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TAC Public Meeting September 2025 Paper 6: Analysis of proposed amendments to the nine priority SASB Standards
Executive summary
| Date | 16 September 2025 |
|---|---|
| Paper reference | 2025-TAC-043 |
| Project | Proposed amendments to SASB Standards |
| Topic | Analysis of proposed amendments to the nine priority SASB Standards |
Objective of the paper
This paper provides analysis at an industry-level of the proposed amendments to the nine priority industry standards covered in the Exposure Draft Proposed Amendments to the SASB Standards. It highlights potential areas for further research, discussion, and stakeholder engagement.
Decisions for the TAC
The TAC is asked for its views on:
- the updated industry descriptions in the Extractives & Minerals Processing Sector, including whether they more clearly describe the activities of entities in the industry, and the potential areas for engagement with stakeholders and other research;
- the noted proposed amendments at a disclosure topic-level in the Extractives & Minerals Processing Sector, including whether the disclosure topics for each industry describe the sustainability-related risks and opportunities that could reasonably be expected to affect the prospects of UK entities in the industry;
- the noted proposed amendments at metric-level in the Extractives & Minerals Processing Sector;
- the amendments in the Processed Foods Standard relating to the revisions of disclosure topics; and
- the amendments to the Processed Foods Standard relating to the revision of metrics.
The TAC is asked to decide:
- whether instances of substantive change identified in the topic summaries should be raised with the ISSB for clarification to ensure they are consistent with the stated objectives of the enhancement project;
- whether it agrees with the recommended actions regarding the noted proposed amendments at metric-level in the Extractives & Minerals Processing Sector;
- whether it agrees with the recommended actions regarding the other industry-level comments in the Extractives & Minerals Processing Sector;
- whether it agrees with the recommendation to raise a question with the ISSB about discrepancies in the inclusion of certain disclosure topics across the Food & Beverage Sector;
- whether it agrees with the recommended action regarding noted proposed amendments at metric-level in the Food & Beverage Sector; and
- whether it agrees with the recommended action that the Secretariat does not further assess the supply chain management topics and related metrics.
Appendices
This paper does not have any appendices.
Context
1This paper extracts and highlights some of the key changes to the nine priority industry standards covered in the ISSB's Exposure Draft, Proposed Amendments to the SASB Standards. The items outlined are for discussion purposes only, do not constitute a final position on any of the issues outlined, and are not a comprehensive list of all amendments that may be of interest to the TAC in responding to this Exposure Draft. Additional key areas may be identified as the Secretariat undertakes further analysis, engages with stakeholders, and interacts with other standard-setters on this subject.
2The nine standards included in the Exposure Draft consist of eight standards from the Extractives and Minerals Processing sector, and one standard from the Food and Beverage Sector, as listed below. The first eight are considered together in this paper, followed by a separate section on the latter.
- Coal operations
- Construction materials
- Iron & steel producers
- Metals & mining
- Oil & gas – exploration & production
- Oil & gas - midstream
- Oil & gas – refining & marketing
- Oil & gas – services
- Processed foods
3The ISSB has reviewed these nine SASB Standards by considering whether:
- the industry description was appropriate and internationally applicable, including whether any changes to the industry classification under SICS would be necessary;
- the disclosure topics in each industry described the sustainability-related risks and opportunities that could reasonably be expected to affect the prospects of most entities in the industry, including whether to add or remove disclosure topics;
- the metrics and technical protocols were likely to result in material information across a variety of jurisdictions for users of general purpose financial reports;
- the known challenges in applying the metrics could be resolved through better alignment with IFRS S1 or IFRS S2, or through improved interoperability or alignment with other sustainability-related standards and frameworks; and
- the metrics and technical protocols could be simplified or clarified.
4This paper considers the amendments proposed to the nine standards as a consequence of this review, and raises any areas of uncertainty posed by the amendments for discussion by the TAC. Any areas of concern can be discussed further through engagement with stakeholders, and considered for inclusion in the TAC's comment letter to respond to the ISSB's consultation.
5The Secretariat conducted a high-level analysis of the proposed amendments from the Exposure Draft Proposed Amendments to the SASB Standards, and the associated Basis for Conclusions, to identify the key areas outlined in this paper. The review focused on the objectives of the ISSB's proposed changes, comparing changes across similar industries, identification of disclosures that are entirely new to an industry, or where changes are substantive – for instance, new metrics requiring companies to establish processes and systems to capture and govern relevant data – or where explanations for substantive changes were not forthcoming. The Secretariat also assessed potential duplication or inconsistencies with existing IFRS Sustainability Disclosure Standards, noting that the proposed changes are intended to complement, rather than conflict with or duplicate, these Standards.
Industry Standards - Extractives & Minerals Processing sector
Industry descriptions
6Paragraph BC54 of the Basis for Conclusions notes that there have been no structural changes to the industry groupings in SICS. The proposed amendments update the industry descriptions to more clearly describe the activities of entities in the industry, and are based on desk research and stakeholder feedback. The Secretariat has no comments to raise regarding the industry descriptions, but will engage with stakeholders to see if they raise any comments.
