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TAC Public Meeting October 2024: Meeting Summary

PUBLIC MEETING SUMMARY

Date: 08 October 2024

Time: 10:15–15:30

Location: FRC Office, 8th Floor, 125 London Wall, London, EC2Y 5AS

The recording of the meeting and agenda papers are available online.

Note: Due to technological issues (associated with Microsoft Teams software updates), the availability of the meeting link was not made available five working days prior to the meeting. The TAC apologises for any inconvenience.

Attendance

Name Designation
Sally Duckworth Chair (responsibility delegated to Peter Hogarth)
Peter Hogarth Member (nominated Chair for this meeting)
Craig Mackenzie Member
David Harris Member (absent for Agenda Items 1, 2, 3 (partial), 4, 5 and 6)
Dia Desai Member (absent for part of Agenda Item 3)
Harriet Cullum Member
Hilary Eastman Member
Jeremy Osborn Member
Joseph Noss Member (absent for Agenda Items 1, 2, 3 (partial), 4, 5, 6)
Madeleine Evans Member (absent for Agenda Items 4, 5, 6 and 7)
Nick Rowbottom Member
Scott Barlow Member
Supriya Sobti Member
Jenny Carter Member appointed by the Financial Reporting Council (FRC) (absent for part of Agenda Item 3)
Paul Lee Member appointed by the UK Endorsement Board (UKEB)
Michael Ashby Observer from the Department for Business and Trade (DBT)
Mita Gandhi Observer from the Bank of England (BoE)
Carlos Martin Tornero Observer from the Financial Conduct Authority (FCA)
Sarah-Jayne Dominic Secretariat

Private meeting

The TAC held a private meeting at 09.30 to 10.00 to discuss confidential and administrative matters.

1. Welcome and apologies

The Chair, Sally Duckworth, was unexpectedly unable to attend the meeting in person and as it was not possible to rearrange, Peter Hogarth was nominated by Sally to chair this meeting as per the committee's Terms of Reference. References to Chair below refer to Peter Hogarth with Sally Duckworth joining the meeting online.

The Chair welcomed members and observers to the October meeting of the TAC.

The Chair noted that the TAC was quorate and read out the attendees—both in person and online.

The Chair asked the members to declare any interest in the agenda items. Interests were declared by Hilary Eastman, Harriet Cullum, Joseph Noss and David Harris. Hilary Eastman declared interest in Agenda Item 6 as a member of the Technical Working Group of the E-Liability Institute. Harriet Cullum and David Harris declared interest in Agenda Item 7 as members of the Transition Plan Taskforce. Joseph Noss declared interest in Agenda Item 7 as Chair of Technical Committee (ISO/TC 322) on Sustainable Finance.

The TAC began by discussing Agenda Paper 8 which listed key updates since the July meeting. This paper was for information only and no decisions were required of the TAC. The TAC had no comments on the paper.

2. GICS - amended wording

The TAC considered Agenda Paper 2 on the suggested amendment to IFRS S2 on the use of GICS for financed emissions.

In the September 2024 meeting, as part of the discussion on financed emissions (paper 2024-TAC-015), TAC tentatively agreed to support more flexibility in IFRS S2 regarding the use of industry classification systems rather than mandating a single approach. Following the tentative decision to amend IFRS S2, the TAC was asked to consider and approve suggested amended text. The TAC was asked the following questions.

  • Does the TAC agree that the criteria for amendment are satisfied?
  • Does the TAC agree that the amendment does not prevent entities from choosing to use GICS and complying with IFRS S2?
  • Does the TAC agree with the suggested amended text in relation to the reference to GICS in IFRS S2?

