ISSB to consult in May on future priorities and other developments

The International Sustainability Standards Board (ISSB) has said it will consult in May on its future priorities for the next two years (see ISSB press release). 

It has identified four potential projects: 

• biodiversity, ecosystems and ecosystem services; 
• human capital; 
• human rights; and 
• integration in reporting.

The ISSB will also be consulting in May on changes to the SASB Standards to make these internationally applicable. That is expected to affect approximately 20% of the metrics included in the SASB Standards, meaning most of the metrics would remain unchanged. 

The ISSB has also said that it will prioritise climate-related disclosures in its package of transitional reliefs to support companies applying its first two standards – S1 (general requirements) and S2 (climate) (see ISSB press release). In the first year of reporting using the ISSB standards, companies will be incentivised to prioritise putting in place reporting practices and structures to provide information about climate-related risks and opportunities. In the second year, companies will be required to provide full reporting on other sustainability-related risks and opportunities beyond climate. The ISSB has also indicated that companies that only report on climate-related risks and opportunities in the first year will not need to provide comparative information.

The full package of reliefs means that for the first year that companies are using the ISSB standards they do not need to provide disclosures about sustainability-related risks and opportunities beyond climate-related information, provide annual sustainability-related disclosures at the same time as the related financial statements, or disclose Scope 3 greenhouse gas emissions. Companies will still need to apply S1 in the first year that they use the ISSB standards to meet general disclosure requirements where they relate to climate which are relevant to the disclosure of climate-related information.

The ISSB is aiming to adopt the final version of the first two disclosure standards - S1 (general requirements) and S2 (climate) - towards the end of June 2023. For more information on the draft S1 and S2 disclosure standards, see our previous blog post.

The International Accounting Standards Board (IASB) – which is the accounting standards-setting body of the IFRS Foundation – has also announced the launch of a new project to explore whether and how companies can provide better information about climate-related risks in their financial statements (see IFRS press release). While the current standards do not refer explicitly to climate-related matters, companies are required to consider climate-related issues in their financial statements if the effects of those matters are material to investors. However, climate-related risks are often perceived as remote and may not be appropriately considered in financial statements, despite investors needing better information about the effect of climate-related risks. IASB Chair, Andreas Barckow, has indicated that the project will not be seeking to develop an IASB standard on climate-related risks, but rather that the potential outcomes of the project would be narrow in scope, such as minor amendments to the standards or new application guidance. The IASB noted that it will consider the work of the ISSB and that any information required by the two boards would be complementary.

The International Auditing & Assurance Board (IAASB) is also planning to consult, in late July/early August, on an international standard for assurance of sustainability-related information (see IAASB press release). The final standard is expected to be published in 2024, covering both limited and reasonable assurance.