Disclosure topics
7Under the proposed amendments, the SASB Standards will include the disclosure topics outlined in the table below.
| Topic | Coal Operations | Construction Materials | Iron & Steel Producers | Metals & Mining | Oil & Gas - Exploration & Production | Oil & Gas - Midstream | Oil & Gas - Services | Oil & Gas - Refining & Marketing |
|---|---|---|---|---|---|---|---|---|
| Greenhouse Gas Emissions | Previously Emissions Reduction Services & Fuels Management | |||||||
| Air Quality | New topic | New topic | ||||||
| Energy Management | ||||||||
| Water Management | Previously Water Management Services | |||||||
| Waste Management | ||||||||
| Ecological Impacts (previously Biodiversity Impacts) | ||||||||
| Labour Practices | Previously Labour Relations | New topic | ||||||
| Community Relations & Rights of Indigenous People (previously Community Relations) | ||||||||
| Operations in Conflict Areas | New topic | New topic | New topic | |||||
| Workforce Health & Safety | New topic | |||||||
| Product Innovation | ||||||||
| Product Specifications & Clean Fuel Blends | ||||||||
| Supply Chain Management | New topic | New topic | ||||||
| Pricing Integrity & Transparency | ||||||||
| Hazardous Materials Management | Previously Chemicals Management | |||||||
| Climate Resilience (previously Reserves Valuation & Capital Expenditures) | ||||||||
| Business Ethics | Previously Business Ethics & Transparency | Previously Business Ethics & Transparency | ||||||
| Management of the Legal & Regulatory Environment | ||||||||
| Competitive Behaviour | ||||||||
| Critical Incident Risk Management | Previously Operational Safety, Emergency Preparedness & Response | |||||||
| Tailings Storage Facilities Management | ||||||||
| Waste & Hazardous Materials Management | ||||||||
| Security, Human Rights & Rights of Indigenous People | Removed (incorporated in part into Community Relations and Operations in Conflict Areas) | Removed (incorporated in part into Community Relations and Operations in Conflict Areas) | ||||||
| Rights of Indigenous People | Removed (incorporated into Community Relations & Rights of Indigenous People) |
8Paragraphs 13 to 19 in this paper detail any specific areas of uncertainty highlighted for discussion regarding the proposed amendments at a disclosure topic level. This includes any queries related to the disclosure topic summaries.
9The ISSB has clarified to the TAC Secretariat that any amendments to disclosure topic summaries were intended to clarify existing information, rather than make substantive changes. As such, no explanations for any disclosure topic summary amendments are included within the Basis for Conclusions. Any potentially substantive amendments to topic summaries are therefore noted here as potentially unintended consequences of the Exposure Draft. The Secretariat recommends that the TAC puts these instances to the ISSB, and asks that they explain and potentially reconsider these amendments in line with the stated objectives for the enhancement project (as covered in Paper 2025-TAC-041).
10The ISSB has also not provided information on why certain disclosure topics are included in some Standards but not in others. For example, the disclosure topic 'Air Quality' is included across all Extractive & Mineral Processing sector Standards except for Coal Operations. While we would not expect detailed explanations for the exclusion of specific topics, it would be helpful to understand the prioritisation process used to determine their inclusion or exclusion. The Secretariat recommends raising this point with the ISSB and considering its inclusion in our consultation response.
11It should be noted that disclosure topic summaries across industries are identical for some disclosure topics but tailored to each industry for others. For example, the wording in the Community Relations & Rights of Indigenous Peoples disclosure topic summaries is now identical across the three standards where it is included (having previously differed in each industry), but the wording in the Air Quality disclosure topic summaries is very specific to the activities and related risks and opportunities for each of the seven industries it applies to. This difference in approach may be warranted on a topic-by-topic basis. The Secretariat recommends discussing this with the ISSB and consider including it in our consultation response.
12This section also notes any disclosure topics which are subject to specific consultation questions from the ISSB within the Exposure Draft.
Coal Operations
13Air Quality: Paragraph BC61 of the Basis for Conclusions notes that Air Quality has not been included as a standalone disclosure topic in the Coal Operations SASB Standard, but does not provide a rationale for this omission. While alignment with GRI air quality disclosures has been undertaken for other industries, the topic has never been incorporated into the Coal Operations Standard, despite it being a topic in GRI 12: Coal Sector 2022. This GRI sector standard states 'Air emissions from coal activities include CO, NOx, PM, and SO2. These emissions can occur in the form of evaporation from tailings ponds or waste areas; fugitive dust emissions from drilling, blasting, storage, transportation, loading, and unloading; refining and processing activities; transportation of supplies and products; and incidents, such as mine fires'. The Secretariat recommends that stakeholder outreach considers whether the omission of air quality and associated metrics is appropriate for the Coal Operations SASB Standard and that this matter is raised with the ISSB in our response to the consultation.
