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TAC Public Meeting June 2024 Paper 7: June general reporting update
AGENDA PAPER 7
Executive summary
| Category | Details |
|---|---|
| Date | 18 June 2024 |
| Paper reference | TAC-Update-June |
| Project | Monitoring |
| Topic | June General Reporting Update |
| Objective of the paper | This paper provides key updates since IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2) were issued in June 2023 by the International Sustainability Standard Board (ISSB). This includes a summary of the ISSB meetings over the past 12 months and jurisdictional developments in relation to the adoption of IFRS Sustainability Disclosure Standards to date. The information in this paper is provided as at 11 June 2024 and does not include any developments after this date. |
| Decisions for the TAC | There are no decisions required. This paper is for information only. |
| Appendices | There are no appendices to this paper. |
This paper has been prepared by the Secretariat for the UK Sustainability Disclosure Technical Advisory Committee (TAC) to discuss in a public meeting. This paper does not represent the views of the TAC or any individual TAC member.
Context
1The objective of this paper is to inform the TAC of international and jurisdictional developments in sustainability-related reporting. This paper is for information only and does not ask the TAC to make any decisions.
2The TAC will be provided with an update of UK-specific, international and jurisdictional developments on sustainability-related reporting at each of its meetings. As this is the first update the TAC has received, this paper summarises developments since IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2) were issued in June 2023.
3For future meetings, the TAC will only receive updates that have occurred since the last TAC meeting.
UK developments
4The TAC has been provided with two separate papers (2024-TAC-004a and 2024-TAC-004b) on current reporting in the UK, including an outline of sustainability-related reporting requirements in the UK and a review of corporate reporting practice.
5There is no further update this month on UK developments.
International Sustainability Standards Board
6The following paragraphs provide a summary of updates from International Sustainability Standards Board (ISSB) meetings over the past 12 months in respect of matters other than the publication of IFRS S1 and IFRS S2.
May 2023
7The ISSB met on 18 May 2023 to ratify consequential amendments to the climate-related Sustainability Accounting Standards Board (SASB) Standards to align them with IFRS S2. In ratifying the amendments, the ISSB confirmed it was satisfied that the applicable due process requirements had been complied with. The ISSB expects to issue the amendments to the climate-related industry-based metrics in SASB Standards in June 2023.
8In May 2023, the ISSB published two documents for public consultation:
- Request for Information Consultation on Agenda Priorities to develop and pursue its two-year work; and
- Exposure Draft Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates (Methodology ED) to enhance the international applicability of non-climate-related industry-based metrics in the SASB Standards.
June 2023
9The ISSB did not meet in June 2023, but did issue IFRS S1 and IFRS S2.
July 2023
10The ISSB met on 27 July 2023 to discuss the path forward for one of the activities described as foundational work in the Request for Information Consultation on Agenda Priorities—specifically, researching targeted enhancements to the IFRS Sustainability Disclosure Standards.
11The ISSB directed the staff to develop educational material to explain and illustrate how an entity might apply some requirements in IFRS S2 to disclose information about some nature and social aspects of climate-related risks and opportunities.
12The ISSB published the Proposed IFRS Sustainability Disclosure Taxonomy for public comment. The proposals reflect the disclosure requirements in IFRS S1 and IFRS S2. The consultation period will close on 26 September 2023.
September 2023
13The ISSB met on 14 September 2023 to discuss comment letters on and survey responses to the Methodology ED.
14The ISSB was not asked to make any decisions. The SASB Standards Board Advisory Group will consider the feedback from the public comment period and recommend amendments to the SASB Standards for ratification by the ISSB.
October 2023
15The ISSB met on 24-25 October 2023 to:
- discuss the SASB Standards Board Advisory Group's decisions made in response to feedback on the Methodology ED.
- receive an update on its work to support the implementation and consistent application of IFRS S1 and IFRS S2. The update focused on educational material—one part of its work to support the implementation and consistent application of IFRS S1 and IFRS S2.
