Members of the International Sustainability Standards Board (ISSB) have voted unanimously to set a 120-day comment period on the board’s agenda consultation.
All 14 members agreed the board fulfilled the requirements of its due process rulebook in developing the proposals.
The vote paves the way for staff to issue a consultation paper next month.
Staff said the decision to recommend a 120-day comment period would “balance the need to provide early clarity about the ISSB’s two-year plan with the need to provide sufficient time for stakeholders to provide high-quality responses.”
In a paper prepared for the 19 April meeting, they set out the consultation remit and the methodology and procedure used to develop it. At its March meeting, the ISSB voted to consult on a project examining the relationship between sustainability reporting and financial reporting, a broader scope than originally intended.
Previously, the board had considered a more limited initiative with the International Accounting Standards Board (IASB) in an effort to revive its dormant management commentary proposals. At its December 2022 meeting, the ISSB also agreed to consult on proposals for three research initiatives concerning biodiversity, human capital, and human rights in value chains.
The decision to consult over a period of 120 days represents a departure by the board and its staff from their initial plan to wrap up the process in 90 days.
During a meeting of the IFRS Foundation’s due process oversight committee (DPOC), however, ISSB vice chair Sue Lloyd encountered significant pushback from committee members regarding the necessity of a shortened comment period.
Masamichi Kono, a trustee of the IFRS Foundation, observed that proposals for abbreviated comment periods from the staff were in danger of becoming the norm.
In their 19 April meeting paper, staff noted, however, that stakeholders require sufficient time “to carefully and thoughtfully consider the content of the RFI” and “to put in place processes required to provide high-quality responses, including translation, for example”.
Second, the consultation will coincide with the publication of the board’s first two sustainability standards, IFRS S-1 and S-2, according to the staff paper.
Moreover, the consultation will collide with the publication of an exposure draft on the proposed methodology for enhancing the international applicability of the standards inherited by the ISSB from the Sustainability Accounting Standards Board (SASB).
In addition, the ISSB intends to consult on a proposed IFRS taxonomy for sustainability disclosure.
Finally, the ISSB has committed to building on the foundation established by IFRS S-1 and S-2, requiring “significant resources through the end of 2023 and into the first half of 2024”.
Staff explained that this will mean the board “likely not have sufficient capacity to begin new research and standard-setting projects until the first half of 2024.”