10 Items for Noting

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Appendix A: Sustainability Update

ISSB meeting

June 2024 meeting – update

A1The International Sustainability Standards Board (ISSB) met in Frankfurt, Germany on 12 June 2024 to discuss staff analysis on the criteria1 used for assessing the priority of workstreams for enhancing the Sustainability Accounting Standards Board (SASB) Standards.

A2The ISSB provided feedback to staff regarding which SASB Standards enhancements could be prioritised but were not asked to make any decisions.

IFRS Foundation updates

A3The IFRS Foundation has signed a Memorandum of Understanding2 with the International Finance Corporation, a member of the World Bank Group, to develop a strategic partnership to strengthen sustainable capital markets by improving sustainability and climate reporting in emerging markets and developed economies.

A4The ISSB has embarked on its new two-year work plan and has published3 a Feedback Statement in response to the Consultation on Agenda Priorities (Request for Information) that explains how the feedback received has shaped their work plan for the period 2024-2026.

A5The ISSB also announced4 a series of initiatives aimed at harmonising sustainability reporting requirements, focussed on areas including disclosure of corporate climate transition plans and the measurement of greenhouse gas (GHG) emissions across the value chain.

A6The IFRS Foundation will assume responsibility for the Transition Task Force disclosure framework and has signed an agreement with the GHG Protocol aimed at ensuring compatibility between the organisations' GHG reporting standards.

A7The IFRS Foundation conference discussed a range of sustainability related topics5 such as the adoption strategy for the ISSB Standards, implementation support for IFRS S1 and IFRS S2, integration in reporting and the ISSB's two-year work plan.

UK updates

A8The UK Sustainability Disclosure Technical Advisory Committee (TAC) is due to meet on 15 July. The agenda and papers are due to be published on 8 July6. Please refer to the TAC Update paper in the UKEB July 2024 public Board papers.

Other international updates

A9The Australian Accounting Standards Board (AASB) announced7 that it will now consider aligning its two disclosure standards (ASRS 1 and ASRS 2) as closely as possible with the ISSB's disclosure standards on general sustainability (IFRS S1) and climate (IFRS S2).

A10The European Financial Reporting Advisory Group (EFRAG) has published8 an initial paper "Connectivity considerations and boundaries of different Annual Report sections” as part of its research project on connectivity between financial and sustainability reporting. The paper analyses benefits of connectivity and reporting boundaries across different sections in Annual Reports and suggests ways to enhance connectivity and how to reduce the expectation gaps around reporting boundaries.

Appendix B: Due Process Compliance Statement: Lack of Exchangeability (Amendments to IAS 21)

The title of this Due Process Compliance Statement (DPCS) is "Lack of Exchangeability (Amendments to IAS 21)"9.

Issue dates

  • Exposure Draft ED/2021/4 issued: 20 April 2021.
  • Final amendments issued: 15 August 2023.
  • Effective for annual reporting periods beginning on or after 1 January 2025. Earlier application is permitted.

Project preparation

Step Mandatory / optional10 Metrics or evidence UKEB Secretariat comments
Added to the UKEB technical work plan [Due Process Handbook (Handbook) [4.30]] Mandatory Project is included in the UKEB published technical work plan. Complete: The Amendments were included in the UKEB technical work plan published in September 2023.
Project Initiation Plan (PIP) Mandatory PIP draft with project outline (background, scope, project objective) and approach for endorsement (key milestones and timing) Complete: The Secretariat included mandatory milestones for the project and considered, as appropriate, other milestones and activities.
[Handbook 6.12 to 6.16, A1 to A2 and A12 to A14] The PIP was approved at the 16 November 2023 Board meeting.
Project Initiation Plan (PIP) [Handbook 6.12 to 6.16, A1 to A2 and A12 to A14] Mandatory Outreach plan for stakeholders and communication approach outlined Complete: Due to the narrow-scope of the Amendments, consultation activities were focused on obtaining responses to the Draft Endorsement Criteria Assessment (DECA) as well as consulting with UKEB advisory groups and limited targeted outreach with relevant UK stakeholders, including some who had previously provided feedback to the IASB and/or UKEB. The PIP (referred to above) included the outreach plan and approach.
Mandatory Resources allocated Complete: One Project Manager supported and overseen by one Project Director, with communications and economics team support.
Mandatory Assessment of whether to set up an ad-hoc advisory group Complete: Assessed. Taking a proportionate approach, an ad-hoc advisory group was not considered necessary due to the narrow-scope nature of the Amendments.
Mandatory Assessment of whether PIP required updating Complete: Assessed. The Secretariat monitored this throughout the project, the nature and scope of which remained as proposed in the original PIP. Based on the discussion in January, and at the suggestion of the Board, the Secretariat has brought forward the timeline for endorsement (originally planned for June 2024 in the PIP) by a month. This does not represent a major change to the nature and scope of a project and therefore the PIP was not updated to reflect this. However, the project timeline in the cover paper for the ECA was updated.
Mandatory UKEB Board public meeting held to approve PIP Complete: The PIP was approved at the 16 November 2023 Board meeting.
Education sessions [Handbook 4.10] Optional Board provided with Education sessions or updates on the IASB project Complete: None was provided as the amendments were not expected to be complex.