Construction Materials and Metals & Mining
14Supply Chain Management: This is a new disclosure topic added to both the Construction Materials and Metals & Mining Standards, noting that it was already included in the Iron & Steel Producers Standard. Paragraph BC98 in the Basis for Conclusions explains that stakeholder feedback, confirmed by additional desk research, found that entities in these industries ‘frequently source raw materials from upstream suppliers and face similar sustainability-related risks and opportunities’ to those in the Iron & Steel industry and disclosure of such would be useful information to users. This addition is the subject of Questions 7(e) and 9(e) in the Exposure Draft.
Iron & Steel Producers
15Labour Practices: This disclosure topic has been added, with Paragraph BC114 in the Basis for Conclusions stating that stakeholders suggested that entities in the industry ‘are exposed to operational disruptions resulting from labour disputes’. The proposed metrics and technical protocols for Labour Practices are based on the revised metrics and technical protocols in the Coal Operations and Metals & Mining SASB Standards. These proposed amendments across all three standards have been informed by the ISSB's research project on human capital. The Secretariat recommends that stakeholder outreach considers whether the addition is appropriate for Iron & Steel.
Oil & Gas – Exploration & Production
16Ecological Impacts: The proposed removal of this sentence could be seen to substantively change the meaning of the topic summary:
‘Depreciation in the future value of reserves may be mitigated by considering the proximity of reserves in or near protected areas as part of the decision-making process.’
There are no proposed additions or replacement text to the summary which would tie consideration of ecological impact to the valuation of the company or its assets in the way that this sentence does. The Secretariat recommends that this is discussed with the ISSB.
17Security, Human Rights & Rights of Indigenous People: this disclosure topic has been removed, with Paragraph BC83 in the Basis for Conclusions stating that research identified that there are 'very different and distinct risks and opportunities' related to security compared to rights. As such, a new disclosure topic on Operations in Conflict Areas now covers security-related information, and the Community Relations disclosure topic has been re-drafted to become Community Relations & Rights of Indigenous People. The term 'Human Rights' is no longer present within the amended standard. The same amendments have been proposed to the Metals & Mining Standard. The Secretariat recommends that the TAC puts this to the ISSB, and asks that they explain, and potentially reassess, these amendments in line with the stated objectives for the enhancement project.
Oil & Gas – Midstream
18Ecological Impacts: reference to jurisdictional demands for mitigation or remediation plans related to ecological impact have been updated, from stating that authorities 'may require' such plans, to reflect current legal and regulatory landscapes. The topic summary now states that jurisdictional legal and regulatory authorities 'are demanding' such plans. While this is a minor adjustment to reflect changes in the landscape, it should be noted that the proposed amendments to the following sentences state that early implementation of such plans is beneficial to entities in avoiding costs, whereas the Standard previously stated that regulatory compliance would pose a cost in itself. A new sentence reads: 'Integrating this detailed planning early in project development can help entities avoid significant delays and incremental operational, compliance and capital costs'. The draft proposes deleting a sentence reading: 'Together with regulatory compliance costs, these plans may require significant capital and operational expenditures.' The Secretariat would recommends that this is discussed with the ISSB, and relevant stakeholders during engagement.
19Water Management: There is no Water Management disclosure topic included within the Oil & Gas – Midstream Standard. It is the only industry standard within the Extractives & Minerals processing sector that does not include a Water Management disclosure topic, and the rationale for this decision is not clear from the Basis for Conclusions. The Secretariat would recommend requesting an explanation for this from the ISSB, and engaging with stakeholders to understand the suitability of this decision.
Metrics and associated protocols
20Paragraphs 21 to 41 in this paper consider the proposed amendments to specific metrics and their associated protocols in the Extractives standards. It highlights any metrics which pose areas of concern or uncertainty following a review by the Secretariat, as well as any metrics which are the subject of specific consultation questions in the Exposure Draft. To aid in developing a holistic understanding of the metric-level amendments, which are sometimes applied across the eight Extractives priority standards and even consequentially across 41 other standards (these are referred to as 'targeted amendments'), this analysis is presented by disclosure topic.
Greenhouse Gas Emissions
21Oil & Gas – Midstream: EM-MD-110a.3 is a new metric which requests ‘(1) Total Scope 1 methane emissions’. In Paragraph BC59 of the Basis for Conclusions, it is explained that this follows stakeholder feedback that an absolute measure of methane emissions in metric tonnes would provide the clearest indicator of entity risks. Within the technical protocol, entities are also requested to disclose whether they participate in methane management frameworks, such as the Oil and Gas Methane Partnership (OGMP) 2.0, which investors also expressed interest in through stakeholder engagement. The same metric has been added to Oil & Gas Exploration & Production: EM-EP-110a.4. However, only EM-MD-110a.3 is subject to a specific question in the Exposure Draft. Question 11(e) asks: ‘Do you agree with the proposed addition of metric EM-MD-110a.3 Total Scope 1 methane emissions? Why or why not? If not, what would you suggest instead and why?’ The Secretariat recommends asking stakeholders for their view on the proposed change.