The TAC discussion covered the following points:

  • Members discussed the criteria for amendment that are set out in the TAC's Terms of Reference. Most members were satisfied that the criteria for amendment were satisfied.
  • Members highlighted the previous discussion in September—noting that GICS is a commercial classification system and others are also available—but requested that the suggested wording focus on aligning classification systems with those used for other regulatory purposes (e.g., Basel Pillar 3 reporting). TAC members highlighted the importance of alignment and connectivity between the classification systems used for reporting financed emissions and financial reporting.

Although not unanimous, the TAC agreed that the criteria for amendment were satisfied.

The TAC agreed that the suggested amendment does not prevent entities from choosing to use GICS and complying with the requirement in IFRS S2.

The TAC did not agree with the suggested wording and requested new wording to be proposed in the November 2024 meeting.

3. Mechanisms to support the application of IFRS S1 and IFRS S2

The TAC considered Agenda Paper 3 on the mechanisms used in the standards to support the application of IFRS S1 and IFRS S2.

This paper considered the mechanisms used in IFRS S1 and IFRS S2 that are designed to support entities in applying the requirements. This paper included a discussion about the proportionality mechanisms, application guidance, permanent reliefs, transition reliefs, effective date and concerns about the timing of reporting. The TAC was asked to consider all mechanisms together and decide whether further mechanisms are required, or whether the existing mechanisms require amendment.

This discussion was divided into three parts.

3.1 Part 1 - proportionality mechanisms, application guidance and permanent reliefs

The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to the mechanisms to support application of IFRS S1 and IFRS S2?
  • Does the TAC agree to tentatively recommend to observe the application of the proportionality mechanisms as practice develops, and if there appears to be inappropriate use of these mechanisms this is shared with the ISSB during its post-implementation review of IFRS S1 and IFRS S2?

The TAC discussion covered the following points:

  • Members suggested that DBT considers the future process for feeding back to the ISSB during its post-implementation review of IFRS S1 and IFRS S2.
  • Concerns were raised about the ability for entities to use some of the mechanisms without having to disclose that they have used them, which could lead to unexplained gaps in reporting that might not be useful for users or regulators.
  • Members noted that entities should provide information about the judgements and assumptions used in the preparation of sustainability-related disclosures in accordance with IFRS S1, which might include when the mechanisms were used.
  • Members contemplated whether application guidance would be useful to demonstrate how an entity can provide information about the proportionality mechanisms.

The tentative endorsement recommendation in the paper is to observe the application of the proportionality mechanisms as practice develops, and if there appears to be inappropriate use of these mechanisms this is shared with the ISSB during its post-implementation review of IFRS S1 and IFRS S2.

The TAC tentatively agreed with this recommendation.

3.2 Part 2 - transition reliefs and effective date

The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to transition reliefs and effective dates in IFRS S1 and IFRS S2?
  • Does the TAC agree to tentatively recommend that the PIC considers the implication of voluntary reporting on the entity's ability to apply the transition reliefs?
  • Does the TAC agree to tentatively recommend to amend IFRS S1 by removing the transition relief in paragraph E4 that permits an entity to report its annual sustainability-related financial disclosures after it has published the related financial statements?
  • Does the TAC agree to tentatively recommend to amend the transition reliefs in IFRS S1 and IFRS S2 to extend or amend either the ‘climate first’ reporting relief or the Scope 3 emissions relief?
  • If the answer to (iv) is 'yes', which transition relief does the TAC agree to extend?
    • Option 1 - extending the ‘climate first’ reporting relief to two years and requiring disclosure of all sustainability-related risks and opportunities in the third year of reporting;
    • Option 2 – extending the Scope 3 emissions relief to two years and requiring Scope 3 emissions in the third year of reporting; or
    • Option 3 - remove 'climate first' reporting relief and attach any expectation on disclosing sustainability-related risks and opportunities
  • only when a relevant topic-specific standard is available and endorsed for use in the UK.
  • Does the TAC agree to tentatively recommend to amend the effective date in both IFRS S1 and IFRS S2 to 1 January 2026, assuming that the UK Sustainability Reporting Standards are issued in Q2 2025?