- receive a work programme update from representatives from the Global Sustainability Standards Board (GSSB). (The IFRS Foundation and the Global Reporting Initiative announced in March 2022 an agreement to seek to co-ordinate the work programmes and standard-setting activities of their boards, the ISSB and the GSSB).
The ISSB was not asked to make any decisions.
16In October 2023, the ‘Blackline Documents' were published in connection with the ISSB's International Applicability of SASB Standards Project. These documents detail near-final versions of amendments to the non-climate-related contents of the SASB Standards in underline and strikethrough. The documents were made available for information purposes to allow stakeholders to familiarise themselves with the amendments prior to the issuance of the December 2023 versions of the SASB Standards.
November 2023
17The ISSB met in Beijing on 15–16 November 2023 to discuss:
- feedback on the Proposed IFRS Sustainability Disclosure Taxonomy for digital reporting reflecting the requirements in IFRS S1 and IFRS S2.
- feedback on its Request for Information Consultation on Agenda Priorities. The Request for Information sought feedback on:
- the strategic direction and balance of the ISSB's activities;
- the suitability of criteria for assessing which sustainability-related matters (including topics, industries and activities) to prioritise and add to the ISSB's work plan; and
- a proposed list of new research and standard-setting projects that could be added to the ISSB's work plan.
The ISSB was not asked to make any decisions.
18On 21 November 2023, the Transition Implementation Group (TIG) on IFRS S1 and IFRS S2 held its first meeting. The TIG discusses, in a public forum, implementation questions from stakeholders that arise when companies implement IFRS S1 and IFRS S2. The purpose of the TIG is to:
- solicit, analyse and discuss stakeholder questions arising from implementation of the new standards;
- inform the ISSB about those implementation questions, which will help the ISSB determine what, if any, action will be needed to address those questions; and
- provide a public forum for stakeholders to learn about the new Standards from others involved with implementation.
December 2023
19The ISSB met in Frankfurt on 13–14 December 2023.
20In relation to amendments to the SASB Standards the ISSB decided:
- that re-exposure was not necessary;
- to ratify the amendments to the SASB Standards; and
- to make related updates to the SASB Standards Taxonomy.
21All 14 ISSB members confirmed they were satisfied the ISSB had complied with the applicable due process requirements and had undertaken sufficient consultation and analysis to publish the amended SASB Standards.
22The ISSB discussed the prospective IFRS Sustainability Disclosure Taxonomy (prospective Taxonomy). The ISSB discussed proposed changes to the prospective Taxonomy resulting from its November 2023 discussion on stakeholder feedback on the Proposed IFRS Sustainability Disclosure Taxonomy, specifically on:
- the approach to tagging narrative information, including the granularity and data type of particular narrative disclosures;
- the approach to modelling the relationship between the requirements in IFRS S1 and IFRS S2;
- the approach to tagging metrics and targets that are not specified by IFRS Sustainability Disclosure Standards; and
- improvements to the prospective Taxonomy, including the categorical elements and the element labels.
23The ISSB was not asked to make any decisions. The ISSB expects to begin the balloting process and issue the IFRS Sustainability Disclosure Taxonomy in the first half of 2024.
24The ISSB discussed feedback on its Request for Information Consultation on Agenda Priorities. Specifically, the ISSB discussed feedback from users of general purpose financial reports. The Request for Information sought respondents' views on:
- the strategic direction and balance of the ISSB's activities;
- the suitability of the criteria identified by the ISSB for assessing which sustainability-related matters (including topics, industries and activities) to prioritise and add to its work plan; and
- a proposed list of new research and standard-setting projects that could be added to the ISSB's work plan.
The ISSB was not asked to make any decisions. The ISSB will continue to discuss feedback on the Request for Information and make decisions on the matters raised in it.