22A similar metric has been added to Coal Operations: EM-CO-110a.3, which requests 'Total Scope 1 methane emissions', though the technical protocol does not require information relating to methane management framework membership. This is also the subject of a specific Exposure Draft question. Question 6(e) asks: ‘Do you agree with the proposed addition of metric EM-CO-110a.3 Total Scope 1 methane emissions? Why or why not? If not, what would you suggest instead and why?’ The Secretariat recommends asking stakeholders for their views on the scope emissions disclosure, and whether there is a need for the Coal Operations industry to disclose membership to methane management framework relevant to the Coal industry.
Energy Management
23Metals and Mining: EM-MM-130a.1 has been revised to remove disclosure of percentage grid electricity and percentage renewable electricity, and now proposes to require purchased electricity consumed, renewable electricity consumed from self-generation and direct contracts and also disclosure of natural gas consumed. Disclosure of total energy consumed remains as it was in the existing standard. Paragraph BC66 of the Basis for Conclusion, explains that the new requirements provide insights to investors on the reliability of energy sources, provides informative incremental insights (especially the disaggregation of renewable electricity) and aligns with GHG Protocol Scope 2 Guidance. The proposed amendment also improves interoperability with GRI 103: Energy 2025. The Secretariat recommends discussing further with stakeholders the decision usefulness of further disaggregation of renewable energy generation and consumption. Similar changes have been made to the Energy Management metrics in the Construction Materials, Iron & Steel Producers, and Processed Foods Standards.
Water Management
24Oil & Gas – Exploration & Production is subject to consultation question 10(e), 'Do you agree that the proposed amendments to the Water Management disclosure topic would provide useful information to primary users in a cost-effective manner for preparers?' While the question is levelled at a disclosure topic level, the key amendments proposed relate to metrics. The topic includes two new metrics, EM-EP-140a.5 (Total water discharged by (1) destination and (2) level of treatment) and EM-EP-140a.6 (water related risks, opportunities and strategies), which aim to improve the usefulness of information to investors based on stakeholder feedback, as detailed in Paragraphs BC70-71 in the Basis for Conclusions. Further edits are made to the metrics in this disclosure topic to support GRI alignment. These two revised metrics are also included in the Coal Operations, Metals & Mining, and Processed Foods Standards, and the water discharge metric is only being incorporated into the Oil & Gas - Refining & Marketing and Oil & Gas – Services Standards. The Secretariat recommends asking UK stakeholders to confirm their support for these proposed changes.
Ecological Impacts
25Oil & Gas Exploration & Production: EM-EP-160a.4; Metals & Mining EM-MM-160a.4 and Coal Operations:EM-CO-160a.4 are new metrics which request (1) Total spatial footprint of operations, (2) area disturbed and (3) area restored. Paragraph BC65 in the Basis for Conclusions notes that this is aligned to the core global disclosure indicators metric number C1.0 ‘Total spatial footprint’, and associated definitions in the TNFD recommendations. Based on stakeholder feedback, this metric was added as a decision-useful metric 'increasingly being used by entities in the Extractives & Minerals Processing sector that operate in environmentally-sensitive areas'. This addition to the Oil & Gas - Exploration & Production Standard is the subject of Question 10(f) in the Exposure Draft: 'Do you agree with the proposed addition of metric EM-EP-160a.4 [...] and with the content of that metric? Why or why not? If not, what do you recommend and why?'. There is, however, no specific question about this metric in the Metals & Mining and Coal Operations Standards, even though it is a new metric in both. The Secretariat recommends asking stakeholders for their views on the proposed change across all three industries.
Security, Human Rights & Rights of Indigenous People
26Oil & Gas – Exploration & Production: EM-EP-210a.3 is marked to be deleted, as part of the removed metric Security, Human Rights & Rights of Indigenous People (as discussed in Paragraph 17 of this paper). It requested disclosure of engagement processes and due diligence practices with respect to human rights, indigenous rights, and operation in areas of conflict. It is replaced in part by similar metrics; EM-EP-210b.4 in the Community Relations & Rights of Indigenous People disclosure topic, and EM-EP-210c.2 in the Operations in Conflict Areas disclosure topic. These refer to Indigenous Rights and operations in conflict areas respectively, but the reference to Human Rights in the original metric is not retained anywhere in the new Standard. Part 2 of the technical protocol in particular is lost, which requested that:
> 2The entity shall describe its due diligence practices and procedures with respect to upholding the principles covered in human rights frameworks, such as the: > > 1. International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work and the fundamental ILO conventions on freedom of association (No. 87), collective bargaining (No. 98), forced labour (No. 29 and No. 105), child labour (No. 138 and No. 182), fair wages (No. 100), and discrimination (No. 111); > 2. United Nations Guiding Principles on Business and Human Rights, specifically Human Rights Due Diligence (Principle 17a-c); and > 3. Voluntary Principles on Security and Human Rights.
27There is no explanation for the proposed removal of this metric and associated technical protocol in the Basis for Conclusions. Some of the information requested by EM-EP-210a.3 could be reported under the Community Relations & Rights of Indigenous People metric EM-EP-210b.1; processes used to manage risks and opportunities associated with community rights and interests. This is a broader metric which could be seen to incorporate wider consideration of Human Rights. However, there is no longer an explicit reference to Human Rights in the amended Standard.
