General Sustainability-related Disclosures

The ISSB met on 16 February 2023 to redeliberate its Exposure Drafts IFRS S1 General Sustainability-related Disclosures (draft S1) and IFRS S2 Climate-related Disclosures (draft S2) and to decide whether to begin the balloting process for IFRS S1 and IFRS S2. The ISSB discussed:

• the sources of guidance an entity would use to identify sustainability-related risks and opportunities, and related disclosures (Agenda Paper 3A);
• the effective date of IFRS S1 and IFRS S2 and the duration of previously agreed transitional reliefs (Agenda Paper 3B and 4A); and
• the due process steps and whether to begin the balloting process for IFRS S1 and IFRS S2 (Agenda Paper 3C and 4B).

Sources of guidance to identify sustainability-related risks and opportunities and disclosures (Agenda Paper 3A)

The ISSB tentatively decided to amend the requirement in draft S1 to permit, but not require, preparers to consider ‘the most recent pronouncements of other standard-setting bodies whose requirements are designed to meet the needs of users of general purpose financial reporting’ in identifying sustainability-related risks and opportunities and in identifying disclosures about those risks and opportunities.

All 14 ISSB members agreed with this decision.

The ISSB also tentatively decided to introduce a requirement to permit, but not require, preparers to consider the Global Reporting Initiative Standards and the European Sustainability Reporting Standards in identifying disclosures about sustainability-related risks and opportunities. These sources of guidance will be listed in the appendices to IFRS S1.

In making this decision, the ISSB emphasised that preparers are permitted to use these sources only in the absence of a relevant IFRS Sustainability Standard. If using these sources, preparers are required to ensure that:

1. immaterial information disclosed in accordance with these sources does not obscure material information;
2. disclosures prepared in accordance with these sources are not repurposed without considering the requirements in IFRS S1; and
3. all disclosures meet the information needs of users and are subject to materiality.

Thirteen of 14 ISSB members agreed with these decisions.

Effective date (Agenda Paper 3B and 4A)

The ISSB tentatively decided:

1. to require that both IFRS S1 and IFRS S2 be effective for annual reporting periods beginning on or after 1 January 2024. All 14 ISSB members agreed with this decision.
2. to confirm early application of IFRS S1 and IFRS S2 is permitted. All 14 ISSB members agreed with this decision.
3. to permit early application, but only if an entity applies both IFRS S1 and IFRS S2 at the same time. All 14 ISSB members agreed with this decision.
4. to confirm that if an entity applies IFRS S1 and IFRS S2 early, it is required to disclose that fact. Thirteen of 14 ISSB members agreed with this decision.

The ISSB tentatively decided to permit an entity applying short-term transitional relief to report its sustainability-related financial disclosures:

1. at the same time as its next second-quarter or half-year interim report, if the entity is required to provide such an interim report;
2. at the same time as its next second-quarter or half-year interim report, but within nine months of the end of its annual reporting period, if the entity voluntarily provides such an interim report; or
3. within nine months of the end of its annual reporting period, if the entity is not required to and does not voluntarily provide an interim report.

Thirteen of 14 ISSB members agreed with these decisions.

The ISSB also tentatively decided to make available in the first annual reporting period in which an entity applies IFRS S1 and IFRS S2:

1. relief from the requirement to report sustainability-related financial disclosures at the same time as the related financial statements (in accordance with the ISSB’s previous decision);
2. relief from the requirement to measure Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions in accordance with the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard if the entity uses a different measurement basis in the annual reporting period immediately preceding its initial application of IFRS S2; and
3. relief from the requirement to disclose Scope 3 GHG emissions.

All 14 ISSB members agreed with these decisions.

Due process and permission to ballot (Agenda Paper 3C and 4B)

All 14 ISSB members confirmed they were satisfied that the ISSB has complied with applicable due process requirements and has completed sufficient consultation and analysis to begin the balloting process for IFRS S1 and IFRS S2.

The ISSB decided that IFRS S1 and IFRS S2 will not be re-exposed.

All 14 ISSB members agreed with this decision.

No ISSB members indicated an intention to dissent from issuing IFRS S1 and IFRS S2.