The TAC discussion covered the following points:

  • Transition relief
    • Members were split in their views on whether to amend the transition reliefs.
    • Members broadly supported removing the timing relief in IFRS S1 paragraph E4 to support connectivity objectives. However, the members also noted that smaller entities may benefit from this relief.
    • Some members did not agree to extend the transition reliefs, noting that the proportionality mechanisms in the standards would be enough to support the application of the standards.
    • Some members agreed that broader reporting of sustainability risks and opportunities (other than climate change) is nascent and more time for entities to prepare disclosures would be welcomed. Some members also acknowledged that IFRS S1 will improve comparability to a certain extent, but in the absence of other topic specific IFRS Sustainability Disclosure Standards, will not lead to comparable and consistent disclosure.
    • Members broadly agreed that extending the Scope 3 reporting relief will not improve reporting or reduce the reporting burden but will only delay the challenges associated with Scope 3 reporting and the subsequent improvements that will develop through the practice of reporting.
  • Effective date
    • The TAC clarified that the objective of the discussion was not to set an effective date, but to provide the Secretary of State with views on when UK entities might be prepared to apply the standards. Members noted that this discussion is separate from the decisions that will be taken by DBT and the FCA on the implementation date for the standards. DBT and FCA will consult on the implementation of UK Sustainability Reporting Standards in the UK.
    • The views expressed on the effective date were related to setting UK Sustainability Reporting Standards, rather than amending IFRS S1 and IFRS S2.
    • Members indicated that entities are not prohibited from starting to voluntarily apply IFRS Sustainability Disclosure Standards and that an effective date should not create a barrier for an entity to start reporting on a voluntary basis. The TAC noted that an effective date for voluntary reporting was not necessary for entities to start applying the standards voluntarily. However, the TAC also noted that if an entity makes an unequivocal statement of compliance with IFRS Sustainability Disclosure Standards, the entity cannot then apply the transition reliefs that will be available in the UK Sustainability Reporting Standards when these standards become effective and are required to be applied.
  • The TAC decided that no effective date for voluntary adoption was necessary, and decisions on the effective or implementation date would be a decision for the PIC. The TAC requested proposed wording for the effective date, noting that the current wording in IFRS S1 and IFRS S2 would need to be amended as the effective date has already passed.

The tentative endorsement recommendations in the paper are to:

  • recommend that the PIC considers the implication of voluntary reporting on the entity's ability to apply transition reliefs.
  • amend IFRS S1 by removing the transition relief in paragraph E4 that permits an entity to report its annual sustainability-related financial disclosures after it has published the related financial statements.
  • amend the transition reliefs in IFRS S1 and IFRS S2 to either extend the 'climate-first' reporting or the Scope 3 emissions reliefs.
  • amend the effective date in both IFRS S1 and IFRS S2 to 1 January 2026, assuming that the UK Sustainability Reporting Standards are issued in Q2 2025.

Although not unanimous, the TAC tentatively agreed to remove the transition relief in IFRS S1 paragraph E4 that permits an entity to report its annual sustainability-related financial disclosures after it has published the related financial statements in its first year of reporting.

The TAC narrowly agreed (tentatively) to amend the transition relief in IFRS S1 to extend the ‘climate-first’ reporting relief to two years and therefore require disclosure of non-climate sustainability-related risks and opportunities in the third year of reporting.

The TAC tentatively agreed to not recommend an effective date for voluntary adoption of the standards as it was not considered necessary, and requested proposed wording for the effective date to be presented at the November 2024 meeting.

