9 Items for Noting

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19 April 2024
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26 April 2024 Agenda Paper 9: Appendix A

Appendix A: Sustainability Update

ISSB meetings

April 2024 meeting – update

A1The International Sustainability Standards Board (ISSB) will meet on 23 April 2024, in Frankfurt, Germany, to discuss the ISSB consultation on Agenda Priorities – Projects to add to the work plan1.

IFRS Foundation updates

A2The first episode of the IFRS Foundation podcast series ‘ISSB Implementation Insights' has been published2. The first podcast includes questions raised by preparers at the initial ISSB Transition Implementation Group (TIG) meeting.

A3The ISSB has begun publishing the status of jurisdictional consultation and adoption of its standards3. The current situation is that Canada, Japan and Singapore are consulting. Australia and Malaysia have recently closed their consultations. Several other jurisdictions4 have announced decisions to adopt or otherwise use the ISSB Standards.

A4The ISSB Chair Emmanuel Faber has met5 with the Presidents of Kenya and Nigeria and government ministers in South Africa to discuss the work of the ISSB.

UK updates

A5The Department for Business and Trade (DBT) published a summary of stakeholder responses to the Non-financial Reporting Review call for evidence6, and an impact assessment7.

A6One of the main findings was that ‘Respondents expressed strong support for greater comparability in sustainability related reporting and the UK's pursuit of International Sustainability Standards Board (ISSB) standards as a solution to issues caused by reporting against a variety of standards'.

Other international updates

A7The Financial Reporting Council (FRC) announced8 the launch of its first market study to examine the UK market for sustainability assurance services. The study aims to ensure this rapidly growing market is functioning effectively and providing high quality assurance over companies' sustainability reporting.

A8The Transition Plan Taskforce (TPT) has issued9 its final set of transition plan resources which aim to help business obtain finance for transition to net zero. IFRS S2 Climate-related Disclosures requires10 the disclosure of 'any climate-related transition plan the entity has, including information about key assumptions used in developing its transition plan, and dependencies on which the entity's transition plan relies'.

A9On 27 March 2024, the Australian Government introduced a Treasury Laws Amendment (Financial Market Infrastructure and other measures) Bill11. The Bill included the implementation of new mandatory climate reporting requirements for certain entities. The legislation introduces standardised, internationally aligned reporting requirements and establishes Australia's climate risk disclosure framework. Reporting requirements will commence from 1 January 2025 for Australia's largest listed and unlisted entities and financial institutions.

A10The European Financial Reporting Advisory Group (EFRAG) is preparing guidance12 to help companies disclose their transition plans in line with ESRS standards.

26 April 2024 Agenda Paper 9: Appendix B

Appendix B: Due Process Compliance Statement: Financial Instruments with Characteristics of Equity – Amendments to IAS 32, IFRS 7 and IAS I

The International Accounting Standards Board (IASB) published the Exposure Draft (ED) Financial Instruments with Characteristics of Equity1 (the Amendments) on 30 November 2023. The IASB comment period ends on 29 March 2024.

Influencing process

Project preparation

Step Mandatory / optional2 Metrics or evidence UKEB Secretariat comments
Added to UKEB technical work plan [Due Process Handbook (Handbook) 4.30] Mandatory Project included in the UKEB published technical work plan Complete: the Amendments were included in the UKEB technical work plan published in July 2022.
Project Initiation Plan (PIP) [Handbook 5.4 to 5.8, A1 to A2 and A12 to A14] 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 included the outreach plan and approach.
Mandatory Resources allocated Complete: One project director (0.8 FTE) and one project manager, with technical support and oversight from a senior project director were allocated to the project.
Mandatory Assessment of whether to set up an ad-hoc advisory group Complete: Taking a proportionate approach, an ad-hoc advisory group was not considered necessary due to the moderate nature of the project.
Mandatory Assessment of whether PIP required updating Complete: No updates to the PIP were required.
Education sessions [Handbook 4.10] Optional Board provided with education sessions Complete: The Board was provided with two education sessions, one specifically on the Amendments at the November 2023 Private Board meeting and an additional optional session on the current requirements, contained within IAS 32 Financial Instruments: Presentation, in December 2023.

Desk-based research

Step Mandatory / optional² Metrics or evidence UKEB Secretariat comments
Desk-based research [Handbook 5.9 and A3] Optional Review of relevant documentation Complete: the Secretariat has reviewed: • The IASB's work on the Amendments, including the staff papers and the ED; • The Illustrative Examples and the Basis for Conclusions to the ED; • Other standard-setters' views; and • Current guidance within accounting manuals; and • Press releases for further guidance and illustrative examples.

Outreach

Step Mandatory / optional² Metrics or evidence UKEB Secretariat comments
Outreach activities [Handbook 5.10 to 5.12 and A4 to A8] Mandatory Evidence of consultation Complete: Due to the narrow-scope nature of the Amendments, consultation activities were focused on consultation with advisory groups, meeting with industry groups, following up with key stakeholders and obtaining responses to the Draft Comment Letter (DCL). The UKEB received three comment letters. The comment letters received were published on the UKEB website.

