ISSB: publication of an exposure draft to enhance the international applicability of SASB standards

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

17 July 2023

available here, proposing a methodology to enhance the international applicability of the Sustainability Accounting Standards Board’s Standards. The 90-day comment period runs until 9 August. Stakeholders are invited to answer the questions which can be found here. 

The SASB was consolidated in the Value Reporting Foundation in June 2021, following the merger with the International Integrated Reporting Council. The VRF itself was subsequently incorporated into the IFRS Foundation in August 2022. The ISSB is therefore now responsible for the stewardship of the SASB Standards. 

The SASB framework, which consists of 77 sustainability reporting standards with an industry-based approach, is currently used by more than 2,500 entities in over 70 jurisdictions around the world. The application of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information is expected to increase the number of entities applying the SASB Standards, as IFRS S1 will require entities to refer to these standards and take them into account when identifying sustainability-related risks and opportunities and when developing appropriate disclosures to address them. 

This exposure draft aims to propose a methodology for the efficient removal and replacement of jurisdiction-specific references and definitions in order to improve the usefulness of the SASB Standards. 

The ISSB believes that this project will only affect 20% of the approximately 1,000 metrics in the SASB Standards. This is because some metrics are applicable regardless of jurisdiction. In addition, the work carried out as part of IFRS S2 Climate-related Disclosures has already enhanced the applicability of climate-related indicators (IFRS S2 will include an illustrative guide based on SASB Standards for the presentation of sector-specific disclosures). The metrics addressed by the exposure draft are therefore those that are not climate-related, representing around 65% of the total SASB metrics.  

According to the ISSB, these enhancements will preserve the structure, completeness and intent of the SASB Standards bearing in mind that the proposed methodology builds on the approach already adopted as part of the work to develop IFRS S2. 

In practice, the ISSB proposes to use five different revision approaches, these approaches being prioritised and used in descending order of preference, seeking first to replace standards, definitions or calculation methods that include jurisdiction-specific references with available internationally applicable references; ultimately, jurisdiction-specific metrics would be removed and replaced when a relevant replacement can be identified to preserve the disclosure topic’s integrity to meet the needs of users of the financial reports published by entities. 

The comments received from stakeholders will enable the ISSB to define its methodology for enhancing the international applicability of SASB Standards and to identify the necessary revisions. The aim is to make these revisions before the effective date of IFRS S1 (i.e. 1 January 2024).  

At its May meeting, the ISSB also ratified the amendments to the climate-related SASB Standards in order to align these disclosures with: 

• the application guidance in IFRS S2 on financed emissions; and  
• the industry-based guidance on implementing IFRS S2 which has been "cleaned up" to make the climate-related sectoral indicators applicable regardless of the jurisdiction concerned. 

Like IFRS S1 and IFRS S2, the amendments to the SASB Standards in these areas are expected to be published in June.