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FRC’s Response to Exposure Draft SASB/ED/2026/1: Proposed Amendments to the SASB Standards and IFRS S2 Industry-based Guidance
Emmanuel Faber ISSB Chair IFRS Foundation Opernplatz 14 60313 Frankfurt am Main Germany
22 July 2026
Exposure Draft SASB/ED/2026/1: Proposed Amendments to the SASB Standards and IFRS S2 Industry-based Guidance
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/2026/1: Proposed Amendments to the SASB Standards and IFRS S2 Industry-based Guidance. Our comments on the SASB Standards in this letter also apply to the IFRS S2 Industry-based Guidance when 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 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 SASB/ED/2026/1, which has been developed following discussions of TAC members in public meetings. It takes into account the views of UK stakeholders when relevant. 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 SASB/ED/2026/1.
Overall position
The FRC continues to reiterate the importance of the points it made in its November 2025 response to the ISSB's July 2025: Exposure Draft of Proposed Amendments to the SASB Standards (SASB/ED/2025/1) (its November 2025 response), and further develops its points in relation to the:
- current architecture of the IFRS materials and how the SASB Standards fit into that architecture;
- overall strategy for enhancing the SASB Standards;
- approach to the ISSB's project to enhance the SASB Standards; and
- proposed amendments related to nature.
Following the submission of the FRC's November 2025 response, additional stakeholder outreach and research activities found that UK preparers had a number of concerns about the SASB Standards. These concerns included confusion about the status of the SASB Standards in the IFRS materials and concerns about the relationship between the SASB Standards and IFRS Sustainability Disclosure Standards. For example, some raised examples where the SASB Standards do not necessarily connect to sustainability-related risks and opportunities which could have current and anticipated financial effects on an entity's prospects.
The FRC strongly suggests that the ISSB pauses its ongoing review of standards for specific industries and reconsiders its approach to amending the SASB Standards using the insights drawn from Phase 1 of the ISSB's project covering twelve priority industries. The ISSB's approach could be reconsidered in light of stakeholder feedback received, as well as other developments, including the ISSB's tentative decision to issue further guidance materials in the form of a Practice Statement for nature-related disclosures.
Current architecture of the IFRS materials and how the SASB Standards fit into that architecture
The FRC agrees that the primary purpose for the SASB Standards should be as guidance to complement IFRS Sustainability Disclosure Standards. However, there is a tension between the roles of the SASB Standards in complementing IFRS Sustainability Disclosure Standards and as a standalone resource. It may be challenging for one set of materials to fulfil both roles effectively.
The FRC believes that the challenges for preparers applying the SASB Standards as well as IFRS Sustainability Disclosure Standards include the:
- unclear status of the SASB Standards in the IFRS materials;
- prescriptive nature of the SASB Standards, including unclear materiality principles;
- duplication between the SASB Standards and IFRS Sustainability Disclosure Standards; and
- inconsistency in and between the SASB Standards.
The FRC recommends that the ISSB includes in each SASB Standard a clarifying statement, either in the introductory provisions or as an application note. The statement would clarify that, for preparers applying the SASB Standards as well as IFRS Sustainability Disclosure Standards, the conceptual foundations and principles in IFRS Sustainability Disclosure Standards, including the materiality principles and proportionality mechanisms (such as the concept of 'all reasonable and supportable information that is available to the entity at the reporting date without undue cost or effort'), apply in the same way to the SASB Standards as they do to IFRS Sustainability Disclosure Standards.
The FRC also strongly recommends that the ISSB develops its strategy for enhancing the SASB Standards to include solutions to address the problems with the current architecture of the IFRS materials and how the SASB Standards fit into that architecture. The forthcoming agenda consultation provides an opportunity for the ISSB to consult on its proposed strategy in relation to the SASB Standards (amongst other things) and the implications for its work plan.
Strategy for enhancing the SASB Standards
The FRC recommends that the ISSB's strategy for enhancing the SASB Standards prioritises simplification, so that the SASB Standards are straightforward for preparers to apply and it is easy for users to understand their output. The FRC proposes that the ISSB simplifies the SASB Standards by applying a financial materiality test to every metric under review.
A strategy for enhancing the SASB Standards could also include:
- restructuring the SASB Standards;
- emphasising principles, not rules; and
- renaming the SASB Standards to clarify their role in providing industry-based disclosure guidance.