Draft Comment Letter (DCL)

Step Mandatory / optional Metrics or evidence UKEB Secretariat comments
DCL published for comment (mandatory unless impracticable) [Handbook paragraphs 5.13 to 5.17 and A4(d)] Mandatory Comment period set for responses to DCL Complete: The DCL was published for consultation for 30 days on 7 February 2024 (comment period deadline: 8 March 2024).
Mandatory Review and approval at a UKEB public meeting Complete: The DCL was reviewed and approved at the Board meeting on 30 January 2024.
Mandatory DCL published on website for public consultation Complete: The DCL was published for consultation for 30 days on 7 February 2024 (comment period deadline: 8 March 2024).

Project finalisation and project closure

Step Mandatory / optional² Metrics or evidence UKEB Secretariat comments
Final Comment Letter (FCL) [Handbook paragraph 5.18 and A4(d)] Mandatory Public responses to DCL considered and published on website Complete: The UKEB received three comment letters which were published on the UKEB website. All responses were assessed, reflected as appropriate in the draft FCL and summarised in the Feedback Statement.
Final Comment Letter (FCL) [Handbook paragraph 5.18 and A4(d)] Mandatory FCL approved by the UKEB in public meeting Complete: A draft of the FCL was presented for approval to the Board at its 28 March 2024 public meeting. The Board approved the FCL subject to suggested amendments.
Mandatory FCL submitted to the IASB and posted on UKEB website Complete: The FCL was submitted to the IASB and posted on the UKEB website on 3 April 2024.
Feedback Statement [Handbook 5.19 to 5.22 and A9 to A11] Mandatory Feedback Statement approved for publication by the UKEB in a public meeting Complete: A draft of the Feedback Statement was presented for approval to the Board at its 28 March 2024 public meeting. The Board approved the draft Feedback Statement, subject to editorial changes.
Mandatory Feedback Statement published on the UKEB website Complete: The final Feedback Statement was published on the UKEB website on 3 April 2024.

Ongoing communications

Step Mandatory / optional² Metrics or evidence UKEB Secretariat comments
Due Process Compliance Statement (DPCS) [Handbook 5.23 to 5.26 and A12 to A14] Mandatory DPCS approved by the UKEB in public meeting Complete: A draft DPCS was presented for approval to the Board at its 28 March 2024 public meeting. [A final DPCS was presented for noting at the Board's 26 April 2024 meeting.]
Mandatory DPCS published on the UKEB website [Complete: The final DPCS was published on the UKEB website after the April 2024 Board meeting.]
Public Board meetings [Handbook 4.10] Mandatory UKEB public meetings held to discuss technical project Complete: The Board received updates on the project at its June, July, September and October meetings in 2022 and at its January, March, May and June meetings in 2023. It discussed preliminary analysis papers at its December 2023 and January 2024 meetings. The Board approved the PIP at its meeting on 19 October 2023, the DCL at its meeting on 30 January 2024 and the FCL and Feedback Statement at its meeting on 28 March 2024.
Secretariat papers [Handbook 4.20] Mandatory Board meeting papers posted and publicly available usually no later than 5 working days before a Board meeting. Complete: The UKEB's meeting papers were published on the UKEB website 5 working days before the public meetings. Meeting minutes and recordings were made publicly available via the UKEB website.
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 has been updated regularly on a timely basis.
Subscriber Alerts [Handbook 4.24] 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.
News Alerts [Handbook 4.24] Optional News Alert to announce publication of key documents Complete: A News Alert was published on 30 January 2024 calling for comments on the DCL. A News Alert was published on 3 April 2024 alerting stakeholders to the FCL. A link to the FCL was sent out to the UKEB advisory groups. A News Alert announcing publication of the Feedback Statement was published on 3 April 2024.

Conclusion

This project complies with the applicable due process steps, as set out in the December 2022 Handbook.

Footnotes

Footnotes

  1. Projects to add to the work plan - Staff paper Agenda reference: 2 ISSB meeting April 2024 ↩↩

  2. First episode of the ISSB Implementation Insights podcast now available ↩↩

  3. Progress towards adoption of ISSB Standards as jurisdictions consult ↩

  4. These include Brazil, Costa Rica, Sri Lanka, Nigeria and Turkey ↩

  5. ISSB Chair meets with leaders in Kenya, Nigeria and South Africa ↩

  6. Department for Business & Trade: Non-Financial Reporting Review Call for Evidence: summary of responses March 2024 ↩

  7. The Companies (Non-financial Reporting) (Amendment) Regulations 2024: impact assessment ↩

  8. FRC launches market study on UK sustainability assurance market ↩

  9. Transition Plan Taskforce publishes new resources ↩

  10. IFRS S2 Climate-related Disclosures, Strategy and decision-making section, para 14 (iv) ↩

  11. New legislation to strengthen financial system and boost investment in cleaner, cheaper energy, March 2024 ↩

  12. EFRAG seeks companies to engage in transition plan implementation guidance ↩