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FRC’s Response to Exposure Draft SASB/ED/2025/1: Proposed Amendments to the SASB Standards
Emmanuel Faber ISSB Chair IFRS Foundation Opernplatz 14 60313 Frankfurt am Main Germany
25 November 2025
Exposure Draft SASB/ED/2025/1: Proposed Amendments to the SASB Standards
Dear Emmanuel,
The Financial Reporting Council (FRC) welcomes the opportunity to provide comments on the International Sustainability Standards Board (ISSB)'s Exposure Draft SASB/ED/2025/1: Proposed Amendments to the SASB Standards (the SASB Exposure Draft).
This letter sets out our key points for consideration.
This letter should be read alongside the accompanying FRC letter Exposure Draft ISSB/ED/2025/2: Proposed Amendments to the Industry-based Guidance on Implementing IFRS S2 (IFRS S2 Industry-based Guidance), which presents the FRC's response to the consultation on the consequential amendments to the IFRS S2 Industry-based Guidance. Our comments on the SASB Standards in this letter also apply to the IFRS S2 Industry-based Guidance where relevant.
The purpose of the FRC is to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work. The comments in this letter are based on the FRC's extensive experience in standard-setting, including in issuing accounting, audit, assurance and actuarial standards, in addition to setting the UK Corporate Governance Code and Stewardship Code.
The FRC is responsible for providing the Secretariat for the UK Sustainability Disclosure Technical Advisory Committee (TAC). The TAC is an independent expert advisory body, established by the UK Government and formed of a chair and members from a range of relevant professional backgrounds. The TAC provides recommendations to the Secretary of State for the Department for Business and Trade for endorsing the IFRS Sustainability Disclosure Standards for use in the UK.
The FRC is also responsible for developing financial reporting standards applicable in the UK and Republic of Ireland, developing the Guidance on the Strategic Report and overseeing the UK Accounting Standards Endorsement Board (UKEB)'s adherence to due process.
Our response reflects this range of interests in and experience of the activities of the IFRS Foundation. Our response should be read alongside the TAC's response to the SASB Exposure Draft, which has been developed following the discussions of TAC members in public meetings. It takes into account the views of UK stakeholders. The FRC, in its role as the Secretariat for the TAC, carried out stakeholder outreach and research activities, drafted meeting papers and minutes; and led the drafting of the TAC's response to the SASB Exposure Draft.
The value of industry-based sustainability disclosures
UK stakeholders generally welcomed sources of guidance, including the SASB Standards1. The FRC believes that the SASB Standards could play an important role in supporting the implementation of IFRS S1 and IFRS S2. The SASB Standards could help entities: (a) consider which sustainability-related risks and opportunities may be relevant to their industry; and (b) identify and disclose material information about sustainability-related risks and opportunities. This may be especially important in respect of issues for which topic-specific IFRS Sustainability Disclosure Standards have not (yet) been developed.
Our stakeholder outreach and research activities suggest that there are some concerns about the current SASB Standards, however, there is general support for an ISSB project to enhance them – albeit most views were from entities currently voluntarily using the SASB Standards, rather than those yet to use them. Stakeholders expressed concerns about the prescriptive nature of the current SASB Standards, viewing them as a potentially onerous reporting burden and believing they lack the materiality and judgement principles in the IFRS Sustainability Disclosure Standards. Most stakeholders recommended a shift towards a principles-based and proportionate approach consistent with IFRS S1 and IFRS S2. Preparers cautioned that an overly prescriptive approach may discourage disclosure, particularly in cases where entities do not possess the necessary data or rely on alternative measurement methodologies. They emphasised the need for industry standards that accommodate varying levels of data availability and reporting maturity. The FRC supports these views and believes that preparers should be transparent about their approach so that users do not assume a different level of data availability and reporting maturity.