25In December 2023, the ISSB published amendments to the SASB Standards to enhance their international applicability. These amendments were intended to help preparers apply the SASB Standards regardless of the jurisdiction in which they operate or the type of generally accepted accounting principles (GAAP) they use without substantially altering the SASB Standards' structure or intent. The SASB Standards facilitate the implementation and application of IFRS S1 for preparers.
January 2024
26The IASB and ISSB met in London on 25 January 2024.
27The IASB and ISSB (boards) discussed feedback on the ISSB's Request for Information Consultation on Agenda Priorities. Specifically, the boards discussed feedback on a potential project on integration in reporting and feedback on connectivity.
28The ISSB's Request for Information included questions on:
- the priority of a potential project on integration in reporting relative to the other three proposed sustainability-related projects that could be added to the ISSB's work plan;
- whether that project, if considered a priority, should be undertaken as a formal joint project with the IASB or as an ISSB-led project (which could still draw on input from the IASB); and
- whether that project, if pursued, should build on the concepts from the IASB's Exposure Draft Management Commentary, the Integrated Reporting Framework, and other sources.
29The Request for Information did not include a question on connectivity; however, respondents provided feedback on that topic.
30The boards were not asked to make any decisions. The IASB will discuss the direction of the Management Commentary project. The ISSB will continue to discuss feedback on the Request for Information and make decisions on the matters raised in it.
February 2024
31The ISSB met in New York City on 21 February 2024.
32The ISSB discussed finalising the criteria for prioritising new research and standard-setting projects that could be added to the ISSB's work plan. The ISSB tentatively decided:
- to make no substantive changes to six of the seven criteria proposed in the Request for Information Consultation on Agenda Priorities; and
- to change the criterion on how a potential project would relate to other projects in the work plan to make it explicit that the ISSB will consider the work of other relevant standard-setters.
The ISSB will decide the strategic direction and balance of its activities and decide which new projects to add to the work plan.
33The ISSB discussed the development of educational material on the concept of 'materiality' in the context of IFRS Sustainability Disclosure Standards. The ISSB was not asked to make any decisions but directed the staff to develop the educational material.
March 2024
34The ISSB met in Frankfurt on 13 March 2024.
35The ISSB discussed the strategic direction and balance of its activities for the two-year period of its next work plan. The ISSB tentatively decided it will:
- begin new research and standard-setting projects;
- support the implementation of IFRS S1 and IFRS S2;
- enhance the SASB Standards;
- pursue connectivity between the requirements in IFRS Sustainability Disclosure Standards and IFRS Accounting Standards;
- seek to ensure IFRS Sustainability Disclosure Standards are interoperable with other sustainability standards; and
- engage with stakeholders.
36The ISSB also tentatively decided:
- to place a high level of focus on supporting the implementation of IFRS S1 and IFRS S2;
- to place a slightly lower level of focus on enhancing the SASB Standards and on beginning new research and standard-setting projects and to give these activities equal attention;
- to reserve resources to give the ISSB flexibility; and
- not to specify a level of focus on connectivity, interoperability and engaging with stakeholders, acknowledging that these activities are integral to all of the ISSB's work.
37The ISSB will decide which new research and standard-setting projects to add to the work plan.
April 2024
38The ISSB met in Frankfurt on 23 April 2024.
39The ISSB discussed which new research and standard-setting projects to add to its two-year work plan. The ISSB tentatively decided to add:
- a research project on risks and opportunities associated with biodiversity, ecosystems and ecosystem services; and
- a research project on risks and opportunities associated with human capital.
40As part of its research, the ISSB will consider:
- how to build on existing materials, including the SASB Standards and Climate Disclosure Standards Board (CDSB) Framework application guidance; and
- how to pursue approaches that would promote interoperability between its own global baseline of sustainability-related financial disclosures and other widely used standards and frameworks.
41The ISSB also tentatively decided not to add to its work plan:
- a research project on risks and opportunities associated with human rights;
- a research project on integration in reporting; or
- other research and standard-setting projects suggested by respondents to the Request for Information Consultation on Agenda Priorities.