3.3 Part 3 - timing of reporting

The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to the requirements for the timing of reporting in IFRS S1 and IFRS S2?
  • Does the TAC agree to tentatively recommend to request that the ISSB provide clarity as to the intention of IFRS S1 paragraphs 66–67 that permits a different reporting period for sustainability-related disclosures, including when it can be applied by an entity?
  • Does the TAC agree to tentatively recommend to request that the ISSB consider how the requirement in IFRS S2 paragraph B19 can be applied to sustainability-related matters other than greenhouse gas emissions? This might be through clarification of the existing requirements or as part of the upcoming research on biodiversity, ecosystems and ecosystem services, and human capital.
  • Does the TAC agree to tentatively recommend to observe practice relating to the use of different reporting periods for sustainability-related disclosures and to feedback to the ISSB as part of its post-implementation review?
  • Does the TAC agree to tentatively recommend to amend both IFRS S1 and IFRS S2 to clarify that the reporting period for certain sustainability-related information may not be the same as the current reporting period for the financial statements? This includes amending IFRS S2 to require entities to disclose when and why the reporting period for greenhouse gas emissions data collected from value chain differs from the reporting period used for the financial statements.

The TAC discussion covered the following points.

  • If an entity uses a different reporting period, or uses a significant amount of estimates due to time lags in data collection, the entity should provide disclosures of these approaches in accordance with the requirements in IFRS S1 paragraph 74 relating to the judgements applied in the process of preparing disclosures.
  • The intention of IFRS S2 paragraph B19 is to require entities to use the latest available information. Members were cautious that requirements do not stifle innovation, and entities are able to assess and manage risks and opportunities.
  • Members noted that IFRS S2 paragraph B42 requires entities to apply judgement as to the inputs used to calculate greenhouse gas emissions, including the trade-offs between timely data and data directly collected from the specific activities in the value chain.
  • The difference between an entity's year end date and the reporting cycle, and whether the wording of IFRS S2 paragraph B19 should be 'financial year' rather than 'reporting period'.
  • The challenges around revising comparatives when information in the value chain, which might already have a time lag, is itself restated by the entity in the value chain.
  • The suggested amendment for IFRS S2 paragraph B19 is in the wrong section as it is only relevant to the requirements relating to financed emissions.

The tentative endorsement recommendations in the paper are to:

  • request that the ISSB provides clarity as to the intention of IFRS S1 paragraphs 66–67 that permits a different reporting period for sustainability-related disclosures, including when it can be applied by an entity. For example, can an entity apply this requirement for specific requirements or only for all sustainability-related disclosures.
  • request that the ISSB considers how the requirement in IFRS S2 paragraph B19—that permits the use of different reporting periods for value chain data-can be applied to sustainability-related matters other than greenhouse gas emissions. This might be through clarification of the existing requirements or as part of the upcoming research on biodiversity, ecosystems and ecosystem services (BEES), and human capital.
  • observe practice relating to the use of different reporting periods for sustainability-related disclosures—with specific regard for financed emissions disclosures—and to feed back to the ISSB as part of its post-implementation review.
  • amend both IFRS S1 and IFRS S2 to clarify that the reporting period for certain sustainability-related information might not be the same as the current reporting period for the financial statements. This may include amending IFRS S2, using the same language that is used in IFRS S1 paragraph 66, to require entities to disclose when and why the reporting period for greenhouse gas emissions data collected from the value chain differs from the reporting period used for the financial statements.

The TAC agreed to tentatively recommend that the ISSB should provide clarity as to the intention of IFRS S1 paragraphs 66–67 and IFRS S2 paragraph B19 that permits a different reporting period for sustainability-related disclosures, including when it can be applied by an entity. Additionally, the TAC agreed to tentatively recommend that the ISSB considers how the requirement in IFRS S2 paragraph B19 can be applied to sustainability-related matters other than greenhouse gas emissions? This might be through clarification of the existing requirements or as part of the upcoming research on biodiversity, ecosystems and ecosystem services, and human capital.

The TAC tentatively agreed that practice relating to the use of different reporting periods for sustainability-related disclosures is observed and fed back to the ISSB as part of its post-implementation review.