The FRC therefore believes that the ISSB's project to enhance the SASB Standards is important, providing the ISSB with the opportunity to ensure that its industry-based sustainability disclosures align with and complement the IFRS Sustainability Disclosure Standards, as well as keeping pace with changes. The FRC encourages the ISSB to be ambitious with its proposals and cautions that being overly attached to the status quo could result in stakeholder disengagement. The FRC recommends:
- that, as a priority, the ISSB communicates the future architecture of the IFRS Sustainability Disclosure Standards, including how the SASB Standards fit into that architecture. The future architecture should prioritise the continuance of the global baseline of sustainability disclosures for capital markets established by IFRS S1 and IFRS S2. In particular, the FRC would value greater clarity about whether the SASB Standards are intended to be a foundation or substitute for future topic-specific IFRS Sustainability Disclosure Standards.
- that the ISSB:
- considers restructuring the SASB Standards to distinguish between core disclosures, industry-agnostic disclosures and industry-specific disclosures;
- considers moving core and industry-agnostic disclosures out of the SASB Standards and into IFRS S1, IFRS S2 and any further topic-specific IFRS Sustainability Disclosure Standards. The SASB Standards would then focus only on industry-specific disclosures; and
- reconsiders the name of the SASB Standards and suggests that they are renamed the 'ISSB Guidance on the Industry-based Sustainability Disclosures'.
- that the ISSB emphasises a principles-based approach so that the SASB Standards do not have to be adapted so much to keep pace with changes. In particular, entities should be encouraged not to disclose information otherwise suggested by a SASB Standard if the information is not material.
- that the ISSB considers adopting a climate-first thematic approach by incorporating core and industry-agnostic climate-related disclosures from the SASB Standards into IFRS S2 first, making any enhancements to industry-specific climate-related disclosures in the SASB Standards at the same time; and then enhancing the content related to other topics in the SASB Standards, alongside developing further topic-specific IFRS Sustainability Disclosure Standards.
- that the IFRS Foundation applies the level of due process to the SASB Standards that is commensurate to the role they will play in the future architecture of the IFRS Sustainability Disclosure Standards.
- that there are mappings from SICS to other industry classification systems to support reconciliations between industry classification systems.
In making these recommendations, we stress the importance of ensuring that an effective consultation process is conducted on the SASB Standards, and other materials that the ISSB might develop. We stand ready to discuss and share further comments with the ISSB about our experience of its consultation process, with a view to improving the experience for stakeholders in the future. One example is encouraging the ISSB to issue proposed amendments to all SASB Standards in a sector together.
The FRC's response has been developed considering the UK context and the UK Government's recent consultation on draft UK Sustainability Reporting Standards (UK SRS). The IFRS Sustainability Disclosure Standards require entities to refer to and consider the applicability of the SASB Standards. However, the UK Government has consulted on proposals to amend 'shall' to 'may' in the draft UK SRS. Our stakeholder outreach and research activities suggest that there continues to be confusion about the status of the SASB Standards in the ISSB's Standards. Some preparers considered the word 'shall' to be prescriptive and having the potential to cause reporting burdens and assurance challenges. Such preparers note that the UK Government's proposed change enables entities to apply judgement in determining the extent of use of the SASB Standards for their reporting.
The FRC's response therefore focuses on the role of the SASB Standards as industry-based sustainability disclosures that support the implementation of IFRS S1 and IFRS S2.
Further information on the points we have made is in the TAC's response to the SASB Exposure Draft, which is accompanied by appendices containing its general points in relation to the SASB Exposure Draft and its detailed responses to the specific questions posed by the ISSB. The stakeholder outreach activities carried out by the FRC, in its role as the Secretariat for the TAC, included a 'snapshot' survey, a roundtable discussion and one-to-one meetings. The TAC's response to the SASB Exposure Draft is also accompanied by an appendix summarising the views provided by stakeholders in one-to-one meetings for the ISSB's information.
If you have any queries or would like to discuss our comments in more detail, please do not hesitate to contact me or Sarah-Jayne Dominic at [email protected].
Yours sincerely
Mark Babington Executive Director, Regulatory Standards Direct telephone line: 020 7492 2323 Email: [email protected]
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Please refer to the TAC's December 2024 report UK Endorsement of IFRS S1 and IFRS S2. ↩