42The ISSB expects to publish a feedback statement by the third quarter of 2024 that will summarise feedback on the Request for Information and present an overview of the ISSB's activities and work plan.
43In April 2024, the ISSB published the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy). Use of the ISSB Taxonomy by companies will enable investors to search, extract and compare sustainability-related financial disclosures as ISSB establishes its global baseline of Standards.
May 2024
44The ISSB met in Montreal on 16 May 2024.
45The ISSB discussed its Consultation on Agenda Priorities, and reviewed:
- a summary of the decisions it made during its inaugural consultation on agenda priorities; and
- an overview of its two-year work plan, which will begin in June 2024.
46The ISSB was not asked to make any decisions. The ISSB expects to publish a feedback statement by the third quarter of 2024 that will summarise feedback on the Request for Information Consultation on Agenda Priorities and present an overview of the ISSB's activities and work plan.
47The ISSB discussed its approach to the industry groupings used in its industry-based materials, such as the SASB Standards. The ISSB decided:
- to continue to group entities into industries based on shared sustainability-related risks and opportunities that could reasonably be expected to affect an entity's prospects, as represented by the Sustainable Industry Classification System® (SICS®), for the ISSB's next two-year work plan; and
- to consider enhancing the industry groupings when it enhances the SASB Standards.
The ISSB will consider its approach to enhancing the SASB Standards and SICS.
48The ISSB received an update on the March 2024 meeting of the TIG. The ISSB was not asked to make any decisions.
Jurisdictional developments
49In July 2023, the International Organization of Securities Commissions (IOSCO) endorsed the inaugural IFRS Sustainability Disclosure Standards issued by the ISSB—namely, IFRS S1 and IFRS S2. As the international standard-setting body for financial markets regulation representing 95% of the world's securities regulators, IOSCO called on its 200 members from 130 jurisdictions to 'consider ways in which they might adopt, apply or otherwise be informed by the ISSB standards'.
50The Financial Stability Board (FSB) of the G20 and the G7 have also supported the ISSB's work and encouraged jurisdictions globally to adopt the standards. In May 2024, G7 Finance Ministers and Central Bank Governors welcomed the IFRS Sustainability Disclosure Standards in their final communiqué and underlined the importance of working towards globally interoperable sustainability disclosure frameworks.
51In May 2024, the IFRS Foundation issued a Jurisdictional Guide and a Regulatory Implementation Programme Outline intended to support jurisdictions on their journey to adopt or use the IFRS Sustainability Disclosure Standards. The guidance sets out some of the key features of jurisdictional approaches as well as the IFRS Foundation's approach to supporting capacity building for effective implementation and adoption of sustainability-related disclosure practices.
52Almost a year on from IOSCO's endorsement a number of jurisdictions have made steps towards adopting a version of the IFRS Sustainability Disclosure Standards. The following paragraphs provide a summary of key jurisdictional developments (as at 11 June 2024) to inform the TAC in its technical assessment of IFRS S1 and IFRS S2.
53The jurisdictional developments have been summarised by the following categories:
- G20 jurisdictions publicly committed to adopting IFRS Sustainability Disclosure Standards;
- Other jurisdictions publicly committed to adopting IFRS Sustainability Disclosure Standards; and
- G20 jurisdictions not publicly committed to adopting IFRS Sustainability Disclosure Standards.
G20 jurisdictions committed to adopting IFRS Sustainability Disclosure Standards
Summary
54Table 1 summarises the status of G20 jurisdictions publicly committed to adoption or other use of the IFRS Sustainability Disclosure Standards.
