assist entities identify and disclose material information about sustainability-related risks and opportunities in the absence of specific IFRS Sustainability Disclosure Standards.

IFRS Foundation updates

A9. The IFRS Foundation and Global Reporting Initiative (GRI) have jointly published an analysis and mapping resource: Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards7. The document illustrates the areas of interoperability between GRI 305: Emissions 2016 (GRI 305) and IFRS S2 Climate-related Disclosures (IFRS S2) when entities measure and disclose greenhouse gas (GHG) emissions.

A10. To support the January 2024 effective date for IFRS S1 and S2 the ISSB has published additional resources including enhances SASB Standards, educational material for both standards and a digital taxonomy8. The educational material includes guidance on nature and social aspects of climate-related risks and opportunities9.

A11. The IFRS Advisory Council meeting summary from the 7 November 2023 meeting summary10 has been published. The meeting was attended by the ISSB Chair who discussed the ISSB adoption strategy. One of the themes that arose included the need for prompt engagement with national standard-setters. An investor member questioned whether the IASB Exposure Draft Subsidiaries Without Public Accountability: Disclosures scope would align with the ISSB disclosure standards for this type of subsidiary. The IASB representatives took the question offline and advised that they would revert at a future date.

A12. During the IASB 'Strategy Refresh – Generation 3.0' discussion the Advisory Council meeting it a breakout group noted the importance of integrating ISSB Standards (IFRS S1 and IFRS S2) with financial statements.

A13. The meeting summary also noted that IFRS Advisory Council members;

  1. noted the importance of connectivity between the IASB and the ISSB, the shared use of the IFRS brand signifying the success of the IASB and the IFRS Foundation in establishing accounting standards.
  2. that enhanced synergy, integration, and consistency between the two boards would contribute to the credibility of IFRS and IFRS sustainability disclosure standards in the eyes of a broader audience.

Other international updates

A14. EFRAG announced the signing of a cooperation agreement with the Taskforce on Nature-related Financial Disclosures (TNFD) in December 202311. The agreement demonstrates “a shared commitment to enhance corporate transparency related to biodiversity and ecosystems”. It builds on the earlier collaboration which is reflected in the alignment between TNFD and European Sustainability Reporting Standards (ESRS).

UK updates

A15. The FCA has welcomed the launch of a voluntary code of conduct for Environmental, Social and Governance (ESG) ratings and data products providers12. The code is owned and maintained by the International Capital Market Association (ICMA) and has been developed in association with the International Regulatory Strategy Group (IRSG).

A16. The FCA and HM Treasury were UK observers to the agreement of the code, which will provide a benchmark for any providers that fall outside the scope of any regulations introduced in the future.

A17. The Code of Conduct clarifies how providers can interact with wider market participants and aims to:

  1. improve the availability and quality of information provided to investors at product and entity levels;
  2. enhance market integrity through increased transparency, good governance and sound systems and controls; and,
  3. improve competition through better comparability of products and providers.

Appendix B: Due Process Compliance Statement: Annual Improvements to IFRS Accounting Standards – Volume II

The International Accounting Standards Board (IASB) published Annual Improvements to IFRS Accounting Standards –Volume 11 Exposure Draft (ED) on 12 September 2023. The IASB comment period ends on 11 December 2023.

Influencing process

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Project preparation
Added to UKEB technical work plan [Due Process Handbook (Handbook) 4.28 to 4.30] Mandatory Project included in the UKEB published technical work plan Complete: The Annual Improvements to IFRS Accounting Standards –Volume 11 (Annual Improvements) were included in the UKEB technical work plan published in September 2023.
Project Initiation Plan (PIP) [Handbook 5.4 to 5.8]
Mandatory PIP draft with project outline (background, scope, project objective) and approach for influencing (key milestones and timing) Complete: The Secretariat included mandatory milestones for the project and considered, as appropriate, other milestones and activities. The PIP was approved at the 19 October 2023 Board meeting.
Mandatory Outreach plan for stakeholders and communication approach outlined Complete: The PIP (referred to above) included the outreach plan and approach.
Mandatory Resources allocated Complete: One Project Manager supported by one Assistant Project Manager, with oversight from a Project Director.
Education sessions [Handbook 4.10]
Optional Board provided with education sessions Complete: No education session was provided but the updates on the project were included in the agenda papers for UKEB March 2023 and June 2023 meetings. In addition, education material was shared with the Board in the 19 October 2023 meeting pack.

Desk-based research

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Desk-based research [Handbook 5.9] Optional Review of relevant documentation. Complete: The Secretariat has reviewed:
  • the IASB's work on the ED (mainly staff papers);
  • the Basis for Conclusions to the ED;
  • relevant material produced by other parties, including accounting firms;
  • IFRS Interpretations Committee Agenda Decisions; and
  • other standard-setters' views.

Outreach

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Outreach activities [Handbook 5.10 to 5.12] Mandatory Evidence of consultation Complete: Due to the narrow-scope nature of the proposed amendments, consultation activities were focused on obtaining responses to the Draft Comment Letter and consultation with the UKEB advisory groups: Accounting Firms & Institutes Advisory Group (AFIAG) and Preparer Advisory Group (PAG). Given most of the proposed amendments in the ED are to IFRS 7 and IFRS 9, we drew the Financial Instruments Working Group (FIWG) members' attention to Annual Improvements and asked them to contact the project team if they had any feedback. No feedback was received from the FIWG members. The UKEB received one comment letter. The comment letter received was published on the UKEB website.