28There is also Metals and Mining: EM-MM-210c.2, where the previous disclosure requirements on engagement process and due diligence practices with respect to human rights made specific reference to child labour as part of reporting on compliance with the International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work. In the revised standard, specific references to child labour have been removed. The Basis for Conclusions does not provide a rationale for this change.
29The Secretariat recommends explanations be sought from the ISSB, and that these issues be raised with stakeholders for comment during the TAC's stakeholder engagement.
Workforce Health and Safety
30Changes are being proposed to the metric which requests (1) Total recordable incident rate (TRIR), (2) fatality rate, (3) near miss frequency rate (NMFR), and (4) average hours of health, safety, and emergency response training for (a) direct employees and (b) contract employees across six of the standards in the Extractives & Minerals Processing sector, as referred to in Paragraphs BC92-94 of the Basis for Conclusions. This is also applied as targeted amendments to 13 other standards. In relation specifically to Construction Materials: EM-CM-320a.1, it is not clear why a new sub-metric requesting the number of fatalities has been added, when there is no ‘fatality rate’ sub-metric. There does not seem to be an explanation in the Basis for Conclusions and the targeted amendments section of the Exposure Draft notes that the ISSB is not proposing to add new sub-metrics to existing metrics. The Secretariat recommends asking the ISSB for their reasons and stakeholders for their views on the proposed change.
Critical Incident Risk Management
31Oil & Gas - Exploration & Production EM-EP-540a.2 and Oil & Gas – Services EM-SV-540a.1 contain disclosure topics and metrics relating to critical incident risk management. By way of context, in contrast to the workforce health and safety disclosure topic which focuses on employees/non-employee workers, this topic and its associated metrics are wider, and extends to local communities, human health more generally, and the environment.
32Metrics have been revised with a view to reporters disclosing a description of management systems used to identify and mitigate 'low probability, serious accidents'. This replaces what was formerly 'catastrophic and tail-end risks'. The ISSB has not explained its rationale for this change in its Basis for Conclusions. Following Secretariat engagement with the ISSB, it is understood that the intention was not to narrow the focus of this metric, but rather to remove jargon to enhance clarity. However, this revision may have an unintended consequence of being both interpreted and applied in a way that narrows the metric's scope by potentially excluding high probability, high impact accidents and emergencies – these appear to have been included within the scope of the original metric. Disclosure of high probability, high impact accidents and emergencies may be seen to be even more material to primary users when assessing risks under IFRS S1 and IFRS S2. The Secretariat recommends that, in the light of the ISSB’s drafting intentions, this may be raised in the comment letter with a view to more clearly reflecting the drafting intent behind it.
Waste & Hazardous Materials Management
33In Metal & Mining: EM-MM-150a.7, while the requirement to disclose the volume of hazardous waste generated is proposed to remain as in the existing standard, there is now a proposed new requirement for entities that are subject to more than one jurisdictional law or regulation that defines hazardous waste, for such entities to disclose whether and how variations between these frameworks affect the reported data for hazardous waste generated, hazardous waste recycled and number of incidents associated with hazardous materials and waste management. The Secretariat recommends discussing this requirement further with stakeholders, particularly those with multi-jurisdictional operations, to understand whether there is complexity in determining the disclosure, and the decision usefulness thereof.
Climate Resilience
34Coal Operations: EM-CO-420a.1. The metric on coal reserve sensitivities, which previously required an entity to disclose how future scenarios might affect whether reserves are proved or probable, is proposed for amendment. Entities will now be required to use climate-related scenario analysis to assess how transition risk scenarios, reflecting changes in coal market demand and prices linked to greenhouse gas emissions, could affect the quantity of proved and probable reserves that can be produced before reaching their economic limit.
35The revised technical protocols note that this disclosure may be included as part of paragraph 22 of the IFRS S2 disclosures, which requires disclosure of the resilience of an entity's strategy and business model to climate-related changes, developments and uncertainties, taking into account identified climate-related risks and opportunities.
36Paragraph BC109 of the Basis for Conclusions explains that this change was made to align the disclosure more closely with IFRS S2 terminology. The Secretariat recommends discussion of this revision with stakeholders to identify any concerns.
Management of the Legal and Regulatory Environment
37The following standards each contain a disclosure topic entitled Management of the Legal and Regulatory Environment, together with identical metrics and technical protocols. The disclosure metric in each case is listed as Description of entity positions related to government regulations or policy proposals affecting the industry. It can be found in the following standards:
- Oil & Gas – Exploration & Production: EM-EP-530a.1
- Oil & Gas - Services: EM-SV-530a.1
- Oil & Gas - Refining & Marketing: EM-RM-530a.1
38However, neither the existing Standards nor the ISSB's Exposure Draft capture metrics from litigation risks, with the focus of the current draft on reputational risk from policy influencing activities. Litigation risks are a well-established risk, especially in the context of TCFD, and can have ongoing material implications for entities in these sectors. For example:
- in 2015, the resolution of civil claims against the British multinational oil and gas company BP led to a settlement of over $20 billion stemming from the Deepwater Horizon Oil Spill;
- research shows for example that climate litigation is increasingly common, with over 2,967 cases filed to date, globally by the end of 2024 and the UK ranking third in terms of filings; and
- there is growing evidence of a causal link between climate litigation and stock price movements, with the largest stock market responses observed for cases filed against carbon majors, reinforcing the investor relevance of legal and regulatory risk disclosures.
