9 Items for Noting

28 June 2024 Agenda Paper 9: Appendix A

ISSB meeting

May 2024 meeting – update

A1 The International Sustainability Standards Board (ISSB) met in Montreal, Canada on 16 May 2024 to discuss a summary of decisions and final work plan, the Sustainable Industry Classification System® (SICS®) used in the SASB Standards and a summary of the Transition Implementation Group March meeting.

Summary of decisions and final work plan

A2 The ISSB reviewed a summary of the key decisions it had made during its inaugural consultation on agenda priorities and its two-year work plan¹. The ISSB was not required to make any decisions and intends publishing a feedback statement by the third quarter of 2024.

Sustainable Industry Classification System® (SICS®)

A3 The ISSB discussed the SICS® approach for industry groupings and decided to maintain the approach, that is, grouping entities based on shared sustainability-related risks and opportunities. However, the ISSB will also consider enhancing the industry groupings when it enhances the SASB Standards.

Transition Implementation Group (TIG)

A4 The ISSB received an update on the TIG meeting held on 15 March 2024. The ISSB was not required to make any decisions.

A5 The TIG had discussed how the standards and related materials could be applied where a specific disclosure requirement was not prescriptive, the application of the undefined terms ‘vulnerable' and 'business activities' in paragraph 29(b)−(c) of IFRS S2² and the revision of preceding period estimated amounts³.

A6 The TIG noted the importance of connected information and connections between sustainability disclosures and other general purpose financial reports, including financial statements. For example, it was noted that the same estimates and assumptions used in a financial statement asset impairment test might also apply for the purposes of some sustainability-related financial disclosures.

A7 In relation to prior period adjustments the TIG noted that, while IFRS S1 and IFRS S2 did not change the requirements in the IFRS Accounting Standards, it was important to ensure that connections with the financial statements were also considered when adjusting prior period metrics.

IFRS Foundation updates

A8 Following the meeting of the Management Commentary Consultative Group⁴ where the members⁵ supported finalising the project the IASB announced that it will finalise the revision of the Management Commentary Practice Statement by making targeted refinements to Exposure Draft Management Commentary⁶.

A9 The Sustainability Standards Advisory Forum (SSAF) met on 11 June and discussed the IFRS Sustainability Disclosure Taxonomy and Enhancements to the SASB Standards. The staff noted the significant collaboration with the IASB in the development of the ISSB's digital financial reporting strategy and priorities⁷.

A10 The IFRS Foundation Due Process Oversight Committee (DPOC) met on 4 June 2024 to discuss updating the Due Process Handbook⁸. A project will be established to formally reflect the establishment of the ISSB and make other targeted amendments. One of the areas to be updated is cooperation and connections between the IASB and ISSB. For example, the joint consideration of technical matters and undertaking of joint projects.

A11 The DPOC will review drafts of the updated Handbook and the Invitation to comment before providing approval for publication. The DPOC intends to publish a consultation on a revised Handbook before the end of 2024.

A12 Erkki Liikanen, Chair of the IFRS Foundation Trustees, congratulated the Singapore Exchange for introducing mandatory climate-related disclosures for all listed issuers and large non-listed companies in a phased approach, using requirements aligned with the ISSB Standards⁹.

A13 The IFRS Foundation released a Jurisdictional Guide¹⁰ at IOSCO's Annual Meeting¹¹. The announcement noted that 20 plus jurisdictions had taken steps to adopt or otherwise use ISSB Standards and that this accounted for approximately 75% of global market capitalisation excluding the United States.

A14 The Foundation also announced a Regulatory Implementation Programme¹² which provided tools, educational materials and capacity building to support jurisdictions seeking to make policy decisions for the adoption or other use of ISSB Standards.

A15 Andreas Barckow, Chair of the International Accounting Standards Board (IASB), delivered a keynote address at the European Accounting Association (EAA) Annual Congress on 15 May 2024¹³.

A16 The IASB Chair noted that ‘connectivity' was an emerging priority in financial reporting and that the heightened emphasis may be due to a shift in how the purpose and context of financial reporting was now being perceived. He noted the conventions that created the boundaries of financial statements and questioned whether this required change, or whether it would be preferable to link to information in other reports.

A17 He also noted that the ISSB standards have an explicit requirement to connect to the financial statements and that in time the IASB could ‘start thinking about providing for a similar kind of linkage the other way around, where this is both feasible and appropriate.'

A18 The IFRS Foundation and the Global Reporting Initiative (GRI) have announced that they are deepening their working relationship¹⁴. The organisations will aim to identify ways in which the ISSB and GRI standards can be used together to facilitate reporting on an organisation's impacts, risks and opportunities.

UK updates

A19 The UK Sustainability Disclosure Technical Advisory Committee (TAC) met on 31 May 2024 to approve the assessment approach and agree the work and project plans¹⁵. Please refer to the TAC Update paper in the UKEB June 2024 public board papers. The TAC's first substantive meeting was held on 18 June 2024.

Other international updates

A20 The Ministry of Finance of the People's Republic of China has issued Exposure Draft of Chinese Sustainability Disclosure Standards¹⁶. Entities will be allowed to voluntarily apply the draft standards which are based on ISSB Standards. A climate standard is intended to be published by 2027 with a full set of sustainability standards published by 2030.