The International Sustainability Standards Board (ISSB) has voted to issue a methodology for updating the Sustainability Accounting Standards Board’s (SASB) legacy standards for public comment on a 90-day comment period.

ISSB vice-chair Sue Lloyd said, “I think this approach is a very proportionate way [forward], focusing people on what the point of the exposure draft is.”

She stressed that the consultation will be “about the methodology” and not about whether people “agree or disagree with the particular disclosures set out in the balance of the SASB standards”.

The board’s exposure draft, distributed before last month’s 19 April meeting, will not solicit opinions on line-by-line changes to the standards.

Instead, it proposes an approach for updating the standards to make them more relevant to an international audience.

The ISSB assumed responsibility for the SASB standards as a result of a merger between the IFRS Foundation and the SASB’s parent body, the Value Reporting Foundation.

The SASB Standards are an important source of guidance for entities applying the ISSB’s general sustainability reporting standard IFRS S-1, as well as its climate change reporting standard IFRS S-2.

Although the standards are well established as a framework for sustainability reporting, their critics say they are too focused on North American capital markets.

A staff analysis has found that 20% of the SASB’s metrics contain jurisdiction-specific references defining their scope, methods or parameters.

Sue Lloyd at IASB

Sue Lloyd at ISSB

Accordingly, the ISSB has developed a set of focused procedures – the so-called methodology – for revising specific, jurisdiction-focused SASB metrics to make them more internationally applicable.

A staff paper produced for the ISSB’s March 2023 meeting stated at paragraph 43 that the project’s goal “is to ensure that the SASB Standards can be used by preparers internationally”.

The paper added that the effort “is being undertaken in a manner that avoids changing the substance of the disclosures required and to prevent changes for those already using the SASB Standards”.

Full details of the five-step methodology are set out in paragraph 44 of that paper.

The board proposed a cascade method that starts with dropping jurisdiction-specific references from SASB standards and directs users to worldwide or generic equivalents.

Where none exists, the methodology allows for descriptive words to elicit a comparable revelation when there is no direct counterpart as an alternative.

Board members were also broadly supportive of the proposal to limit the comment period to 90 days, given the target nature of the proposals and their urgency.

The board recently opted for a full 120-day comment period for its upcoming agenda consultation.

The ISSB wants to use the methodology to update those metrics in the SASB standards that have not been amended once the board issues IFRS S-2, Climate-related Disclosures.

The exposure draft refers to these metrics as “non-climate-related SASB Standards metrics”.

This means that the SASB’s climate-related metrics will in effect be subject to a separate workstream.

Although the board has given reporting entities the option of deferring application of IFRS S-1 until 2025, they will be expected to make climate-related disclosures from next year.

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