ISSB: call for feedback on the Board’s future work plan

Keywords: Mazars, Thailand, Sustainability, ISSB, IFRS S2, IFRS S1, IASB 

17 July 2023 

(available here) to gather stakeholders' views on the priorities that the ISSB should consider when setting its work plan now that the first two standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures have been finalised (their publication is expected by the end of June 2023). 

While the IASB usually adopts a 5-year time-frame for discussions of this type, the ISSB wanted to retain as much flexibility as possible so that it could refocus its work if necessary, taking into account possible changes in standard-setting for sustainability reporting and the priority issues to be considered. The work plan which will start in 2024 (i.e. after the due process for the public consultation) will therefore cover just two years of activity. 

Areas in which stakeholder feedback is sought 

This RFI seeks stakeholder feedback in the following areas. 

Strategic direction and balance of the ISSB’s activities 

Stakeholders are invited to give their views on the strategic direction and overall balance of the ISSB's work, in order to prioritise the following activities which have been identified by the Board: 

• beginning new research and standard-setting projects (see below);  
• supporting the implementation of IFRS S1 and IFRS S2 as part of the ISSB’s foundational work (see below); 
• researching targeted enhancements to the ISSB Standards, in particular IFRS S2, to address climate-related issues such as the ‘just transition’; 
• enhancing the SASB Standards (see the parallel launch of the public consultation on enhancing the international applicability of these standards reported above in this issue), given the IFRS Foundation's responsibility for maintaining these standards since the consolidation of the Value Reporting Foundation in August 2022 (the VRF itself having resulted from the June 2021 merger of the International Integrated Reporting Council and the SASB). 

In addition to these four main areas, the ISSB will commit resources to continue working on (i) connectivity (in conjunction with the IASB's forthcoming work relating to climate-related risks in the financial statements), (ii) interoperability (in conjunction, in particular, with EFRAG and the European Commission, to ensure the closest possible alignment between IFRS Sustainability Disclosure Standards and ESRS) and (iii) dialogue with stakeholders, in particular to promote the Board's work to encourage widespread use of IFRSs. 

Suitability of criteria for assessing which sustainability-related matters to prioritise and add to the ISSB’s work plan 

Stakeholders are asked for their feedback as to the suitability of the criteria for assessing which sustainability-related matters (topics, industries and activities) to prioritise and add to the ISSB’s work plan.  

In practice, the list is similar to the one used by the IASB to define its own priorities during the 3rd public consultation on its work plan (launched in March 2021). 

New research and standard-setting projects 

Stakeholders are invited to give their opinions of a proposed list of new research and standard-setting projects that might be added to the ISSB’s work plan. They are also asked to indicate which project(s) should be prioritised, as the ISSB will not have the capacity to make rapid progress on all the subjects identified in the RFI. 

What is the ISSB’s ambition? 

The ISSB's primary ambition is to complete the IFRS standard-setting work on sustainability disclosures, with the first two standards taking a "climate first" approach, although IFRS S1 will require entities to rely on standards and frameworks available elsewhere to identify their sustainability-related risks and opportunities (apart from climate, covered by IFRS S2) and to make the relevant disclosures in the absence of an IFRS standard. 

New research and standard-setting projects 

The ISSB has identified four potential projects in this public consultation, although stakeholders have the opportunity to suggest other projects to the Board. Three of these projects address sustainability-related risks and opportunities associated with: 

• biodiversity, ecosystems and ecosystem services. The topics that might be covered under this heading include (i) water (including marine resources); (ii) land-use and land-use change (including deforestation); (iii) pollution (including emissions into air, water and soil); (iv) resource exploitation (including the circular economy); and (v) invasive non-native species; 
• human capital. This topic could include (i) worker wellbeing; (ii) diversity, equity and inclusion (DEI); (iii) employee engagement; (iv) workforce investment; (v) the alternative workforce; (vi) labour conditions in the value chain; and (vii) workforce composition and costs;  
• human rights, with a focus on how human rights contribute to the sustainability-related risks and opportunities of entities, including how they vary by jurisdiction or business model. The research will also give an understanding of existing practices, tools and measures. 

As these three projects cover very broad topics, the main challenge will be the clear delineation and definition of priorities. 

A fourth research project concerns the integration of disclosures by entities, exploring how to integrate financial reporting at large beyond the requirements for connected information in IFRS S1 and IFRS S2. 

Stakeholders are therefore asked whether the ISSB should work with the IASB on a formal joint project on the integration of reporting and whether the ISSB should draw on the IASB’s existing work on management commentary (see the May 2021 Exposure Draft updating Practice Statement 1, which has not yet been completed). 

This is another very wide-ranging project, and the IFRS Foundation is ultimately working towards creating an integrated, coherent and comprehensive system of corporate reporting that provides a holistic and transparent view of how an entity creates value over time. 

Supporting the implementation of IFRS S1 and IFRS S2  

As part of its foundational work, the ISSB wishes to develop and strengthen the guidance given to stakeholders to explain certain concepts and help resolve difficulties identified when applying the standards. 

A Transition Implementation Group will be established to this end. Measures will also be taken to help the various jurisdictions to adopt the standards. Finally, an exposure draft on the XBRL taxonomy for IFRS sustainability disclosures will be also published. 

Stakeholders have 120 days, or until 1 September 2023, to send the ISSB their comments using the questionnaire available here.  

Following this consultation, further deliberations will take place, culminating in the publication of a Feedback Statement setting out the decisions taken by the ISSB on its two-year work plan.