| Jurisdiction | Current status | Both IFRS S1 & IFRS S2? | Reporting commencing from | Companies in scope |
|---|---|---|---|---|
| African Union: Kenya | Publicly committed | - | - | - |
| African Union: Morocco | Publicly committed | - | - | - |
| African Union: Nigeria | Consultation closed | ✓ | 2028-2030 | Listed & unlisted |
| African Union: Zimbabwe | Publicly committed | - | - | - |
| Argentina | Publicly committed | - | - | - |
| Australia | Consultations closed | Climate | 2024 | Listed & unlisted |
| Brazil | Open consultation | ✓ | 2026 | Listed |
| Canada | Consultation close | ✓ | 2025 | Listed |
| China | Open consultation | ✓ | 2026-2030 | Listed & unlisted |
| India | Consultation closed | Climate | 2025-2029 | Banking & finance |
| Japan | Open consultation | ✓ | - | Listed |
| South Korea | Open consultation | ✓ | 2026-2030 | Listed |
| Turkey | Endorsed | ✓ | 2024 | Regulated banks & large |
Australia
55The Australian Government (Treasury) and the Australian Accounting Standards Board (AASB) held two separate consultations that closed in February and March 2024: the first on exposure drafts of three Australian Sustainability Reporting Standards (ASRS) and the second on draft legislation for climate-related financial disclosure requirements.
56Proposals seek to phase in mandatory requirements for large businesses and financial institutions from 2024, with modifications from both IFRS S1 and IFRS S2 such as:
- references to 'sustainability' replaced with ‘climate' in the equivalent of IFRS S1;
- does not mandate use of SASB Standards for industry-based metrics;
- specifies the climate scenarios to be used;
- prioritises Australian methodologies for GHG emissions calculations;
- only requires financial institutions to consider the applicability of disclosures related to their financed emissions; and
- ARSR 101 developed to list relevant versions of non-legislative documents.
57The AASB are now discussing stakeholder feedback from the consultation in their meetings.
Brazil
58On 13 June 2024, the Comitê Brasileiro de Pronunciamentos de Sustentabilidade (CBPS, Brazilian Committee of Sustainability Pronouncements) will close its consultation on two exposure drafts for sustainability disclosures standards based on IFRS S1 and IFRS S2.
59The Superintendence of Accounting and Auditing Standards (SNC) of the Brazilian Securities and Exchange Commission (CVM) also launched an overlapping consultation, open for comment until 11 July 2024. It proposes for listed entities to apply the standards from 2026, with early adoption permitted for those applying both standards at the same time.
Canada
60The Canadian Sustainability Standards Board (CSSB) closed its consultation on exposure drafts of two Canadian Sustainability Disclosure Standards (CSDSs) on 10 June 2024. The exposure drafts follow both IFRS S1 and IFRS S2 with proposed modifications such as:
- extended transition relief for Scope 3 emissions disclosures, from one year to two years;
- extended transition relief for disclosures beyond climate-related risks and opportunities, from one year to two years; and
- consulting on proposed criteria for modification of the IFRS Sustainability Disclosure Standards.
61The earliest voluntary adoption of the CSDSs will be from 1 January 2025. In March 2024, the Canadian Securities Administrators (CSA) issued a press release anticipating that it will mandate only climate-related disclosures once standards are finalised.
China
62The Ministry of Finance and People's Republic of China issued an exposure draft of Chinese Sustainability Disclosure Standards for Business Enterprises—Basic Standard and Explanation of the Drafting in May 2024. The proposals seek to establish unified China Sustainability Disclosure Standards based on IFRS Sustainability Disclosure Standards by 2030. Climate-related disclosure standards will be issued by 2027. The Ministry intends to gradually phase in voluntary and mandatory reporting for listed and unlisted entities, eventually including small and medium-sized companies. The consultation is open for comment until 24 June 2024 and key features include:
- follows a 'four-pillars' approach as required in IFRS Sustainability Disclosure Standards;
- applies a 'double materiality' approach requiring disclosure of external impacts;
- requires separate sustainability reports to the annual report; and
- requires disclosure of Scope 1, 2 and 3 GHG emissions
63The announcements follow previous developments in February 2024, when three leading stock exchanges (Beijing, Shanghai and Shenzhen) introduced mandatory environmental, social and governance (ESG) disclosure guidelines covering approximately 450 listed companies. The disclosures follow the 'four-pillars' approach as in the IFRS Sustainability Disclosure Standards, a 'double materiality' approach and cover Scope 1, 2 and 3 GHG emissions. They will be mandatory for larger companies from 2026 and voluntary for small and medium-sized enterprises. Companies captured by both sets of rules will need to comply with those of the stock exchanges in the first instance.
