The International Sustainability Standards Board (ISSB) is close to completion of its project to update the Sustainability Accounting Standards Board’s (SASB) standards for international applicability.
Board member Jeff Hales said the project is “very far along” but that “nothing is final official in terms of updating the SASB standards until the ISSB has voted to ratify the recommendations of the SASB board advisors”.
The changes to the standards have been overseen by a group of board advisers who expect to complete their work in time for the ISSB’s December meeting.
In April, the ISSB revealed its methodology for non-climate guidance, similar to the approach used for the climate-focused International Financial Reporting Standard (IFRS) S-2 standard updates.
According to a staff analysis prepared for the meeting, the majority of respondents to the consultation were supportive of the board’s approach to updating the SASB standards.
The consultation proposed a five-step methodology following a cascade-type approach that starts by removing jurisdiction-specific references from the SASB standards and directing users to equivalent international requirements.
Where none exists, the methodology contains a hierarchy of alternatives such as substituting descriptive words to elicit a comparable disclosure as an alternative.
Critics of the SASB standards had argued that they were too focused on capital markets in the US to be relevant to an international audience.
The updated standards will play, however, an important role as industry-specific guidance for companies applying IFRS S-1 , General Sustainability-related Disclosures from 1 January 2024.
What next for the SASB standards?
One clear area of concern to emerge from the public feedback on the project were calls for greater clarity on how the SASB Standards will be used in the long term.
Additionally, other respondents suggested that the ISSB should develop its own set of industry-specific standards.
The ISSB has signalled that it will consider the future role of the SASB Standards when it sets its work priorities for the next two years.
Developments in Europe
This development comes as the European Commission announced plans to delay key aspects of the Corporate Sustainable Reporting Directive in its 2024 work programme.
This includes the adoption of requirements for sector-specific sustainability disclosures and for sustainability reporting from companies outside of the European Union.
The decision is part of the Commission’s efforts to reduce the reporting burden for companies.
Specifically, the Commission wants to delay the adoption of sector-specific European Sustainability Reporting Standards (ESRS) by two years, from 30 June 2024 to 30 June 2026 and push back the use of ESRS for non-EU companies until 30 June 2026.
The Commission said the delay will give companies more time to prepare for the new reporting requirements and will ensure that the ESRS are well-developed and tailored to the needs of different sectors.
In addition, there was also strong interest in maintaining and improving the interoperability of the SASB standards with the Global Reporting Initiative (GRI) and ESRS standards.
Interoperability across different reporting frameworks helps to ensure not only comparability between reporting entities but also reduces costs and eases implementation.
Many respondents to the ISSB consultation requested that the ISSB continue to work on this issue, and some even suggested that the ISSB delay the proposed revision of the SASB standards until the GRI and ESRS have finalised their own sector-specific standards.
The ISSB has acknowledged the importance of interoperability and has said that it will continue to work with the GRI and EU to ensure that the SASB standards are aligned with the GRI and ESRS standards to the greatest extent possible.
ISSB members also received an update on 24 October led by GSSB chair Carol Adams on the board’s future workplan.
The presentation revealed that the GRI plans to issue exposure drafts dealing with banking, capital markets and insurance during the fourth quarter of 2024.
The GSSB has committed to working with other standard-setting bodies to ensure that their standards are complementary and interoperable.
It has also signed a memorandum of understanding with the ISSB to coordinate their work programs and standard-setting activities.
Implementation of IFRS S-1, S-2
Meanwhile, the ISSB and IFRS Foundation launched a number of actions to assist in the implementation of its first two sustainability standards, including the development of educational materials and the establishment of an online ISSB Knowledge Hub.
The board has also set up a Transition Implementation Group to address implementation issues.
It has also sought feedback on the proposed IFRS Sustainability Disclosure Taxonomy.
The ISSB issued an exposure draft detailing the taxonomy on 27 July on a 60-day comment period.
Staff are currently reviewing feedback on the proposals with the aim of issuing the final digital taxonomy early in 2024.