Staff at the International Sustainability Standards Board (ISSB) have received the green light from board members to start work on drafting updates to the legacy Sustainability Accounting Standards Board (SASB) standards.

The development came after board members expressed their broad support for a proposal to enhance the reporting rulebook.

However, the board also recognised the need for effective stakeholder engagement and to consider factors such as the importance of the ISSB’s long-standing goal of establishing a robust global baseline for sustainability reporting.

ISSB member Elizabeth Seeger said: “I think [this paper] helps accomplish exactly what we asked you all to accomplish, which is to give the marketplace an indication of how we’re going to think about the SASB standards holistically.”

However, board vice-chair Sue Lloyd acknowledged the importance of following a robust and transparent due process when changing the standards.

Focus on extractives, power & food sectors

In a meeting paper, the ISSB staff presented a proposal for enhancing the SASB standards over the next two years.

They recommend a phased approach to the work, starting with an initial set of priority industries to be addressed in the first phase, followed by a second phase of additional priorities.

The initial priority industries include the extractives and mineral processing sector, the electric utilities and power generators sector, as well as three industries in the food and beverage sector made up of agricultural products, meat/poultry/dairy, and processed foods.

The staff also propose making targeted amendments to other SASB standards to ensure consistent measurement of common topics across industries.

Finally, they have proposed additional research will be conducted in the first phase to identify the next set of priority projects for SASB enhancements in the second phase.

Agenda consultation, priorities

The board committed to updating the legacy Sustainability Accounting Standards Board standards for which it is now responsible as one of the conclusions of its first two-year agenda consultation in June.

The board also confirmed it would pursue research on both BEES and human capital as a prelude to possible full-blown standard setting activity in the future on those topics.

A key issue for the board, however, remains what amounts to the branding of the SASB standards and securing buy-in for them as fully-fledged IFRS Foundation literature among the board’s constituents.

ISSB vice-chair Lloyd said it was “critically important” for the outside world to “have an exposure draft, which they recognise as looking like an IFRS Foundation exposure draft, where they actually see the proposed changes to particular metrics, even if we don’t repeat the same change 50 times.”

Due process concerns, market by-in

Lloyd added that it was important for constituents to be able to see what changes were being proposed to the standards, for those changes to be clearly articulated, and for constituents to be able to comment on those proposals with a full 120-day comment period.

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

The IFRS Foundation took over responsibility for maintaining the SASB standards through a merger with the Value Reporting Foundation in July 2021.

In June, ISSB chair Emmanuel Faber warned that the project to update the SASB standards could potentially put at risk the board’s push to achieve interoperability with other reporting frameworks such as the Global Reporting Initiative and European Sustainability Reporting Standards.

The board last issued proposals to update the SASB standards in May last year so as to improve their relevance for international stakeholders.

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