The International Sustainability Standards Board (ISSB) has launched a consultation to gather feedback on a proposed methodology for enhancing the international applicability of the legacy Sustainability Accounting Standards Board’s (SASB) standards.

Former SASB chair Jeff Hales said: “Through this project, we hope to make it easier for companies to apply the SASB standards regardless of where they operate and to help companies applying IFRS S1 produce comparable and decision-useful disclosures.”

The proposed five-step methodology at the centre of the consultation process is set out in paragraph 9 of the board’s exposure draft.

It follows a cascade-type approach that starts by removing jurisdiction-specific references from SASB standards and directing users to equivalent requirements more relevant to a global audience.

Where none exist, the methodology contains a hierarchy of alternatives such as substituting descriptive words to elicit a comparable disclosure as an alternative.

The exposure draft does not solicit opinions on line-by-line changes to the standards, noting that the “methodology focuses on procedural revisions and avoids substantive amendments to the SASB standards metrics’ original content”.

Speaking during the ISSB’s April meeting round, vice chair Sue Lloyd said the consultation was “about the methodology” and not about whether people “agree or disagree with the particular disclosures set out in the balance of the SASB standards”.

ISSB staff estimate that around 20% of SASB metrics refer to specific jurisdictional laws and regulations.

The SASB standards represent an important source of guidance for companies applying IFRS S-1, General Requirements for Disclosure of Sustainability-related Financial Information.

They complement the standard by guiding companies through the process of identifying sustainability-related risks, opportunities, and disclosures beyond climate considerations.

The SASB standards had already gained significant marketplace traction ahead of the consolidation of the SASB into the IFRS Foundation through a merger with its parent body, the Value Reporting Foundation, in July 2021.

More than 2,700 companies across 70 jurisdictions worldwide now apply the disclosures, including 72% of the S&P Global 1200 Index.

The ISSB aims to incorporate the feedback received from stakeholders and revise the metrics before the implementation of IFRS S1 in January 2024.

The proposals in the exposure draft do not apply to the ISSB’s separate climate change reporting standard, IFRS S-2.

Although that standard also makes references to the SASB literature, the board has opted to update the SASB metrics on a fast track in readiness for entities applying the standard from 1 January next year.

The origins of the five-step methodology can be found in paragraphs BC133 to BC141 of the Basis for Conclusions of IFRS S-2.

The ISSB will vote on ratifying changes to the SASB metrics in the climate change standard during their next meeting on 18 May.

The consultation is open for public comments until 9 August 2023.

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