39The Secretariat recommends that stakeholders are asked about the following during outreach:
- The substantive merits of including actual/potential costs from litigation or supervisory enforcement actions related to environmental or social matters in a disclosure topic entitled 'Management of the Legal and Regulatory Environment' with consideration of their connectivity to the financial statements.
- Whether they feel the Exposure Drafts are consistent in their approach to this topic. For example, legal expenses associated with price fixing or price manipulation are already included through EM-RM-520a.1, (Oil & Gas Refining & Marketing) and so too are fines and other expenses incurred as a result of non-compliance with industry/regulatory labelling or marketing codes are included as per FB-PF-270a.3 (Processed Foods technical protocol, Paragraph 3).
- The value of extending this disclosure topic and metric to the other extractive industries, where information about legal/regulatory risks is similarly material.
40In terms of changes made to the technical protocol for this topic, the ISSB appears to have narrowed the focus of disclosure to reputational risks from policy influencing activities through:
- deleting the requirement to ‘identify risks and opportunities related to legislation, regulation and rule-making’ within the technical protocol (existing Paragraph 1); and
- deleting the sentence 'Relevant risks to an entity may include risk of increased compliance costs, risk of policy reversal, risk of loss of financial incentives...risk to reputation...' within the technical protocol (existing Paragraph 2).
41Whilst not explained in the Basis for Conclusions, we understand that the ISSB's intention is to both align technical protocols with the intent of the disclosure topic (on reputational risks), and to avoid duplication with IFRS 2 on climate-related transition risks. The Secretariat recommends that stakeholders are also asked about whether the ISSB's approach to this is consistent with its approach to duplication. For example, Scope 1 requirements across the various standards may be seen to essentially restate IFRS S2 requirements. This is also the case with requirements to identify risks and opportunities related to social matters in other standards. Moreover, certain parts of the Standards do require the costs of compliance to be disclosed, for example in the case of product specifications and fuel blending (Oil & Gas Refining & Marketing: EM-RM-410a.3).
Other industry-level comments
Climate physical risks
42Climate physical risks refer to those risks and losses arising from the adverse physical effects of climate change. Drivers of such risks include sea level rise, flooding, extreme rainfall, wildfires, droughts, heatwaves, cyclones/hurricanes/typhoons, temperature variability, and water stress (the latter is addressed under the Water Management topic). These risks are captured in IFRS S2, including through cross-industry metrics that require disclosure of the amount and percentage of assets or business activities exposed to physical risks.
43Preliminary research suggests that major oil refineries in the UK and elsewhere may often be located near to coastlines. This may be to, for example, facilitate access to cooling water, facilitate import / export efficiency, lower transport costs, and reduce inland pipeline spills. This coastal siting may increase refineries' exposure to acute and chronic physical risks, such as flooding and sea level rise. However, this standard does not appear to engage with these physical risks.
44The Secretariat recommends that stakeholders, including insurers who typically insure against such risks, could be asked about whether physical climate risks (outside water stress) could be better reflected in this standard in an industry-specific way. Given growing investor awareness and interest in climate physical risks, they could also be asked about the extent to which acute and chronic climate physical risks (outside water stress, which receives coverage) are more generally adequately reflected across the extractives industry, and for any linked suggestions on metrics. In contrast to transition risk, these risks tend to receive limited consideration.
Just Transition Risk
45The Oil & Gas - Refining & Marketing standard currently includes a topic and metrics on workforce health and safety but does not appear to require disclosure of just transition risk metrics. Such risks can arise from, for example, the costs of redeployment programmes, severance payments, legal disputes, reputational damage, loss of Government subsidies/permits, and other operational disruptions arising from strikes.
46In a context where 148 countries, and 1145 publicly listed companies now have net zero targets in place, just transition risks may start to become more important as oil and gas service providers navigate the shift to low-carbon operations. The recent termination of oil refining at the Grangemouth oil refinery in Scotland is a reminder of the salience of this topic to the UK.
47The ISSB notes, for context to its approach, that just transition is covered in its educational material, however this also seems to be the case with certain nature risks, such as water stress, which are nonetheless captured in this Standard. The Secretariat recommends that stakeholders are consulted in the context of the TAC Secretariat's outreach, on whether this Standard should be expanded to include industry topic/metrics on just transition risks, with a view also to facilitating a more consistent approach with nature, and better aligning with IFRS S2, in an incremental way.
