11 Items for Noting

Appendix A: Technical Advisory Committee Update

Executive Summary

Purpose of the paper

This paper provides an update on the 10 June 2025 UK Sustainability Disclosure Technical Advisory Committee (TAC) meeting.

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.

In addition to the TAC, the Policy Implementation Committee (PIC) is responsible for ensuring that any endorsed standards are implemented in a way that aligns with the mandates of UK government departments and regulator representatives.

On 18 December 2024 the TAC concluded³ that the endorsement of both IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2), was likely to be conducive to the long-term public good in the UK. The TAC will continue to meet monthly during 2025 (refer Appendix A).

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

This paper presents a summary of matters considered at the June 2025 meeting, relevant to the UKEB remit. At the time of writing, official minutes had not been issued. The TAC's main discussion at this meeting related to the draft comment letter in response to the ISSB Exposure Draft (ED) Amendments to Greenhouse Gas Emissions Disclosures⁴ to IFRS S2 Climate-related Disclosures (IFRS S2).

Question for the Board

n/a

Recommendation

n/a – noting only

Appendices

Appendix A: UK Sustainability Disclosure TAC 2025 meeting schedule

TAC meeting – June 2025

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

General Reporting Update5

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.

Proposed Amendments to IFRS S2 Climate-related Disclosures

Context

3The International Sustainability Standards Board (ISSB) published an ED⁶ which proposed targeted reliefs to ease application requirements related to the disclosure of greenhouse gas (GHG) emissions in IFRS S2. The ISSB deadline for stakeholder comments is 27 June 2025.

Global Industry Classification Standard (GICS)

4The TAC disagreed with the proposed reliefs from the use of the GICS⁷ in specific circumstances when disaggregating financed emissions. The TAC discussed a range of issues including a conflict with existing core financial reporting principles, potential competition concerns, operational challenges due to the need to potentially maintain multiple internal systems, inconsistency with other ISSB approaches (e.g. jurisdictional reliefs for GHG Protocol Corporate Standard), and unclear comparability benefits.

Derivatives-related emissions

5In relation to a potential conflict with financial reporting principles the TAC papers noted that IFRS S1⁸ stated that the term 'reporting entity' for sustainability-related information was the entity that prepares the consolidated financial statements under IFRS Accounting Standards. However, the proposed amendments would mean that where a subsidiary, regardless of its materiality, used GICS the whole reporting entity would be required to use the classification approach which would create an inconsistent reporting approach.

6The TAC recommended that the ISSB consider permitting entities to use classification systems that align with their business models, and which are consistent with their regulatory and financial reporting purposes, as this would provide users with more useful information about the entity.

7The TAC supported the proposed relief from disclosing derivatives-related emissions due to the inherent complexity and the lack of established methodologies for measuring these emissions. However, the TAC did not support the proposed paragraph 29A(b)(i) which would require disclosure of the 'magnitude' of derivatives excluded from the emissions disclosure as there were a range of possible interpretations. In addition, as not all derivative transactions would result in accounting entries, users may potentially perceive a disconnect with financial reporting.

8The TAC recommended that the ISSB consider revising the amendment to require qualitative information explaining an entity's emissions exposure through derivatives.

Proposed amendments to IFRS S2 – Due process summary9

9The TAC reviewed a summary of the due process followed in the development of the comment letter as per the Due Process Policy¹⁰. It was noted that the final due process summary will be tabled at a future meeting for approval.

Appendix A: UK Sustainability Disclosure TAC meeting schedule

A1UK Sustainability Disclosure TAC meetings in 2025 are scheduled as follows:

1. 14 January – link to meeting summary.
2. 11 February – The TAC met in private on 11 February and held confidential informational sessions on upcoming workstreams and to discuss related administrative matters. No minutes issued.
3. 25 March – The private TAC meeting scheduled for 25 March was cancelled due to illness and rescheduled to 15 April.
4. 15 April – The TAC met in private on 15 April, to hold confidential informational sessions on upcoming workstreams and to discuss related administrative matters. No minutes issued.
5. 13 May – link to meeting summary.
6. 10 June – awaiting meeting summary.
7. 8 July
8. 16 September
9. 14 October
10. 11 November
11. 9 December

A2The public meeting agenda, technical papers and summary minutes from the TAC meetings can be found on the UK Sustainability Disclosure Technical Advisory Committee website¹¹.

Appendix B: Sustainability Update

ISSB meeting

May 2025

B1The International Sustainability Standard Board (ISSB) met in Montreal, Canada on 15 May 2025. The topic for discussion was Enhancing the SASB Standards – Project Update.

B2The ISSB discussed¹ the prospective Exposure Draft (ED) of proposed amendments to nine of the twelve SASB Standards it has prioritised for enhancement. The ISSB staff suggested additional guidance to explain the meaning of the words ‘shall refer to and consider the applicability of’ the sources of industry-based guidance required by IFRS S1 and IFRS S2. The ISSB was not asked to make any decisions.

B3The exposure draft will seek input on a variety of topics:

1. amendments to nine specific SASB Standards;
2. amendments to metrics and disclosures covering six topics that appear in 41 other SASB Standards; and
3. strategic considerations related to the SASB Standards included in the Invitation to Comment.

B4The ED is anticipated to be published by the end of June 2025, subject to the ISSB's ratification in the June 2025 ISSB meeting.

IFRS Foundation

B5The IFRS Foundation published an initial set of jurisdictional profiles which indicate the degree of alignment with the ISSB Standards². The profiles indicate each jurisdiction's stated target for alignment with ISSB Standards and the status of its sustainability-related disclosure requirements. The UK is featured in the 'snapshot' section³ as it is in the process of determining an adoption or other use of ISSB Standards.

B6The IFRS Foundation has also published⁴ educational material regarding measurement and disclosure of greenhouse gas (GHG) emissions in IFRS S2 Climate-related Disclosures. The educational material provides specific guidance on absolute gross GHG emissions generated during the reporting period; and disclosing information about GHG emissions, such as GHG emissions targets.

UK Updates

B7The Financial Reporting Council (FRC) has issued a consultation on a proposed UK version of the International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. The consultation proposes ISSA (UK) 5000 for use on a voluntary basis by assurance providers.

B8The UK Sustainability Disclosure Technical Advisory Committee (TAC) meet on 10 June 2025 to discuss a draft comment letter in response to the ISSB Exposure Draft (ED) Amendments to Greenhouse Gas Emissions Disclosures⁶ to IFRS S2. The proposed amendments are targeted toward aspects of GHG emissions disclosures and provide reliefs to existing requirements in IFRS S2. For an update from this meeting relevant to the UKEB remit please refer to paper 11A ‘Items for Noting’ in the UKEB June meeting.