ISSB Exposure Drafts IFRS S1 and IFRS S2

Timeline

Per the UK Endorsement Board (UKEB) due process, a 30-day consultation period has been set for UK stakeholders concluding on Monday 27 June 2022. The UKEB secretariat will then assess all feedback received and prepare a Final Comment Letter for the UKEB Board to consider when it meets on 19 July before submission to the ISSB.

Background

In November 2021, the IFRS Foundation announced the formation of a new International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of high-quality sustainability disclosure standards to meet investors’ information needs.

Following a request from The Department for Business, Energy and Industrial Strategy (BEIS), the UKEB agreed to assist the UK Government by carrying out work in this area to consider the overlap or impact of the proposed ISSB disclosure standards with those issued by the IASB. The UKEB agreed a project plan that includes consideration of the overlap between IASB issued accounting standards and ISSB issued sustainability disclosure standards, and discussion with relevant UK stakeholders (including government departments and regulators) and other national standard setters.

In March 2022, the International Sustainability Standards Board (ISSB) issued two Exposure Drafts (“EDs”), IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (“IFRS S1”) and IFRS S2 Climate Related Disclosures  (“IFRS S2”). These are the first EDs published by the ISSB.

  • [Draft] IFRS S1, proposes overall requirements for disclosing sustainability-related financial information to provide primary users with a complete set of sustainability-related financial disclosures.
  • [Draft] IFRS S2, sets out the requirements for identifying, measuring, and disclosing climate-related risks and opportunities.

UKEB outreach

Our outreach approach is documented in our Project Initiation Plan (PIP) which was approved by the UKEB Board at their April 2022 public meeting. The project has engaged with a range of stakeholders during the consultation on the Draft Comment Letter (DCL). [A full version of the PIP and DCL are attached below].

On Thursday 30 June the project team held a virtual outreach event for over 150 participants which included a cross government briefing on corporate sustainability reporting with BEIS, FCA and FRC and a panel discussion including users, prepares and regulators with the ISSB. A recording of the event can be found here . The slides for this webinar can be found here

Draft Comment Letter

Due to the close association between the two exposure drafts, the UKEB considered them as part of a single project. This single comment letter therefore covers comments on both exposure drafts.

The UKEB welcomes the exposure drafts and strongly supports the need for a general requirements framework for sustainability-related information and the alignment of the climate exposure draft with the TCFD Recommendations. 

The UKEB acknowledges the many areas of alignment with the IASB’s Conceptual Framework for Financial Reporting, IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, and believe this will improve connectivity with the financial reports and help stakeholders to better understand how the information presented is underpinned by financial reporting.

The letter also makes several recommendations in relation to the proposed approach to ensure the success of the proposals while maintaining the significant momentum of the ISSB’s critical agenda.  

The draft comment letter is accompanied by an Invitation to Comment and Your Details documents for stakeholders to provide formal responses, however the UKEB is equally happy to receive responses via email at UKEndorsementBoard@endorsement-board.uk.

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29 June 2022
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