India
64The Reserve Bank of India (RBI) issued the Draft Disclosure Framework on Climate-related Financial Risks, largely mirroring IFRS S2. The proposals would apply to various financial entities, and set out a phased plan of implementation, with governance, strategy and risk management pillars applicable from 2025, and metrics and targets from 2027. The consultation period closed on 30 April 2024.
Japan
65The Sustainability Standards Board of Japan (SSBJ) has published three exposure drafts based on IFRS Sustainability Disclosure Standards which are open for comment until 31 July 2024. The timeline for introduction is currently unknown. SSBJ propose splitting the content of IFRS S1 into two standards, the 'Application' and the ‘General Disclosures' exposure drafts. Other modifications proposed include:
- Includes 'jurisdiction-specific alternatives' and disclosure options; and
- Freezes references to SASB Standards as last revised.
Nigeria
66In February 2024, the Financial Reporting Council (FRC Nigeria) issued a Request for Comments on a Draft Roadmap Report for Adoption of IFRS Sustainability Disclosure Standards in Nigeria, which was open for comment until 14 March and approved in April 2024. It sets out the path from voluntary adoption to phased mandatory adoption of both IFRS S1 and IFRS S2 for entities defined as public interest entities (PIEs) from 2028, followed by small and medium-sized entities (SMEs) from 2030.
South Korea
67The Korea Sustainability Standards Board (KSSB) has published an exposure draft proposing two mandatory Korean sustainability disclosure standards (KSSB 1 and KSSB 2) based on IFRS S1 and IFRS S2. Some key differences of these standards are that they:
- require a declaration if disclosures are omitted and explanation where information is not considered material;
- provide definitions of time horizons; and
- propose a non-mandatory jurisdictional specific disclosure standard (KSSB 101), that allows entities to selectively disclose additional sustainability-related information as required by domestic laws or to meet sustainability-related policy objectives.
68The timeline within the legal framework or listing rules will be determined by the Korean government, subject to stakeholder consultation. The Financial Services Commission (FSC) previously announced in October 2023 that mandatory disclosures would not be implemented until after 2026 and will focus on KOSPI-listed firms (large at first, all listed by 2030).
Turkey
69The Public Oversight, Accounting and Auditing Authority (KGK) announced at COP28 that Turkey will introduce mandatory sustainability reporting in 2024 for large companies (assets exceeding 500 million lira; revenue exceeding 1 billion lira; workforce exceeding 250 people) and regulated banks.
70Published in December 2023, the Turkish Sustainability Reporting Standards (TSRS) follow IFRS S1 and IFRS S2 with extended transition relief periods of one year for comparative information and two years for Scope 3 disclosures.
Other jurisdictions committed to adopting IFRS Sustainability Disclosure Standards
Summary
71Table 2 summarises the status of non-G20 jurisdictions publicly committed to adoption or other use of the IFRS Sustainability Disclosure Standards.
| Jurisdiction | Current status | Both IFRS S1 & IFRS S2? | Reporting commencing from | Companies in scope |
|---|---|---|---|---|
| Bangladesh | Endorsed | ✓ | 2024-2027 | Banking & finance |
| Costa Rica | Endorsed | ✓ | 2025-2026 | Listed & unlisted |
| Hong Kong | Consultation closed | Climate | 2025 | Listed |
| Malaysia | Consultation closed | - | 2025-2027 | Listed & unlisted |
| Panama | Publicly committed | - | - | - |
| Pakistan | Consultation closed | ✓ | 2025-2027 | Listed & unlisted |
| Philippines | Consultation closed | ✓ | 2025 | Listed |
| Singapore | Consultation closed | Climate | 2025-2027 | Listed |
| Sri Lanka | Endorsed | ✓ | 2025 | To be confirmed |
| Taiwan | Publicly committed | - | - | - |
Bangladesh
72Bangladesh Bank's Sustainable Finance Department issued requirements in December 2023 for banks and financial institutions based on IFRS S1 and IFRS S2. These are to be phased in over three years, with the first filing in June 2024 for intermediate reports. Full disclosures are to be achieved by 2027.
