8 Items for Noting

Appendix A: Technical Advisory Committee Update

Executive Summary

Purpose of the paper

The UK Sustainability Disclosure Technical Advisory Committee (TAC) met on 14 January 2025 to discuss a draft letter to the ISSB Chair summarising the key interpretation issues identified in their recommendation to adopt for IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2) in the UK.

Summary of the Issue

The TAC was tasked by the Department for Business and Trade¹ (DBT) to assess the IFRS Sustainability Disclosure Standards from a technical perspective and provide advice² to the Secretary of State on whether their endorsement would be conducive to the long-term public good in the UK.

The UKEB is represented on the TAC by a Board Member, who is appointed as a full member of the TAC to reflect the need to maintain connectivity between UK adopted international accounting standards and UK Sustainability Reporting Standards.

The Committee has scheduled monthly meetings throughout 2025. This paper presents a summary of matters considered at the January 2025 meeting for the Board's consideration. At the time of writing, official minutes had not yet been issued.

Question for the Board

n/a

Recommendation

n/a

Appendices

Appendix A: UK Sustainability Disclosure TAC 2025 meeting schedule

TAC meeting – January 2025

1The TAC Secretariat will publish an official record of the meetings and final decisions in due course. A summary of the meeting and agenda items is noted below for information.

General Reporting Update

2The TAC noted a paper that summarised International Sustainability Standards Board (ISSB) meetings and jurisdictional developments in relation to the adoption of IFRS Sustainability Disclosure Standards.

Interpretation issues and other matters to raise with the ISSB

3The TAC also considered a draft letter to the Chair of the ISSB which set out a prioritisation of matters identified during the technical assessment of IFRS S1 and IFRS S2 for consideration.

4The TAC categorised these matters as suggested amendments, matters requiring clarification, matters for engagement, considerations for future standards and matters for ongoing monitoring.

5The TAC noted five high priority matters requiring further clarification based on the urgency and significance:

1. Reporting of financed emissions.
2. Disclosure of commercially sensitive information required in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information but exempt from disclosure under IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
3. The requirement to disaggregate Scope 1 and 2 greenhouse gas emissions between consolidated group and other investees under S2 Climate-related Disclosures.
4. Guidance on the requirements to revise comparative figures.
5. Examples to illustrate current and anticipated financial effects.

Due process summary

6The TAC noted a summary of the due process followed in the development of the technical assessment and endorsement recommendations.

Appendix A: UK Sustainability Disclosure TAC meeting schedule

A1.UK Sustainability Disclosure TAC meetings in 2025 are scheduled as follows:

1. 14 January – meeting summary awaited.
2. 11 February
3. 25 March
4. 13 May
5. 10 June
6. 8 July
7. 16 September
8. 14 October
9. 11 November
10. 9 December

A2.The public meeting agenda, technical papers and summary minutes from the TAC meetings can be found on the UK Sustainability Disclosure Technical Advisory Committee website⁶.

Appendix B: Sustainability Update

ISSB

December 2024 meeting – update

B1.The International Sustainability Standards Board (ISSB) met in Frankfurt on 11 December 2024. The topics discussed were improving the international applicability of the SASB standards and a research project on Human Capital.

Enhancing the SASB Standards

B2.The staff provided an update⁷ on the project and presented a summary of the feedback received from stakeholders during recent engagements. No decisions were made.

Human Capital research project

B3.The ISSB discussed⁸ a preliminary assessment of investor interest and evidence of the effects of human capital on an entity's prospects. The ISSB was not asked to make any decisions. The staff anticipated presenting further research and analysing implications for standard-setting during the first half of 2025.

Other ISSB updates

B4.The ISSB welcomed⁹ the International Organisation of Securities Commissions' launch of its Growth and Emerging Markets (GEM) Committee Network to support the adoption or other use of ISSB Standards. The GEM Committee comprises 31 jurisdictions representing 90% of BRICS market capitalisation.

IFRS Foundation

B5.The IFRS Foundation published¹⁰ proposed updates to the Due Process Handbook (Handbook) to reflect the creation of the ISSB. The proposed updates are intended to demonstrate that the ISSB and the IASB follow the same transparent standard-setting process. The consultation is open for comments until 28 March 2025.

B6.The IASB and the ISSB have jointly published¹¹ a webcast recognising the importance of connectivity between their respective requirements in enabling the provision of high-quality financial information to capital markets.

UK updates

B7.The UK Sustainability Disclosure Technical Advisory Committee (TAC) published¹² its final recommendations to the UK government, recommending endorsing IFRS S1 and IFRS S2 for use in the UK. The TAC concluded that using the standards as a basis for the UK Sustainability Reporting Standards would support long-term public good in the UK. The TAC met¹³ on 14 January 2025. Please refer to the TAC Update paper of the UKEB 30 January 2025 public Board meeting.

B8.The UK Sustainability Disclosures Policy and Implementation Committee (PIC) met on 16 December 2024¹⁴. The committee discussed the process for moving to the next phase of work, including the forthcoming consultation on the draft UK Sustainability Reporting Standards (UK SRS).

European updates

B9.The European Financial Reporting Advisory Group (EFRAG) has added¹⁵ new non-authoritative technical explanations to assist stakeholders in the implementation of the European Sustainability Reporting Standards (ESRSs). These related to climate change mitigation and adaptation targets, biodiversity, and ecosystems.