Although not unanimous, the TAC agreed to tentatively recommend to amend both IFRS S1 and IFRS S2 to clarify that the reporting period for certain sustainability-related information may not be the same as the current reporting period for the financial statements. The TAC did not agree with the suggested wording and requested new wording to be proposed in the November meeting.

4. Current and anticipated financial effects

The TAC considered Agenda Paper 4 on the requirements related to current and anticipated financial effects.

This paper presented an analysis of the current and anticipated financial effects requirements in IFRS S1 and IFRS S2. This paper considered the challenges associated with these requirements and the mechanisms used to support the application of the requirements. The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to the current and anticipated financial effects provisions in IFRS S1 and IFRS S2?
  • Does the TAC agree to tentatively recommend maintaining the requirements in IFRS S1 and IFRS S2 in relation to current and anticipated financial effects?
  • Does the TAC agree to tentatively recommend that the ISSB considers providing clarity and/or guidance on current and anticipated financial effects
  • including whether information about the combined financial effects ‘would not be useful’?
  • Does the TAC agree to tentatively recommend that practice related to current and anticipated financial effects, including the use of mechanisms to support the application of the requirements, should be an area for continued monitoring to provide feedback to the ISSB during their post-implementation review of IFRS S1 and S2?

The TAC discussions covered the following points.

  • Members noted the challenges of providing information about the current and anticipated financial effects, including the different time horizons that would need to be used.
  • The importance of connectivity, noting that connectivity does not mean that the financial numbers have to be duplicated, but that information in the financial statements can be cross-referred to.
  • The value of the ISSB providing worked examples to support the application of the requirements. Members requested that the recommendation should change to request that the ISSB develop worked examples or make those already developed more readily available.
  • Investors will find both qualitative and quantitative information helpful, noting that sometimes quantitative information can give a false sense of accuracy.

The tentative endorsement recommendations in the paper are:

  • to maintain the requirements in IFRS S1 and IFRS S2 in relation to current and anticipated financial effects;
  • to recommend the ISSB considers providing clarity and/or guidance on current and anticipated financial effects including whether information about the combined financial effects 'would not be useful'; and
  • to note in its advice to the Secretary of State that, as part of implementation, industry practice and disclosures related to current and anticipated financial effects, (including the use of mechanisms to support the application of the requirements), should be an area for continued monitoring to provide feedback to the ISSB during its post-implementation review of IFRS S2.

The TAC recommends that the requirements in IFRS S1 and IFRS S2 for the disclosure of current and anticipated financial effects of sustainability-related risks and opportunities are maintained without amendment.

The TAC recommends that the ISSB develops further guidance and worked examples on current and anticipated financial effects; including whether information about the combined financial effects 'would not be useful'.

The TAC recommends that practice related to current and anticipated financial effects, including the use of mechanisms to support the application of the requirements, is an area for continued monitoring to provide feedback to the ISSB during its post-implementation review of IFRS S2.

5. Resilience and scenario analysis

The TAC considered Agenda Paper 5 on resilience and scenario analysis.

This paper considered the requirements in IFRS S1 and IFRS S2 relating to resilience and scenario analysis, including the definitions of ‘resilience’, stakeholder requests for guidance on scenario analysis, and the application of proportionality mechanisms. The TAC is asked to consider whether any amendments to IFRS S1 and IFRS S2 are necessary and whether any additional transitional reliefs are needed. The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to the current and anticipated financial effects provisions in IFRS and IFRS S2?
  • Does the TAC tentatively agree to recommend to maintain the requirements in IFRS S1 and IFRS S2 in relation to resilience and scenario analysis?
  • Does the TAC tentatively agree to recommend to engage with the ISSB to consider a definition for ‘resilience’ in IFRS S1 that aligns with the definition of climate resilience in IFRS S2; and ensure that definitions of resilience in future ISSB standards are consistent with existing definitions?
  • Does the TAC tentatively agree to recommend to request the ISSB clarifies why the disclosure as to whether the entity uses scenario analysis to identify sustainability-related opportunities is not required in IFRS S1; and to provide additional guidance on the use of scenario analysis as a tool to identify sustainability-related risks and opportunities?
  • Does the TAC tentatively agree to recommend that the PIC consider as part of its implementation discussions whether prescribing specific scenario analysis would be beneficial, and potentially periodically setting a standardised climate-related scenario against which entities could undertake climate scenario analysis?
  • Does the TAC tentatively agree to recommend to monitor the use of the proportionality mechanism for climate-related scenario analysis in order to provide feedback to the ISSB when they conduct the post-implementation review of IFRS S2?