Costa Rica
73In January 2024 the Colegia de Contadores Publicos announced the adoption of IFRS S1 and IFRS S2 immediately on a voluntary basis, followed by mandatory reporting for regulated entities from January 2025, and from January 2026 for entities classified as high taxpayers.
Hong Kong
74In April 2024, the Stock Exchange of Hong Kong published conclusions on its consultation paper, Enhancement of Climate-related Disclosures Under the Environmental, Social and Governance Framework. Proposals broadly aligned with IFRS S2 and will be phased in for listed entities from 2025. Following the consultation feedback, the Exchange agreed to modify its proposals to reflect IFRS S2 more closely and has also published implementation guidance with relevant principles in IFRS S1 to assist compliance.
Malaysia
75The Malaysian Securities Commission's Advisory Committee on Sustainability Reporting (ACSR) released a consultation paper on the adoption of the IFRS Sustainability Disclosure Standards, which closed for comment on 21 March 2024. It proposed a new National Sustainability Reporting Framework (NSRF) with gradual adoption of the IFRS Sustainability Disclosure Standards subject to additional transition reliefs. Mandatory reporting was proposed for Main Listed companies from 2025 with full adoption from 2027, with other listed and unlisted entities potentially from 2027 onwards.
76Additional transition reliefs proposed involve delaying full implementation of IFRS S1 and further reliefs for IFRS S2 such as:
- exempting disclosure of the impact of climate-related risks and opportunities on strategy and decision-making for the first two years;
- exempting disclosure of climate-related risks and opportunities for the first year;
- exempting Scope 3 emissions reporting for the first two years of reporting, apart from the categories of business travel and employee commuting; and
- disclosures to focus on ‘principal business segments' for the first year of reporting.
Pakistan
77In December 2023, the Accounting Standards Board's (ASB's) Sustainability Working Group (SWG) published the results of their consultation and recommendations for the implementation of the IFRS Sustainability Disclosure Standards. The recommendations mostly focused on timings, detailing a phased approach to adoption based on company size (listed and unlisted), with 'very large' companies beginning reporting in 2025, ‘large' companies in 2026 and then any remaining listed companies in 2027.
Philippines
78The Philippines Securities and Exchange Commission announced that it will publish revised sustainability reporting guidelines in line with IFRS S1 and IFRS S2 during 2024 with reporting due in 2025, following its consultation in October 2023.
Singapore
79In April 2024, the Singapore Exchange Regulation (SGX RegCo) closed its consultation on proposals to incorporate IFRS S1 and IFRS S2 into its sustainability reporting rules for climate-related disclosures. It plans to open a separate consultation on the implementation of IFRS S1 beyond climate-related disclosures.
Sri Lanka
80The Institute of Chartered Accountants of Sri Lanka's Sustainability Disclosure Standards Committee have issued two new standards aligned with IFRS S1 and IFRS S2 called SLFRS S1 and SLFRS S2. These standards will be effective from 2025 with details to be finalised such as potential phase-ins and the companies it will apply to.