The FRC strongly recommends that the ISSB restructures the SASB Standards to distinguish between 'general' disclosures, 'topic-specific industry-agnostic' disclosures and 'industry-specific' disclosures.
Users of the ISSB's standards would benefit from the ISSB emphasising a principles-based approach, rather than rules, so that the SASB Standards do not have to be frequently updated to keep pace with changes. A number of preparers commented that they expected that their disclosures would evolve considerably over the next few years. There is a risk that the number of industry-specific disclosures in the SASB Standards is more than is necessary for the global baseline, diluting focus on the implementation of IFRS S1 and IFRS S2 and on the provision of decision-useful information. There may also be trade-offs between the quality and quantity of disclosures and between the resources devoted to managing risks and the resources devoted to reporting risks. There is a case for allowing practices in relation to industry-specific disclosures to emerge naturally first, guided by principles and driven by the market, and then for standardisation to follow once practices are better developed and have begun to converge. The FRC agrees that the ultimate objective over time is to have consistency in disclosures. Renaming the SASB Standards as 'ISSB Guidance on the Industry-based Sustainability Disclosures', would also bring useful clarity.
Approach to the ISSB's project to enhance the SASB Standards
The FRC recommends that the ISSB consider adopting a climate-first thematic approach to its project to enhance the SASB Standards, rather than the current prioritisation by industry. The industry-based approach dues not currently facilitate bringing together proposed amendments to all relevant SASB Standards applicable to a sector.
For example, the ISSB has not so far considered all industries in the Food & Beverage sector. We believe that the ISSB should only issue the three updated SASB Standards within that sector on a provisional basis. The Standards should be finalised when all eight of the SASB Standards applicable to the sector have been updated.
Proposed amendments related to nature
The FRC believes that the ISSB should not conclude on nature-related disclosure requirements based on its consultations on the SASB Standards because:
- the consultation questions are industry-specific and do not focus on the ISSB's overall strategy in relation to nature-related disclosures;
- the respondents to these consultations will most likely be stakeholders who are currently using the SASB Standards, and such stakeholders will not necessarily be experts on nature-related disclosures; and
- while disclosure topics and metrics are likely to provide users with some decision-useful information about an entity's nature-related risks and opportunities, there is no evidence that the SASB Standards provide a global baseline of nature-related disclosures for capital markets.
Other points
The FRC recommends that the ISSB reconsiders the way in which it targets stakeholders for any future phases of this project. The FRC notes that this consultation seems most likely to elicit feedback from stakeholders who are already familiar with the SASB Standards. The ISSB could target stakeholders who are not familiar with the SASB Standards by including materials about the historical reasoning for the inclusion or exclusion of the disclosure topics and metrics.
Responses to the industry-specific questions
The FRC does not endorse the current relationship between the SASB Standards and IFRS Sustainability Disclosure Standards or the ISSB's proposed approach to amending the SASB Standards. However, the FRC broadly supports the proposed amendments to the three SASB Standards in SASB/ED/2026/1. The amendments represent a positive step towards improved international applicability and interoperability and better reflect the diverse business models of entities in the Agricultural Products, Meat, Poultry & Dairy, and Electric Utilities & Power Generators industries. While broadly supporting the Exposure Draft, the FRC recommends that further improvements be made before these Standards are finalised to ensure that they provide primary users with decision-useful information. Specifically, across the three SASB Standards under consultation, the FRC identifies limitations in the proposed industry descriptions, disclosure topics, metrics, technical protocols and proportionality mechanisms that may create uncertainty in application, leave relevant sustainability-related risks and opportunities insufficiently addressed and reduce the comparability and decision-usefulness of disclosures across different business models and jurisdictions.
Despite the FRC's efforts to engage a wide range of primary users, only one participated and provided high-level comments. The primary user broadly supported the SASB Standards, emphasising the importance of industry-specific disclosures, but did not provide detailed views on the proposed amendments to the three SASB Standards in SASB/ED/2026/1. It is therefore difficult to conclude on the extent to which the metrics in the SASB Standards provide decision-useful information to primary users.
Further information on the points we have made is in the TAC's response to SASB/ED/2026/1, which is accompanied by an appendix containing detailed responses to the specific questions posed by the ISSB.
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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