Industry Standards – Food & Beverage sector: Processed Foods Standard
Sector level
48In the Food & Beverage sector there are eight industry standards:
- Agricultural Products
- Alcoholic Beverages
- Food Retailers & Distributors
- Meat, Poultry & Dairy
- Non-Alcoholic Beverages
- Processed Foods
- Restaurants
- Tobacco
Industry description
49Paragraph BC134 in the Basis for Conclusions explains that the industry description for Processed Foods has been expanded to include activities that supply other businesses such as restaurants, cafeterias, hotels and airlines. This is not seen a substantive amendment.
Disclosure topics and metrics
50Under the proposed amendments, the Processed Food Standard will have the following disclosure topics:
| Disclosure Topic | metrics in current Standard | amended metrics | new metrics | deleted metrics | metrics proposed in Exposure Draft | Level of revision |
|---|---|---|---|---|---|---|
| Energy management | 1 | 1 | - | - | 1 | Low |
| Water management | 3 | 2 | 1 | 1 | 3 | Medium |
| Food Safety | 4 | 1 | 2 | 3 | 3 | High |
| Health & Nutrition | 2 | - | 3 | 2 | 3 | High |
| Product Labelling & Marketing | 4 | 2 | 2 | 2 | 4 | High |
| Packaging Lifecycle Management | 2 | 2 | - | 2 | - | Low |
| Product Innovation [new] | - | - | 1 | - | 1 | Medium |
| Environmental & Social Impacts of Ingredient Supply Chain* | 2 | - | - | 2 | - | - |
| Environmental Supply Chain Management | - | - | 3 | - | 3 | Medium |
| Social Supply Chain Management | - | - | 3 | - | 3 | Medium |
| Ingredient Sourcing | 2 | - | - | 2 | - | - |
| Activity metrics | 2 | 1 | - | - | 2 | Low |
| Total | 22 | 9 | 15 | 12 | 25 |
*Note that this topic disclosure has been replaced by the two separate supply chain topics and incorporates ingredient sourcing.
51The following comments are focused on those disclosure topics where there are medium or high levels of revision.
General observations
52It would have been more efficient and insightful to have been able to review the amendments to the Processed Foods Standard along with revisions to other standards in the Food & Beverage Sector. Notwithstanding that there are already nine disclosure topics in the proposed revised Processed Foods Standard, a review of the disclosure topics in the other seven SASB standards in the sector identifies other topics that may be relevant to Processed Foods, and it is recommended that these are raised with the ISSB for comment:
- Air emissions from refrigeration in the Food Retailers and Distributors Standard: the industry includes production of ready-to-eat meals and frozen foods which require refrigeration and therefore it may be appropriate to have Processed Foods companies to report on this topic.
- Food waste management in the Food Retailers and Distributors Standard: food processing companies also generate significant levels of food waste and this topic may also be relevant.
53A significant number of metrics have been deleted (12) and 15 new metrics introduced, with 9 out of 22 (40%) of the existing metrics being amended which has resulted in an overall significant change to the disclosure metrics in this standard. A review of each of the proposed disclosure topics and associated metrics can be found below.
Energy management and water management
54The topic summary for energy management is revised to reflect (a) linkage of energy usage to sustainability related impacts, and (b) how energy efficiency and energy mix can affect reliability and volatility of costs. A few clarifications have been made to the water management topic summary. These changes appear appropriate and these topics are relevant to the Processed Foods industry.
55The associated metrics for energy and water management have been revised in line with amendments made to the same metrics in the standards in the Extractive sector as detailed in Paragraphs 23 and 24 of this paper. No further comment is provided in respect of Processed Foods, although of course the Secretariat will consider any matters arising from its stakeholder engagement activities.
Food safety
56There are only minor clarifications to the topic summary, but significant amendments to the four quantitative metrics in the existing standard:
- food safety audit non-conformance rates and corrective action rates;
- ingredients sourced from recognised food safety certified suppliers;
- food safety violations; and
- numbers of recalls
which have been replaced by:
- a quantitative metric FB-PF-250a.5: Percentage of production volume from sites certified to internationally recognised food safety standards for (1) own operations and (2) co-packing operations;
- a qualitative metric FB-PF-250a.6: Processes, controls and procedures to ensure food safety throughout the value chain; and
- a quantitative metric FB-PF-250a.4: which has been amended to focus on major recalls, not the total number of all recalls.
57Paragraph BC136-137 of the Basis for Conclusions explains that:
- FB-PF-250a.5 addresses stakeholder feedback to provide disaggregated data on an entity’s certification levels at direct and co-packing operations, which is expected to be less burdensome to produce.
- Stakeholders had informed the ISSB that the descriptive metric FB-PF-250a.6 is likely to give more decision-useful information, and improves interoperability with GRI 13: Agriculture, Aquaculture and Fishing Sectors 2022.
58The Secretariat does not have any concerns over these amendments, but recommends stakeholder input is sought.
Health & Nutrition
59There is only one revision to the topic summary, to emphasise that some jurisdictions now require mandatory warning labels for foods considered to be unhealthy. To provide related information for users to measure this a new quantitative metric FB-PF-260a.5 is proposed. Paragraph BC139(c) of the Basis for Conclusions explains that this would indicate an entity’s exposure to such labelling and thereby provide information about potential risks and opportunities.