B10.The Global Reporting Initiative (GRI) and EFRAG have published¹⁶ an interoperability index outlining how GRI requirements relate to the ESRSs.

B11.The European Securities and Markets Authority (ESMA) has launched¹⁷ a consultation on amending the European Single Electronic Format (ESEF) requirements seeking stakeholders' views on how they can be applied to sustainability reporting. The proposals also aim to ease the burden associated with financial reporting. Comments are requested by 31 March 2025.

International updates

B12.The Financial Accounting Standards Board (FASB) issued¹⁸ Exposure Draft: Proposed Accounting Standards Update (ASU) Environmental Credits and Environmental Credit Obligations (Topic 818). The proposed amendments cover environmental credits, compliance programs and carbon offsets (voluntary carbon credits) and apply to entities that generate environmental credits as well as those that use them. The ED includes recognition and measurement flowcharts, illustrative examples and example quantitative disclosures.

B13.The International Federation of Accountants (IFAC) and the We Mean Business Coalition (WMBC), together with the Global Accounting Alliance (GAA), have published¹⁹ a report entitled Building Trust in Sustainability Reporting and Preparing for Assurance: Governance and Controls for Sustainability Information. The report outlines steps to align sustainability and financial reporting in terms of quality, timing and connectivity, and addresses challenges in sustainability reporting.

B14.The Canadian Sustainability Standards Board (CSSB) has published²⁰ its first Canadian Sustainability Disclosure Standards (CSDSs) based on IFRS S1 and IFRS S2. The standards are voluntary unless mandated by regulators or governments. CSDS 2 Climate-related Disclosures allows a three-year relief period for reporting scope three GHG emissions as opposed to IFRS S2, which allows only one year.

B15.The Chinese Ministry of Finance (MOF), together with other Chinese ministries and institutions, has published²¹ Sustainability Disclosure Standards for Business Enterprise—Basic Standard (Trial) for voluntary application until mandatory requirements are announced.

B16.The Hong Kong Institute of Certified Public Accountants (HKICPA) has issued²² the final Hong Kong sustainability disclosure standards, HKFRS S1 and HKFRS S2, which are fully aligned with the ISSB standards. This follows the publication of a roadmap by the Government of the Hong Kong Special Administrative Region that sets out implementation details for mandatory sustainability disclosures.

B17.The Malaysian Stock Exchange (Bursa Malaysia Securities Berhad) has amended²³ its listing requirements to require main and ACE market participants to provide sustainability disclosures in line with the Malaysian National Sustainability Reporting Framework (NSRF). The NSRF requires the disclosure of sustainability-related information using IFRS S1 and IFRS S2.

B18.The Qatar Financial Centre Regulatory Authority (QFCRA) has published²⁴ Proposed Amendments to General Rules on Corporate Sustainability Reporting, which would align the existing sustainability reporting requirements with IFRS S1 and IFRS S2. The comment period for the amendments ends on 25 March 2025.

Appendix C: Due Process Compliance Statement: Exposure Draft Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202X)

The International Accounting Standards Board (IASB) published Exposure Draft (ED) IASB ED/2024/7 Equity Method of Accounting—IAS 28 Investments in Associates and Joint Ventures (revised 202x) on 19 September 2024. The IASB consultation period ended on 20 January 2025.

Influencing process

Project preparation

Outreach

Draft Comment Letter (DCL)

Project finalisation and project closure

Ongoing communications

Conclusion

This project complies with the applicable due process steps, as set out in the UKEB Due Process Handbook (published December 2022).

Appendix D: Advisory Groups Update

Executive Summary

Purpose of the paper

The purpose of this paper is to provide an update on meetings held by the following UKEB Advisory Groups and Working Groups, to accompany the verbal updates given by their Chairs:

• Academic Advisory Group (Chair: Michael Wells)
• Accounting Firms and Institutes Advisory Group (Chair: Tony Clifford)
• Investor Advisory Group (Chair: Paul Lee)
• Preparer Advisory Group (Chair: Giles Mullins)
• Rate-regulated Activities Technical Advisory Group (Chair: Phil Aspin)
• Financial Instruments Working Group (Chair: Peter Drummond)
• Sustainability Working Group (Chair: Seema Jamil-O'Neill)

Summary of the Issue

All the groups, set out above, are advisory, consultative groups. They are not decision-making bodies. The advisory groups provide specialist knowledge and information as input into the Board's technical decision-making, while the working groups solely advise the UKEB Secretariat.

The Advisory Groups webpage of the UKEB website sets out the purpose of each group, a list of each group's members and their biographies, and a link to its Terms of Reference. In addition, minutes for each AG meeting are uploaded as they become available.

The table below also sets out the meetings held by these groups during the last 12 months and includes links to the meeting minutes, available at the time of writing.

Since the December 2024 Board meeting, the Financial Instruments Working Group (FIWG) has met. At the time of writing, the summary minutes of that meeting have not yet been published.

The summary minutes of the Rate-regulated Activities Technical Advisory Group (RRA TAG) meeting held on 29 November 2024 have been published on the UKEB website²⁸.

Decisions for the Board

No decisions required

Recommendation

The Board is recommended to review the summary minutes of the groups' meetings.

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Footnotes