Desk-based research

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | | Desk-based research [Handbook 6.17 and A3] | Optional | Review of relevant documentation | Complete: The Secretariat has reviewed:

  • The IASB's work on the Amendments mainly the IASB's staff papers, Exposure Draft (ED) including its Basis for Conclusions, and final amendments;
  • Comment letters on the ED received by the IASB from UK stakeholders including the UKEB;
  • Previous work done by the UKEB as part of its influencing activities;
  • Regulatory opinion/CRR feedback
  • Other standard-setter views; and,
  • Accounting manuals and press releases.
|

Outreach

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | | Consult with a representative range of stakeholders prior to adoption [Handbook 6.18 to 6.21 and A4 to A8] | Mandatory | Evidence of consultation | Due to the narrow-scope nature of the Amendments, consultation activities were focused on obtaining responses to the Draft Endorsement Criteria Assessment (DECA), consultation with UKEB advisory groups, and limited targeted outreach with relevant UK stakeholders. A summary of outreach activities is provided in the Feedback Statement. The UKEB received five comment letters in response to its Invitation to Comment. The comment letters received were published on the UKEB website. |

Draft Endorsement Criteria Assessment (DECA)

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | The UKEB sets comment period for responses to DECA | Complete: The DECA was published for consultation for 90 days on 5 February 2024 (comment period deadline: 6 May 2024). |

Project finalisation and project closure

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | | Final Endorsement Criteria Assessment (ECA) [Handbook 6.32 and 6.40 to 6.48] | Mandatory | Final ECA approved by the UKEB in public meeting | Complete: A draft of the final ECA was presented for approval to the Board at its 24 May 2024 public meeting. The Board approved the final ECA, subject to suggested amendments. | | | Mandatory | Final ECA published on the website | Complete: The final ECA was published on the UKEB website on 17 July 2024. | | Final Endorsement Criteria Assessment (ECA) [Handbook 6.32 and 6.40 to 6.48] | Mandatory | Final ECA approved by the UKEB in public meeting | Complete: A draft of the final ECA was presented for approval to the Board at its 24 May 2024 public meeting. The Board approved the final ECA, subject to suggested amendments. | | | Mandatory | Final ECA published on the website | Complete: The final ECA was published on the UKEB website on 17 July 2024. |

Project finalisation and project closure

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments |

Project finalisation and project closure

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | Final Endorsement Criteria Assessment (ECA) [Handbook 6.32 and 6.40 to 6.48] | Mandatory | Final ECA approved by the UKEB in public meeting | Complete: A draft of the final ECA was presented for approval to the Board at its 24 May 2024 public meeting. The Board approved the final ECA, subject to suggested amendments. | | | Mandatory | Final ECA published on the website | Complete: The final ECA was published on the UKEB website on 17 July 2024. |

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments | | Final Endorsement Criteria Assessment (ECA) [Handbook 6.37 to 6.39] | Mandatory | DPCS published on the website | Complete: The final DPCS was published on the UKEB website after the 18 July 2024 Board meeting. |

Ongoing communications

| Step | Mandatory / optional10 | Metrics or evidence | UKEB Secretariat comments |

Conclusion

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

Footnotes

Footnotes

  1. ISSB June 2024 meeting, Agenda paper 6: Enhancing the SASB Standards, Criteria for adding projects to the ISSB's work plan paragraph 11 ↩

  2. IFC and IFRS Foundation announce partnership to improve sustainability reporting in emerging markets ↩

  3. ISSB's Feedback Statement Consultation on Agenda Priorities (June 2024) ↩

  4. ISSB delivers further harmonisation of the sustainability disclosure landscape as it embarks on new work plan ↩

  5. IFRS Foundation Conference (24-25 June 2024) ↩

  6. UK Sustainability Disclosure TAC Meetings and Summaries ↩

  7. Australia reverses decision on ISSB-inspired standards to extend beyond climate ↩

  8. EFRAG publishes paper addressing interplay of connectivity and annual report boundaries ↩

  9. At the time of writing this paper, the balloting is in progress. The DPCS is prepared on the basis that all steps are completed as planned by the July 2024 Board meeting. The changes made from the draft DPCS that was presented at the May 2024 Board meeting are highlighted in grey and these highlights will be removed before publication. ↩

  10. In accordance with the Due Process Handbook. ↩↩↩↩↩↩↩↩↩

  11. Due to the pre-election period of sensitivity, the formal written vote and subsequent adoption was deferred until after 5 July 2024. ↩