60A current metric that measures revenue from products labelled or marketed as having health or nutrition attributes, is to be replaced with a more robust metric FB-PF-260a.4 that measures revenue from products classified as healthy by a recognised nutrient profile model. Such nutrient profile models are becoming internationally accepted and are being used to identify junk food for an upcoming advertising ban in the UK to protect children by prohibiting such foods being advertised on television between specified hours or online at any time. The previous metric was open to inconsistent approaches in defining health and nutrient attributes, impairing comparability.
61The Secretariat will seek to gather feedback on these changes, as they are quantitative in nature and may therefore potentially increase data collection activities.
Product Labelling & Marketing
62The topic summary has been revised to emphasise increasing regulation related to marketing practices especially those that target children. Paragraph BC140-141 of the Basis for Conclusion explains that a new quantitative metric FB-PF-270a.6 is proposed that would indicate an entity’s exposure to such regulations that limit advertising of unhealthy foods to children and thereby provide information about potential risks from fines and penalties. This would replace a metric that currently measures ‘advertising impressions’ about which the ISSB has had feedback that it is unfeasible to report reliably, particularly in online advertising.
63Two other quantitative metrics that measured revenue from GMO products, and monetary losses related to legal proceedings associated with labelling and marketing practices, have been deleted as they were not considered to provide useful information. A third quantitative metric FB-PF270a.3 is revised so that the number of incidents of non-compliance is replaced by a description of the incidents, including costs incurred.
64Finally, a new metric FB-PF-270a.5 is proposed that would require disclosure of the entity’s marketing policy and related governance and oversight processes. This could be seen as overlapping with disclosure about governance and strategy related disclosure requirements in IFRS S1. It is assumed that if the entity had identified a risk related to product labelling and marketing, it would have disclosed this information already.
65Overall, there is a significant level of revisions in this disclosure topic, but the removal of some challenging quantitative measures may reduce burden for reporting entities.
Product innovation
66This is a new disclosure topic focused on how entities use innovation in food products to develop and sell products with social and environmental benefits. It was added based on stakeholder feedback and research from a SASB Standards Board project that ran between 2019 and 2022 that suggested it would address changing consumer market preferences and entities who could produce more sustainable products would be better positioned to access these markets. The new qualitative metrics FB-PF-410b.1 requires entities to disclose how they use innovation in food products to address sustainability-related risks and opportunities.
Supply chain management and ingredient sourcing
67One overall disclosure topic on supply chain has been replaced by separate environmental and social focused topics. The environmental topic will focus on risks and opportunities arising from environmental impacts and dependencies when sourcing ingredients. The social topic to focus on how an entity screens, monitors and engages with suppliers on social topics such as labour practices, human rights, ethics, corruption and impacts on local communities or Indigenous Peoples.
68Each disclosure topic has what seems like extensive disclosure requirements – both quantitative and qualitative. The Secretariat would need to perform more analysis in this area and gather stakeholder input given the wide range of environmental and social topics being addressed. It is proposed that the Secretariat considers any comments raised by stakeholders in these areas, but does not perform any further analysis, research or review of reporting in these topic areas.
All Questions for the TAC
- Does the TAC have any views on any of the updated industry descriptions in the Extractives & Minerals Processing Sector, including whether they more clearly describe the activities of entities in the industry, and the potential areas for engagement with stakeholders and other research?
- Does the TAC have any views on the noted proposed amendments at a disclosure topic-level in the Extractives & Minerals Processing Sector, including whether the disclosure topics for each industry describe the sustainability-related risks and opportunities that could reasonably be expected to affect the prospects of UK entities in the industry?
- Does the TAC agree to put instances of substantive change within the disclosure topic summaries to the ISSB for explanation in line with the stated objectives of the enhancement project?
- Does the TAC agree with the recommended actions suggested regarding the noted proposed amendments at metric-level in the Extractives & Minerals Processing Sector, and does it have any other comments on these?
- Does the TAC agree with the recommended actions suggested regarding the other industry-level comments in the Extractives & Minerals Processing Sector, and does it have any other comments on these?
- Does the TAC have any views on any of the amendments in the Processed Food Standard relating to the revisions of disclosure topics including whether the disclosure topics describe the sustainability-related risks and opportunities that could reasonably be expected to affect the prospects of UK entities in this industry?
- Does the TAC agree that the Secretariat should raise a question with the ISSB about why the two disclosure topics identified in paragraph 52 from other Food & Beverage Sector standards are not included in the Processed Food Standard?
- Does the TAC have any views on any of the amendments in the Processed Food Standard relating to the revisions of metrics?
- Does the TAC agree with the recommended actions suggested regarding the noted proposed amendments at metric-level in the Processed Food Standard, and does it have any other comments on these?
- Does the TAC agree with the recommended actions that the Secretariat does not invest more time assessing the supply chain management topics and related metrics given their considerable breadth?
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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