The TAC discussions covered the following points.

  • There were mixed views about whether the definition of 'resilience' in IFRS S1 should align with the definition of climate resilience in IFRS S2, noting that the IFRS S1 definition of resilience could be used as the starting point for definitions of resilience in future topic-specific standards and that these definitions could be developed for the particular sustainability-related matters of each standard.
  • Whether prescribed scenarios were necessary, noting that the selection and use of scenarios for scenario analysis will be entity specific.
  • The approaches used in climate-related scenario analysis might not be appropriate for other sustainability-related risks and opportunities, and therefore flexibility in IFRS S1 is preferred.

The tentative endorsement recommendation in the paper is:

  • to maintain the requirements in IFRS S1 and IFRS S2 in relation to resilience and scenario analysis;
  • to engage with the ISSB to consider a definition for ‘resilience’ in IFRS S1 that aligns with the definition of ‘climate resilience’ in IFRS S2, and ensure that definitions of resilience in future ISSB standards are consistent;
  • to request the ISSB clarifies why the disclosure as to whether the entity uses scenario analysis to identify sustainability-related opportunities is not required in IFRS S1, and to provide additional guidance on the use of scenario analysis as a tool to identify sustainability-related risks and opportunities;
  • to suggest that the PIC consider as part of its implementation discussions whether prescribing specific scenario analysis would be beneficial, and potentially periodically setting a standardised climate-related scenario against which entities could undertake climate scenario analysis; and
  • to monitor the use of the proportionality mechanism for climate-related scenario analysis in order to provide feedback to the ISSB when it conducts its post-implementation review of IFRS S2.

The TAC agreed to tentatively recommend that the requirements in IFRS S1 and IFRS S2 for the disclosure of resilience and scenario analysis are maintained without amendment.

The TAC agreed to tentatively recommend engaging with the ISSB to consider a definition for 'resilience' in IFRS S1. There were mixed views about whether the definition of ‘resilience’ in IFRS S1 should align with the definition of climate resilience in IFRS S2.

The TAC did not agree to tentatively recommend to request the ISSB clarifies why the disclosure as to whether the entity uses scenario analysis to identify sustainability-related opportunities is not required in IFRS S1. The TAC did not agree to recommend that the ISSB provides additional guidance on the use of scenario analysis as a tool to identify sustainability-related risks and opportunities

The TAC did not agree to recommend that the PIC considers as part of its implementation discussions whether prescribing specific scenario analysis would be beneficial, and potentially periodically setting a standardised climate-related scenario against which entities could undertake climate scenario analysis.

6. Targets

The TAC considered Agenda Paper 6 on targets.

This paper considered the requirements in IFRS S1 and IFRS S2 relating to targets, including the requirements to disclose targets relating to sustainability-related risks and opportunities, in addition to the specific requirements relating to emissions reduction targets. The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to the requirements relating to targets in IFRS S1 and IFRS S2?
  • Does the TAC agree to tentatively recommend to maintain the requirements in IFRS S2 without amendment for entities to disclose information about targets?
  • Does the TAC agree to tentatively recommend that the ISSB consider how an entity might identify and disclose targets related to sustainability-related risks and opportunities that could reasonably be expected to affect the entity's prospects as part of its research on topic-specific standards?
  • Does the TAC agree to tentatively recommend to observe the application of the requirements relating to targets—notably relating to the use of carbon credits and connectivity with identified risks and opportunities—and providing feedback to the ISSB during its post-implementation review of IFRS S1 and IFRS S2?

The TAC discussion covered the following points.

  • The distinction between ambitions and targets (also including commitments, milestones and goals), including when an entity would be expected to apply the requirements in IFRS S1 and IFRS S2.
  • Net zero targets not necessarily connecting to the risk management, noting that net zero targets might not be captured by the objectives of the standards.
  • The need for safe harbour provisions, especially if entities have a 2050 target.
  • Clarifying that there is no requirement in IFRS S1 or IFRS S2 for an entity to have a target, and whether the PIC should consider whether to mandate that an entity has targets. However, not all sustainability-related risks and opportunities should, or can have, separately identifiable targets, so it might not be appropriate to mandate that entities have targets.
  • Unlike the TCFD requirements, there is no requirement for entities to disclose the process (governance and risk management) regardless of materiality judgements, so it might not be clear to users why an entity does not have a metric or target.

The tentative endorsement recommendation in the paper is:

  • to maintain the requirements in IFRS S2 without amendment for entities to disclose information about targets;
  • to recommend that the ISSB considers how an entity might identify and disclose targets related to sustainability-related risks and opportunities as part of its research on topic-specific standards; and
  • to observe the application of the requirements relating to targets—notably relating to the use of carbon credits and connectivity with identified risks and opportunities—and providing feedback to the ISSB during its post-implementation review of IFRS S1 and IFRS S2.

The TAC agreed to tentatively recommend that the requirements in IFRS S1 and IFRS S2 for the disclosure of sustainability-related targets are maintained without amendment.

The TAC agreed to tentatively recommend engaging with the ISSB to consider clarity around the term ‘targets’ and the way it differs from other terms, including 'ambitions'. The TAC also agreed to tentatively recommend that the ISSB considers how an entity might identify and disclose metrics and targets related to (non-climate) sustainability-related risks and opportunities that could reasonably be expected to affect the entity's prospects as part of its research on topic-specific standards.

The TAC agreed to tentatively recommend that market practice related to targets, notably the use of carbon credits and connectivity with identified risks and opportunities, is an area for continued monitoring to provide feedback to the ISSB during its post-implementation review of IFRS S1 and IFRS S2.

7. Transition plans

The TAC considered Agenda Paper 7 on transition plans.

This paper considered the requirements in IFRS S2 relating to the disclosure of transition plans. The TAC was asked to consider the following questions.

  • Does the TAC agree with the analysis in this paper in relation to transition plans in IFRS S2?
  • Does the TAC agree to tentatively recommend to maintain the requirements in IFRS S2 for entities to disclose information about climate-related transition plans, only if such a plan exists?

The TAC discussions covered the following points.

  • The location of reporting, noting that material information about the transition plan should be disclosed in the general purpose financial report, but an entity might need to disclose information in a separate report due to jurisdictional challenges (i.e., legal challenges).
  • The Government's manifesto commitment, and the need to wait for the disclosure obligations to be set before deciding whether and what additional guidance is needed.
  • Some members believed that the requirement should be amended to make explicit reference to the Transition Plan Taskforce materials, whereas others suggested that any addition should wait until the ISSB has completed its own process for integrating the materials before making jurisdictional amendments.

The tentative endorsement recommendation in the paper is:

  • to maintain the requirements in IFRS S2 for entities to disclose information about climate-related transition plans, only if such a plan exists.

Although not unanimous, the TAC agreed to tentatively recommend to maintain the requirements in IFRS S2 for entities to disclose information about climate-related transition plans, only if such a plan exists.

8. AOB

There was no AOB.

The Chair noted that the next meeting will be held on 5 November 2024.

The meeting ended at 15:30.

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