Warning
The content on this page has been converted from PDF to HTML format using an artificial intelligence (AI) tool as part of our ongoing efforts to improve accessibility and usability of our publications. Note:
- No human verification has been conducted of the converted content.
- While we strive for accuracy errors or omissions may exist.
- This content is provided for informational purposes only and should not be relied upon as a definitive or authoritative source.
- For the official and verified version of the publication, refer to the original PDF document.
If you identify any inaccuracies or have concerns about the content, please contact us at [email protected].
TAC Public Meeting May 2025: Meeting Summary
PUBLIC MEETING SUMMARY
Date: 13 May 2025
Time: 9:20am-12:00pm
Location: London Stock Exchange Group, 10 Paternoster Square, London EC4M 7LS
Attendance
| Name | Designation |
|---|---|
| Sally Duckworth | Chair |
| Craig Mackenzie | Member |
| David Harris | Member |
| Hilary Eastman | Member |
| Jeremy Osborn | Member |
| Madeleine Evans | Member |
| Nick Rowbottom | Member |
| Peter Hogarth | Member |
| Scott Barlow | Member |
| Supriya Sobti | Member (online between 10:50am and 12:00pm) |
| Jenny Carter | Member appointed by the Financial Reporting Council (FRC) |
| Paul Lee | Member appointed by the UK Endorsement Board (UKEB) |
| Mike Ashby | Observer from the Department for Business and Trade (DBT) |
| Laura Kennedy | Observer from the Bank of England (BoE) (online from 9:50am) |
| Matilda Robson | Observer from the Financial Conduct Authority (FCA) |
| Sarah-Jayne Dominic | Secretariat |
Apologies
| Name | Designation |
|---|---|
| Harriet Cullum | Member |
1. Welcome and apologies
The Chair welcomed the attendees to the May meeting of the Technical Advisory Committee (TAC).
The Chair noted apologies from Harriet Cullum.
The Chair noted the following interests in agenda items:
- Hilary Eastman, member of an IEEE working group for developing a standard for an environmental liability process model for accounting in systems engineering.
- David Harris, employee of London Stock Exchange Group, which calculates and commercialises industry classification systems (ICB and TRCB).
2. General reporting update (agenda paper 2)
The Committee noted the May general reporting update.
3. Due Process Policy
The Chair noted that the TAC's Terms of Reference require the TAC to determine its Due Process Policy within the 12 months following approval of the Terms of Reference and that a draft Due Process Policy was being tabled for approval.
The Committee approved the draft Due Process Policy (the Policy) subject to comments including:
- The TAC agreed that section 2 on the TAC's influencing activities should mention proactive, as well as reactive, activities.
- In relation to references to the long-term public good in the fourth guiding principle in paragraph 11 and in paragraph 40, the TAC agreed to include a footnote clarifying that DBT is responsible for advising the Secretary of State on the matters in paragraph 3 of the TAC's ToR, and that the TAC may provide advice on these matters but is not required to.
- In relation to the section on research projects, the TAC noted that these were specific projects since general research activities were referenced throughout the Policy, for example in relation to sections 3 and 4 on the development of comment letters and endorsement recommendations and advice. The TAC agreed with the inclusion of a separate section on research projects, but queried whether the section should be moved to a different location in the Policy.
- The TAC noted that section 4 on the development of endorsement recommendations and advice focuses on new rather than amended IFRS Sustainability Disclosure Standards and amendments are only referenced in paragraph 62. The TAC agreed section 4.4 on other commissions should be moved to the beginning rather than the end of the section to clarify that the section covers amended as well as new Standards.
- The TAC emphasised the importance of principled rather than prescriptive approaches and did not support a Policy which sought to cover all possible scenarios. The TAC agreed to include a few lines in the introduction noting the Policy is overarching and designed to be tailored on a case-by-case basis.
The Committee authorised the Chair to resolve the edits arising from these comments. The Chair noted the document will then undergo final proofreading and formatting and, once completed, the TAC's Due Process Policy will be published on the FRC website.
4. Proposed amendments to IFRS S2 – Project plan & assessment approach
The following points were made during the TAC discussion on the project plan for the proposed IFRS S2 amendments:
- That the proposed outreach timeline may be overly ambitious, given the limited availability of stakeholders during the half-term period around 26 May. However, the Secretariat confirmed that most meetings had already been scheduled between 14 and 27 May.
- That time may need to be built into the project plan for the TAC to reflect on how the proposed amendments, particularly those related to the use of GICS, could impact the recommendations submitted to DBT and how these would be reflected in the UK SRS, even before the ISSB have finalised their proposed amendments.
- That there may be merit in establishing a standing principle for stakeholder outreach sample selection, to ensure greater rigour and inclusivity, and help prevent over-reliance on a recurring set of stakeholders.
- Whether some form of interim written communication, such as an email from DBT, should be issued while awaiting the formal commissioning letter regarding the TAC's work on the ISSB's IFRS S2 amendments. Additionally, clarification was sought on whether a separate commissioning process would be required for the review of final ISSB amendments for the purpose of updating the UK SRS. It was discussed that no formal commission was required from the DBT for either matter, as the TAC's work related to ISSB consultations falls within its terms of reference.
- The idea of establishing advisory sub-groups, similar to those used by the UKEB was considered. However, it was noted that the TAC already includes members with the necessary technical expertise and additional advisory sub-groups were considered not to be necessary.
