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Letter to ISSB Chair: summary of points on IFRS S1 and IFRS S2 for ISSB’s consideration
UK endorsement of IFRS S1 and IFRS S2
Dear Emmanuel,
The UK Sustainability Disclosure Technical Advisory Committee (TAC) recently submitted its Technical assessment and endorsement recommendations report to the UK Government regarding the IFRS Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB), namely IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and IFRS S2 Climate-related Disclosures (IFRS S2).
The TAC's comprehensive technical assessment of these standards, supported by extensive stakeholder consultations and deliberations, identified some key matters for the ISSB's consideration. These matters are outlined in the attached appendix and are being formally shared for your consideration. We would be happy to discuss further with you. The matters have been categorised as follows:
- suggested amendments for creation of UK Sustainability Reporting Standards (UK SRS), which are provided for informational purposes only and are subject to a public consultation on the draft UK SRS;
- matters for clarification, acknowledgement, educational material or guidance, which are intended for the ISSB to consider providing further insights, interpretations or examples to support consistent application of the standards and reduce unnecessary cost or effort. While all of these are important, they have been prioritised based on their relative urgency and significance as follows:
- high: matters for immediate consideration due to their broad impact or critical significance to particular sectors or stakeholder groups
- medium: matters for consideration that can be mitigated in the short-term by existing measures or interim practices
- low: matters that can be addressed progressively as practice evolves;
- matters for engagement, including interoperability-related issues, where the TAC encourages the ISSB to collaborate with other standard setters, regulators and relevant parties to achieve a streamlined outcome. These matters are identified by a 3 in the appendix;
- considerations for future standards development and enhancements; and
- matters for monitoring and feedback, which are shared for informational purposes and highlight areas of potential challenges that may arise during implementation.
As noted, these matters stem from the TAC's technical assessment conducted to support its endorsement advice to the Secretary of State for Business and Trade. They do not represent a complete UK position, as other regulators and the UK Government may identify additional issues relevant to their specific activities or the development of implementation requirements.
We look forward to continuing our engagement with you, the Board and ISSB staff as IFRS S1 and IFRS S2 progress through the adoption process in the UK.
Thank you for your attention to these important matters.
Yours sincerely
Sally Duckworth Chair of the UK Sustainability Disclosure TAC Email: [email protected]
Appendix – Summary of matters for the ISSB's consideration
A. Suggested amendments for creation of UK Sustainability Reporting Standards – for information only 1
| Item no. | Topic per TAC report | Standard name | Summary of amendments for your information | Reference to TAC material |
|---|---|---|---|---|
| A.1 | Transition reliefs | IFRS S1 | Considering the relatively advanced state of climate reporting in the UK and the need to maintain connectivity between sustainability-related reporting and the financial statements, the TAC recommended the removal of the transition relief in IFRS S1 paragraph E4 that permits, in the first year of reporting, an entity to report its annual sustainability-related disclosures after it has published the related financial statements. | TAC report paragraph 233 & Appendix 5 |
| A.2 | The TAC recommended extending the 'climate-first' relief from one up to two years allowing UK entities to fully disclose all sustainability-related risks and opportunities by the third year of reporting. This sufficiently prioritises climate-related disclosures (including Scope 3 emissions) before introducing non-climate sustainability-related reporting requirements. | TAC report paragraphs 237-238 & Appendix 5 | ||
| A.3 | Effective date | IFRS S1 & IFRS S2 | Noting that the effective date in IFRS S1 and IFRS S2 has already passed, the TAC recommended its removal from the UK Sustainability Reporting Standards (UK SRS). The effective date in the UK will instead be determined by the Financial Conduct Authority (FCA) and the UK Government, who are responsible for the implementation of these standards. | TAC report paragraph 241 & Appendix 5 |
| A.4 | Greenhouse gas emissions: financed emissions | IFRS S2 | The TAC recommended an amendment to IFRS S2 paragraphs B62 and B63 so that UK entities are not required to use the Global Industry Classification Standard (GICS) when disaggregating gross financed emissions by sector/industry classification but might use GICS or a different classification system they use for existing regulatory or financial reporting purposes. Not mandating one commercial classification system is intended to improve consistency and maintain connectivity within the entities' own reporting while reducing transition costs for entities already using alternative classification systems that align with existing regulatory or financial reporting frameworks. | TAC report paragraph 191 & Appendix 5 |
B. Matters for clarification, acknowledgement, educational material or guidance – for consideration 2
| Item no. | Topic per TAC report | Standard name | Summary of matters for consideration s,
Note: The PDF seems to have inconsistent footnote numbering (e.g., 3 appearing multiple times at different places). I will number them sequentially as they appear for markdown rendering.
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These matters are subject to a public consultation on the draft UK Sustainability Reporting Standards. ↩
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The relative prioritisation scale is defined as follows: High: Matters for immediate consideration due to their broad impact or critical significance to particular sectors or stakeholder groups. Medium: Matters for consideration that can be mitigated in the short-term by existing measures or interim practices. Low: Matters that can be addressed progressively as practice evolves. ↩
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The TAC encourages the ISSB to collaborate with other standard setters, regulators and relevant parties to ensure a streamlined outcome. ↩