The International Sustainability Standards Board (ISSB) has approved a series of amendments to the legacy standards issued by the Sustainability Accounting Standards Board (SASB).
The amendments take the form of two packages of consequential amendments to align the SASB rulebook with the ISSB’s new climate-change standard, International Financial Reporting Standard (IFRS) S-2.
In an official summary of the 18 May meeting posted on the board’s website, the ISSB said it “expects to issue the amendments to the climate-related SASB Standards in June 2023.”
The ISSB took over responsibility for the SASB standards following a merger of the two boards’ respective parent bodies last year.
The first set of amendments is intended to bring the SASB standards into line with the so-called industry guidance in IFRS S-2.
The purpose of the industry-based guidance is to assist companies in making climate-related disclosures that are relevant to different industries.
This guidance is located in Appendix B of IFRS S-2 and is based on the climate-related topics and metrics in the SASB Standards.
The amendments are intended to enhance international applicability and remove inconsistencies and ill-adapted metrics (see paragraphs 20 to 25 of the staff paper).
The second set of amendments is to align the SASB standards with new requirements for reporting on financed emissions in IFRS S-2.
Financed emissions refer to the greenhouse gas emissions associated with activities funded or supported by financial institutions through activities such as investments that contribute to climate change.
The meeting heard the amendments will help deliver a level playing field between companies applying the IFRS S-2 guidance to support their disclosures and those using the SASB standards.
ISSB member Elizabeth Seeger said, however, she was uncertain about the proposed approach to financed emissions.
She said she was “skeptical about adjusting SASB standards” for financed emissions because S-2 effectively placed these requirements in a silo without considering the context of “other climate-related information reported by organisations” that would report under S-2.
“And so this very specific focus on finance emissions is very precise – but again out of context – and also introducing quite a significantly new topic to those three industries,” she added.
The board consulted on the financed emissions disclosures in March 2022 when the ISSB released IFRS S-2 for public comment. They initially covered four industry sectors.
These covered asset management and custodian services, commercial banking, insurance, and investment banking.
In December 2022, the board decided to drop the requirements for investment banking.
Staff reasoned at paragraph 29 of their meeting paper there is “currently no widely accepted calculation methodology”. They said additional work was “needed to establish such a calculation methodology.”
Also at the December meeting, the ISSB decided to make the disclosure of financed emissions for the three industries a mandatory requirement and to locate that material within the main body of S-2 – separate from the non-mandatory industry-based guidance.
Finally, the board confirmed that it remains on track to issue both IFRS S-2 and its general requirements standard, IFRS S-1, next month.
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