- That the TAC should remain conscious of the distinction between influencing and endorsing in its responses to ISSB matters. Accordingly, it was proposed that the language used in the comment letter should reflect an intent to influence the ISSB's direction, rather than imply endorsement, as would be the case in endorsement recommendations and advice provided to DBT. In light of this, it was agreed that paragraph 19 should be revised to avoid the term “disagreement” and instead reflect views expressed in the context of the TAC's assessment criteria. It was agreed to rephrase the final sentence of paragraph 19 to read: “Additionally, if the TAC expresses views on the proposed amendments for use in the UK, they will be made in the context of the TAC's assessment criteria.” It was also agreed that the response letter should include prefatory wording that in summary describes the mandate of the TAC and also include words clarifying that the response is intended solely to inform and influence the ISSB and does not reflect the TAC's endorsement recommendation position.
- The TAC approved the plan subject to the comments above and it was agreed that the Chair would work with the Secretariat to finalise the necessary revisions to the project plan, to be renamed as a project management plan.
5. Proposed amendments to IFRS S2 – Category 15 scope 3 GHG emissions measurement and disclosures
The TAC discussed the following regarding the IFRS S2 Category 15 scope 3 emissions amendments:
Category 15 – Scope 3 Financed Emissions
- It was discussed why derivatives were the only asset class explicitly singled out for exclusion from financed emissions, despite other asset classes such as credit card balances, short-term lending, invoice finance and others, also presenting significant category 15 scope 3 GHG emissions measurement challenges. It was then noted that such balances would fall under the new disclosure requirement in paragraph 29A(b)(ii) which requires the disclosure of other financial activities for which no financed emissions are calculated. For instance, if an entity is able to calculate financed emissions on 90% of its loan book, the remaining 10% for which emissions cannot be reliably measured would be disclosed under 29A(b)(ii). Consequently, the TAC expressed support for the proposed disclosure requirement in paragraph 29A(b)(ii).
- The TAC disagreed with the proposed new requirement in paragraph 29A(b)(i) to disclose derivative amounts on which financed emissions have not been calculated. It was suggested that a qualitative disclosure of an entity's sectoral exposure through derivatives would be more meaningful than a quantitative figure, which may not reflect emissions risk or exposure. It was noted that disclosure of a material derivatives amount, for instance, may prompt unnecessary questions even if the associated emissions are immaterial. Additionally, concerns were raised that, due to the prevalence of derivatives in some non-financial services entities, the new disclosure requirement in paragraph 29A(b)(i) could lead to unintended widespread application by these entities, resulting in disclosures that are irrelevant and not meaningful.
- It was also discussed that excluding the requirement to disclose derivatives amounts keeps IFRS S2 clearer. If the ISSB believes such information would be useful, it may be more appropriate to address it through educational or non-mandatory guidance rather than through inclusion in the standard.
- Regarding the lack of established methodologies for measuring category 15 scope 3 GHG emissions on certain financial activities and derivatives, it was discussed that the ISSB's current approach of a permanent exclusion is not an ideal solution in the long term. Instead, the ISSB should be encouraged to revisit these areas in future as accounting, measurement methodologies and technologies evolve.
Global Industry Classification Standard (GICS)
- It was agreed that the TAC's response should clearly and firmly disagree with the proposed mandatory use of GICS and should reaffirm the position previously communicated to DBT in the TAC's endorsement recommendations and advice.
- In addition to the concerns already outlined in the paper presented to the TAC, the following points were raised as further reasons for not supporting the ISSB's proposed decision tree mandating GICS to some entities:
- That IFRS S1 paragraph 1 requires an entity to disclose information about its sustainability-related risks and opportunities that is useful to primary users of general-purpose financial reports. However, in the ISSB's proposed decision tree for sector classification (i.e. amendment on the use of GICS), this objective is ranked only fourth in priority, thereby undermining a core principle of IFRS S1.
- That while GICS and NACE can be mapped to each other, this calls into question the necessity of mandating GICS. If both classification systems yield comparable outcomes, the rationale for mandating one over the other appears weak.
- The ISSB has cited the global use of GICS in global capital markets as the main justification for its proposal. However, it was noted that asset managers are not mandated to use GICS, which undermines the strength of this argument.
- That sectoral/industry classification, just like the GHG Protocol, GWP values and other areas, is subject to jurisdictional mandates. Therefore, the ISSB's proposed mandatory application of GICS across jurisdictions for certain entities appears to contradict the principle of considering jurisdictional mandates.
- It was also noted that the paper raised the potential anti-competitive implications of mandating a commercial classification product. It was suggested that any references to such concerns should be supported by appropriate evidence, such as legal advice to avoid the perception of speculative or unsubstantiated claims.
Jurisdictional reliefs relating to Global Warming Potential (GWP) values and GHG Protocol Corporate Standard
- A minority of members highlighted that the response to the ISSB should also address the perspective of users, noting that the current focus is primarily on reducing burdens for preparers. They suggested that the response should reflect the need for efforts to promote consistency in the use of GWP values across jurisdictions. However, some members cautioned that advocating for such consistency may appear contradictory to the TAC's position on GICS, GHG Protocol and others. It was agreed that any suggestion regarding future harmonisation of GWP values across jurisdictions should be considered for inclusion in the ISSB's jurisdictional adoption guide, rather than proposed as a direct amendment to the standard itself.
6. AOB
There was no other business.
In closing, the Chair thanked everyone for joining the meeting and confirmed that the next meeting is scheduled for 10 June 2025.
The meeting ended at 11:50am.