Draft Comment Letter (DCL)

Step Mandatory / optional15 Metrics or evidence UKEB Secretariat comments
DCL published for comment (generally mandatory) [Handbook paragraphs 5.13 to 5.17] Mandatory Consultation period set for responses to DCL Complete: The DCL was published for consultation for 32 days on 19 October 2023 (comment period deadline: 20 November 2023).
Mandatory Review and approval at a UKEB public meeting Complete: The DCL was reviewed and approved at the Board meeting on 19 October 2023.
Mandatory DCL published on website for public consultation Complete: The DCL was published for consultation for 32 days on 19 October 2023 (comment period deadline: 20 November 2023).
Optional News Alert to announce publication Complete: Two news alerts were published on 19 October 2023 and on 15 November 2023 calling for comments. A link to the DCL was included in the meeting packs for the October 2023 PAG meeting and the November 2023 AFIAG meeting.

Project finalisation and project closure

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Final Comment Letter (FCL) [Handbook paragraph 5.18] Mandatory Public responses to DCL assessed and published on website Complete: The UKEB received one comment letter which was published on the UKEB website. All responses were assessed, reflected as appropriate in the FCL and summarised in the Feedback Statement.
Mandatory FCL approved by the UKEB in public meeting Complete: A draft of the final comment letter was presented for approval to the Board at its 14 December 2023 public meeting. The Board approved the final comment letter, subject to suggested amendments.
Mandatory FCL submitted to the IASB and posted on UKEB website Complete: The FCL was submitted to the IASB on 14 December 2023 and posted on UKEB website on 14 December 2023. The Board decided at its 19 October 2023 meeting to have a 30-day consultation period for the DCL, acknowledging that the FCL would be submitted to the IASB 3 days after its submission deadline.
Optional News alert published to announce publication To be completed: A news alert announcing publication of the FCL was published on 14 December 2023.

Feedback Statement

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Feedback Statement [Handbook 5.19 to 5.22] Mandatory Feedback Statement approved by the UKEB in a public meeting Complete: A draft of the Feedback Statement was presented for approval to the Board at its 14 December 2023 public meeting. The Board approved the Feedback Statement, subject to suggested amendments.
Mandatory Feedback Statement posted on the UKEB website Complete: The Feedback Statement was published on the UKEB website on 14 December 2023.
Optional News alert published to announce publication Complete: A news alert announcing publication of the Feedback Statement was published on 14 December 2023.

Due Process Compliance Statement (DPCS)

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Due Process Compliance Statement (DPCS) [Handbook 5.23 to 5.26] Mandatory DPCS approved by the UKEB in public meeting Complete: A [draft] DPCS was presented for approval to the Board at its 14 December 2023 public meeting. A final DPCS was presented for noting at the Board's 30 January 2024 meeting.
Mandatory DPCS published on the UKEB website To be completed: [The final DPCS was published on the UKEB website after the January 2024 Board meeting.]

Ongoing communications

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Public Board meetings [Handbook 4.10] Mandatory UKEB public meetings held to discuss technical project Complete: The Board received an overview of the project in October 2023. The Board approved the PIP and DCL at its meeting on 19 October 2023 and FCL at its meeting on 14 December 2023.
Secretariat papers [Handbook 4.20] Mandatory Board meeting papers made available on the UKEB website usually no later than five working days before a Board meeting Complete: The UKEB's meeting papers were published on the UKEB website 5 working days before the relevant public meetings. Meeting minutes and recordings were made publicly available via the UKEB website. Subscribers were notified via UKEB news alerts.

Project webpage

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
Project webpage [Handbook 4.25(b)] Mandatory Project webpage contains a project description with up-to-date information on the project. Complete: The project webpage was created in September 2023 and has been updated regularly on a timely basis.
Subscriber Alerts [Handbook 4.24 and A4(d)] Optional Evidence that subscriber alerts have occurred Complete: Subscribers were alerted via email 5 days before each Board meeting, with links to the agenda, papers and the option to dial in to observe the discussion. Two news alerts were issued, alerting subscribers to the publication of the DCL.

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 ED.

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

Footnotes

  1. Feedback summary – Users of general purpose financial reporting ↩

  2. Changes to the Proposed IFRS Sustainability Disclosure Taxonomy ↩

  3. Ratification of amendments to the SASB Standards and DRAFT: Basis for Conclusions on Enhancing the International Applicability of the SASB Standards ↩

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

  5. Summary of content in the Proposed IFRS Sustainability Disclosure Taxonomy (Agenda Paper 7B) ↩

  6. SASB Standards - website ↩

  7. Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards (January 2024) ↩

  8. New and updated resources to help companies apply IFRS S1 and IFRS S2 from 2024 (December 2023) ↩

  9. Educational material - Nature and social aspects of climate-related risks and opportunities (December 2023) ↩

  10. IFRS Advisory Council - Meeting Summary ↩

  11. EFRAG and TNFD sign a cooperation agreement to further advance nature-related reporting (21 December 2023) ↩

  12. FCA welcomes the launch of industry code of conduct for ESG ratings and data products providers (14 December 2023) ↩

  13. The IASB Exposure Draft Annual Improvements to IFRS Accounting Standards –Volume 11 can be accessed here. ↩

  14. In accordance with the Due Process Handbook. ↩

  15. In accordance with the UK Endorsement Board Due Process Handbook (paragraphs 5.13 to 5.17), a draft comment letter is issued in all circumstances unless impracticable. ↩

  16. Paragraphs 4(c) and 4(d) in the Minutes of UKEB Public Meeting 19 October 2023. ↩