The Board made its final decisions on all the technical content of its initial standards (IFRS S1 and IFRS S2). The Board then started the drafting and balloting process of the standards, ahead of their expected issue at the end of Q2 2023.

During the meeting the Board tentatively decided to permit, but not require, entities to consider the Global Reporting Initiative (GRI) standards and the ESRS in identifying disclosures about applicable sustainability-related risks and opportunities. These sources of guidance (that is, the GRI and ESRS) might only be considered in the absence of a relevant IFRS Sustainability Disclosure Standard, to the extent that these sources of guidance assist an entity in meeting the objective of IFRS S1 and do not conflict with other IFRS Sustainability Disclosure Standards. This tentative agenda decision is expected to result in greater interoperability and reduce the reporting burden on entities that have to comply with multiple sustainability reporting frameworks.

The Board also tentatively decided that the effective date for both IFRS S1 and IFRS S2 would be for annual reporting periods beginning on or after 1 January 2024. The effective date is subject to local regulators adopting the IFRS Sustainability Disclosure Standards and setting a specific adoption date for entities within that jurisdiction. In addition, the Board tentatively decided to provide various reliefs in the first year of adopting IFRS Sustainability Disclosure Standards – for example, providing relief from the requirement for an entity to report sustainability-related disclosures at the same time as their financial statements, as well as allowing entities to not disclose Scope 3 GHG emissions. These tentative agenda decisions allow entities more time to implement and/or enhance current sustainability reporting policies and systems.

A full update of the meeting and tentative decisions made is here; alternatively, listen to the February 2023 ISSB podcast here.

The full update of the March 2023 meeting and tentative decisions made is here; alternatively, listen to the March 2023 ISSB podcast here.

At the supplementary meeting, the Board tentatively decided to introduce a transition relief in IFRS S1 that would allow an entity to only report on climate-related risks and opportunities (as set out in IFRS S2) in the first year of adopting IFRS Sustainability Disclosure Standards. For an entity that decides to apply this transition relief, the requirements in IFRS S1 would only apply to the extent that they relate to the disclosure of climate-related information. In addition, an entity would be required to provide information about other sustainability-related risks and opportunities in the second year in which it applies the IFRS Sustainability Disclosure Standards.

If the above relief is used, entities could extend the previously agreed transition relief in IFRS S1 related to disclosing comparative information. That is, an entity would not be required to disclose comparative information related to its other sustainability-related information in the first year in which it discloses that information. Comparative information for climate-related disclosures would be required in the second year of applying IFRS Sustainability Disclosure Standards.

A summary of the supplementary April Board meeting is here. The full update of the meeting in Frankfurt and decisions made is here. Alternatively, listen to the April 2023 ISSB podcast here.

The Board met remotely in March 2023 to discuss the process to maintain, enhance and improve the SASB standards. The discussion included the work involved in updating the international applicability of the SASB standards. However, this was an educational session and so the Board was not asked to make any decisions.

In addition, the Board published in May 2023 a 90-day consultation on its proposed methodology for revising the SASB standards to improve their international applicability. Considering that the ISSB has stated that SASB standards shall be considered by entities when identifying applicable sustainability-related risks and opportunities as well as applicable disclosures, it is important for the SASB standards to be internationally applicable and not jurisdiction-specific. Read PwC’s In brief here.

During the March 2023 meeting, the Board also discussed one of the potential projects to be included in the ISSB’s request for information, focused on connectivity in reporting. The Board tentatively decided that, within its request for information, it would expand the scope of the potential project to focus on integrated disclosures beyond the requirements related to connected information in IFRS S1 and IFRS S2. The Board also decided that it would seek feedback with regard to whether the potential project on integration should build on and incorporate concepts from the International Accounting Standards Board’s (IASB) Management Commentary project and/or the Integrated Reporting Framework (IRF) or other sources. Should it be prioritised, obtaining clarity regarding other sources that the ISSB should consider will help to guide the project on integration.

At the Board meeting in April 2023, the Board agreed on a 120-day comment period for its upcoming request for information to help structure its work plan. The Board released its request for information on 4 May 2023. PwC’s In brief regarding the ISSB’s request for information is here.

Representatives of the ISSB and the Sustainability Standards Board of Japan (SSBJ) provided updates on their respective activities and discussed agenda items such as issues related to the implementation of IFRS Sustainability Disclosure Standards. In addition, the SSBJ outlined its project plan for the development of Japanese sustainability disclosure standards, with exposure drafts expected by 31 March 2024 and final standards by 31 March 2025. The full announcement is here.

More than 1,000 people from 45 countries convened in Montreal and online to discuss what’s next for investor-focused IFRS Sustainability Disclosure Standards. The discussions included the importance of the SASB standards to the implementation of IFRS S1 and IFRS S2, capacity building and various reliefs tentatively agreed by the Board. The full announcement is here.

Questions have been raised regarding the interaction between IAS 1, ‘Presentation of Financial Statements’, and IFRS S1. To help address these concerns, the IASB has added a project to its work plan to explore whether and how entities can provide better information about climate-related risks in their financial statements. The IASB will consider the work of the ISSB to ensure that any proposals work well with IFRS Sustainability Disclosure Standards and that any information required by the two Boards would complement each other. For example, disclosures required by the IFRS Sustainability Disclosure Standards might explain the sustainability-related risks and opportunities arising from an entity’s activities, its assets and liabilities. These disclosures might provide early indications of matters that will subsequently be reflected in an entity’s financial statements. The full announcement is here.

In January 2023, the ISSB tentatively decided to require an entity to explain the connections between sustainability-related risks and opportunities that have affected or are expected to affect the entity’s financial statements and the information disclosed in the entity’s financial statements. As part of this process, an entity should avoid unnecessary duplication and is permitted to use cross-referencing, subject to specific conditions.

As noted above, sustainability reporting and assurance requirements are coming fast; in Europe, ESRS regulation will impact some entities as early as 2025. In addition, the EU Taxonomy will soon apply to many more companies. Entities, and their governance bodies, need to act now or face growing risks of non-compliance, reputational risks, or loss of competitive advantage. Refer to the Seventh PwC EU newsletter where we set out five ‘no regret’ steps to help guide entities in preparing for sustainability assurance.

Compliance with Minimum Safeguards (MS) is one of the necessary conditions that an economic activity must meet to be recognised as Taxonomy-aligned. It complements compliance with the Substantial Contribution and the Do No Significant Harm (DNSH) criteria.

The MS aim to ensure that Taxonomy-aligned economic activities are carried out in accordance with the OECD Guidelines for Multinational Enterprises (MNEs), the UN Guiding Principles (UN GPs) on Business and Human Rights, the principles set out in the International Labour Organisation core conventions and the International Bill of Human Rights. Thus, the MS require companies to implement appropriate procedures to ensure that these guidelines and principles on social and governance aspects are met.

While the exact date of the SEC’s final rule on climate-related disclosure is unknown, we currently expect the rule to be released in summer 2023. The SEC also intends to issue a proposal on human capital management disclosures and a final rule on the reporting of material cybersecurity events, both of which we expect in the first half of 2023.