Project Initiation Plan - ISSB RFI

Purpose

1This paper sets out the approach and plan to influence the International Sustainability Standards Board (ISSB) Request for Information Consultation on Agenda Priorities (RfI).

Background

ISSB Request for Information

2The ISSB published its RfI on 4 May 2023 and requested comments by 1 September 2023. The ISSB has requested that its preferred method of feedback will be from an online survey but that comment letters will also be accepted.

3The project will provide both a formal comment letter and also replicate the relevant content from the UKEB comment letter in the online survey and submit both to the ISSB.

4The RfI has the following questions (emphasis added on the specific projects the ISSB is considering):

1. Question 1–Strategic direction and balance of the ISSB's activities.
2. Question 2–Criteria for assessing sustainability reporting matters that could be added to the ISSB's work plan.
3. Question 3–New research and standard-setting projects that could be added to the ISSB's work plan.
4. Question 4–New research and standard-setting projects that could be added to the ISSB's work plan: Biodiversity, ecosystems and ecosystem services.
5. Question 5–New research and standard-setting projects that could be added to the ISSB's work plan: Human capital.
6. Question 6–New research and standard-setting projects that could be added to the ISSB's work plan: Human rights.
7. Question 7–New research and standard-setting projects that could be added to the ISSB's work plan: Integration in reporting.
8. Question 8–Other comments.

5The UK does not yet have an endorsement framework in place for the adoption of ISSB Sustainability Disclosure Standards. Until that framework is in place, the UK Government, has asked the UKEB, the Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) to engage with the International Sustainability Standards Board (ISSB) and to respond to their consultations, according to their respective regulatory objectives and functions. This request was publicly announced in Lord Callanan's letter¹ to the ISSB regarding their exposure drafts of IFRS S1 and IFRS S2.

6The UKEB is carrying out work to consider the overlap or impact of the proposed ISSB IFRS Sustainability Disclosure Standards with IFRS Accounting Standards. In other words “connectivity” between the two sets of standards and the information that is produced as a result of their use. This means that the UKEB project will in the main focus on the following areas:

1. researching integration in reporting; and
2. the relative priority of activities/projects to determine potential trade-offs.

7However, if, during the technical work and outreach with stakeholders, we identify issues that relate to the other matters and which are within the UKEB's remit, appropriate comments on those matters will also be developed for consideration and approval by the Board.

Integration in reporting project

8In the RfI, the ISSB's proposed research project on integration in reporting considers integrated disclosures beyond the requirements on connected information in the financial statements and sustainability-related financial disclosures, that are included in S1 and S2.

9The project may include creating a corporate reporting framework that integrates disclosure across multiple documents. In addition, as it would be a larger project than the initially considered 'connectivity' project it would require more of the ISSB's resources.

10The ISSB is also seeking stakeholder views on:

1. The relative priority and timeliness of advancing this project in the context of ISSB's mission to build out a suite of 'sustainability' standards;
2. Whether and how the ISSB should work with the IASB;
3. Whether the project should utilise IASB's Exposure Draft Management Commentary, the Integrated Reporting Framework, both or other materials in pursuing this work.

Overlap with IASB Climate-related Risks in the Financial Statements project

11In March 2023, the IASB activated a narrow-scope maintenance project ‘Climate-related Risks in the Financial Statements'. This project is to 'explore whether and how financial statements can better communicate information about climate-related risks²'.

12The IASB notes that it will consider the work of the ISSB in the project scope, to the extent that it applies to the financial statements.

13As the UKEB remit covers connectivity between the two international Boards it is appropriate that some of the work undertaken as part of this project will also be used by the UKEB to consider its influencing work on the IASB's Climate-related Risks in the Financial Statements project.

Project outreach completed

14In preparation for the ISSB RfI project on integration in reporting the following activities have already been undertaken during 2023:

1. Board discussions of preparatory papers on connectivity themes;
2. UKEB Advisory and Working Group discussions on preparatory papers;
3. Engagement with IFRS Foundation staff on their project direction;
4. Engagement with UK Stakeholders on the connectivity themes identified so far; and
5. Engagement with other National Standard Setters and other international stakeholders.

Project milestones

15A proportionate approach is proposed, incorporating the mandatory milestones listed in paragraph 5.3 of the UKEB's Due Process Handbook (Handbook)³. The table below provides a brief description of the work we intend to do as part of this project.

Resources allocated

16On the basis of this project plan, we consider that a project team consisting of one Project Director, 0.5 of technical support with oversight from a Senior Project Director, and communications support should ensure the project timelines are achieved.

Ad-hoc advisory group

17As the UKEB has established a specific SWG and intends to continue consulting with the current Advisory and Working Groups, setting up an additional ad-hoc group is not considered necessary for this project.

Project timelines

18The proposed high-level project timeline, subject to subsequent modification⁸, is as follows: