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TAC Public Meeting November 2024 Paper 5: Follow-up discussion on effective date and transition
Executive summary
| Header | Value |
|---|---|
| Date | 05 November 2024 |
| Paper reference | 2024-TAC-026 |
| Project | Technical assessment of IFRS S1 and IFRS S2 |
| Topic | Follow-up discussion on effective date and transition |
Objective of the paper
In the October 2024 meeting, the TAC agreed to amend the effective date and transition reliefs for the UK Sustainability Reporting Standards. This paper presents the suggested wording for the effective date and transition reliefs.
Decisions for the TAC
The TAC is asked to approve the suggested wording for the amendments to the effective date and transition reliefs.
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.
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Context
1In the October 2024 meeting, the TAC 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. - amend the transition relief in IFRS S1 to extend the ‘
climate-first' reporting relief to two years and therefore require disclosure of all sustainability-related risks and opportunities in the third year of reporting. not recommend an effective date for voluntary adoption and requested proposed wording for the effective date to be presented at the November meeting.
2This paper asks the TAC to make final decisions on the recommendations relating to effective date and transition reliefs.
Endorsement recommendations
Suggested endorsement recommendations
3The TAC is asked to approve the following amendments in relation to the effective date and transition reliefs. The references to IFRS S1 and IFRS S2 will be replaced to refer to the UK Sustainability Reporting Standards in due course.
Suggested amendments to IFRS S1:
Appendix E
Effective date and transition
This appendix is an integral part of IFRS S1 and has the same authority as the other parts of the Standard.
Effective date
E1An entity shall apply this Standard for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. If an entity applies this Standard earlier, it shall disclose that fact and apply IFRS S2 Climate-related Disclosures at the same time.
E2For the purposes of applying paragraphs E3–E65, the date of initial application is the beginning of the annual reporting period in which an entity first applies this Standard.
Transition
E3An entity is not required to provide the disclosures specified in this Standard for any period before the date of initial application. Accordingly, an entity is not required to disclose comparative information in the first annual reporting period in which it applies this Standard.
E4In the first annual reporting period in which an entity applies this Standard, the entity is permitted to report its sustainability-related financial disclosures after it publishes its related financial statements. In applying this transition relief, an entity shall report its sustainability-related financial disclosures:
at the same time as its next second-quarter or half-year interim general purpose financial report, if the entity is required to provide such an interim report;at the same time as its next second-quarter or half-year interim general purpose financial report, but within nine months of the end of the annual reporting period in which the entity first applies this Standard, if the entity voluntarily provides such an interim report; orwithin nine months of the end of the annual reporting period in which the entity first applies this Standard, if the entity is not required to and does not voluntarily provide an interim general purpose financial report.
E54In the first two annual reporting periods in which an entity applies this Standard, the entity is permitted to disclose information on only climate-related risks and opportunities (in accordance with IFRS S2) and consequently apply the requirements in this Standard only insofar as they relate to the disclosure of information on climate-related risks and opportunities. If an entity uses this transition relief, it shall disclose that fact.
E65If an entity uses the transition relief in paragraph E54:
- in the first annual reporting period in which the entity applies this Standard, it is not required to disclose comparative information about its climate-related risks and opportunities (see paragraph E3); and
- in the
secondthird annual reporting period in which the entity applies this Standard, it is not required to disclose comparative information about its sustainability-related risks and opportunities, other than its climate-related risks and opportunities.
Suggested amendments to IFRS S2:
Appendix C
Effective date and transition
This appendix is an integral part of IFRS S2 and has the same authority as the other parts of the Standard.
Effective date
C1An entity shall apply this Standard for annual reporting periods beginning on or after 1 January 2024. Earlier application is permitted. If an entity applies this Standard earlier, it shall disclose that fact and apply IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information at the same time.
C2For the purposes of applying paragraphs C3–C5, the date of initial application is the beginning of the annual reporting period in which an entity first applies this Standard.
Transition
C3An entity is not required to provide the disclosures specified in this Standard for any period before the date of initial application. Accordingly, an entity is not required to disclose comparative information in the first annual reporting period in which it applies this Standard.
C4In the first annual reporting period in which an entity applies this Standard, the entity is permitted to use one or both of these reliefs:
- if, in the annual reporting period immediately preceding the date of initial application of this Standard, the entity used a method for measuring its greenhouse gas emissions other than the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004), the entity is permitted to continue using that other method; and
- an entity is not required to disclose its Scope 3 greenhouse gas emissions (see paragraph 29(a)) which includes, if the entity participates in asset management, commercial banking or insurance activities, the additional information about its financed emissions (see paragraph 29(a)(vi)(2) and paragraphs B58–B63).
C5If an entity uses the relief in paragraph C4(a) or paragraph C4(b), the entity is permitted to continue to use that relief for the purposes of presenting that information as comparative information in subsequent reporting periods.
Questions for the TAC
(i)Does the TAC agree to recommend the suggested amendments in relating to effective date and transition?