G20 jurisdictions not publicly committed to adopting IFRS Sustainability Disclosure Standards
Summary
81Table 3 summarises the status of G20 jurisdictions not publicly committed to adoption or other use of the IFRS Sustainability Disclosure Standards.
| Jurisdiction | Current status | Topics | Reporting commencing from | Companies in scope |
|---|---|---|---|---|
| European Union (EU) | European Sustainability Reporting Standards (ESRS) & Corporate Sustainability Reporting Directive (CSRD) | General & Climate | 2024-2028 | Listed & unlisted |
| Indonesia | Unconfirmed | - | - | - |
| Mexico | Unconfirmed | - | - | - |
| Russia | Unconfirmed | - | - | - |
| Saudi Arabia | Unconfirmed | - | - | - |
| South Africa | Unconfirmed | - | - | - |
| United States of America (USA) | Climate disclosure rules by the US Securities and Exchange Commission (SEC); Californian climate-related disclosure regulations adopted (SB 253 and SB 261) | Climate | SEC: 2025-2033 (currently on hold) California: 2026 | Listed Listed & unlisted |
European Union (EU)
82In July 2023, the European Commission via the European Financial Reporting Advisory Group (EFRAG) introduced the European Sustainability Reporting Standards (ESRS), which are effective in 2024 and follow the Corporate Sustainability Reporting Directive (CSRD). The ESRS consists of twelve sector-agnostic standards covering four categories: general, environmental, social, and governance. In January 2024, EFRAG also issued an exposure draft of a voluntary ESRS standard for non-listed small and medium-sized enterprises (VSME ESRS) which closed for comment on 21 May 2024. The ESRS are to be reviewed at least every three years.
83EU countries are expected to complete transposition of CSRD into national law by July 2024. There are number of transitional provisions and implementation will be phased in from 2024 to 2028. Certain non-EU companies will also fall in scope of the CSRD including EU subsidiaries of non-EU parent companies, large undertakings or large groups listed on an EU regulated market, as well as non-EU companies generating a net turnover of more than €150 million in the EU. Listed small and medium-sized entities (SMEs) are not required to report until 2026.
84There is some divergence between ESRS and IFRS Sustainability Disclosure Standards, including:
- a 'double materiality' perspective assessing and reporting on impacts;
- multiple topic specific standards on non-climate matters already issued; and
- up to 40 sector-specific standards are due to be created.
85The CSRD requires EFRAG to take into account the work of global standard-setting initiatives. In September 2023 EFRAG confirmed a 'high level of interoperability' between the ESRS and the Global Reporting Initiative (GRI) standards. EFRAG and the ISSB have also committed to work together to maximise the standards' interoperability and in May 2024 issued ESRS-ISSB standards Interoperability Guidance. The IFRS Foundation and GRI issued a joint statement in May 2024 confirming further collaboration on interoperability.
United States of America (USA)
86In March 2024, the Securities and Exchange Commission (SEC) adopted its own climate-related disclosure rules that leverage international disclosure frameworks and guidance including the Taskforce on Climate-related Financial Disclosures framework (TCFD) and the GHG Protocol, limited to Scope 1 and Scope 2 emissions only.
87The final SEC rule was due to become effective 60 days after publication with compliance phased in from 2025 to 2027, starting with large accelerated filers. However, in April 2024, the SEC voluntarily stayed (suspended) the effective date of the final rule and the outcome is pending judicial review.
88California introduced its own regulations in October 2023, SB 253 and SB 261, which are effective from 2026. The requirements align with international frameworks and guidance such as the TCFD framework and GHG Protocol and will apply to certain listed and unlisted companies doing business in California, based on annual revenue. As in IFRS S2 the regulations require disclosure of Scope 1, 2 and 3 GHG emissions in conformance with the GHG Protocol and apply a 'four-pillars' approach on disclosures of climate-related financial risks. Scope 3 emission disclosures will be phased-in for companies with revenue exceeding $1 billion between 2027 and 2030.
89The TCFD officially transitioned to the ISSB from 2024 from the FSB, alongside the FSB's announcement that the IFRS Sustainability Disclosure Standards marked the 'culmination of the work of the TCFD'. The IFRS Foundation has published a comparison of the requirements in IFRS S2 and the TCFD recommendations setting out that companies applying IFRS S2 will provide all the information covered by the TCFD recommendations.