The vice-chair of the International Sustainability Standards Board (ISSB) has warned that the board is unlikely to amend its new sustainability report standards soon.

“I think in terms of expectations management, we’re not in the market for collecting suggestions for amendments to brand new standards,” Sue Lloyd said during a recent meeting of the ISSB’s Transition Implementation Group (TIG).

Her comments came as TIG members explored two issues with applying IFRS S1:

  • adjusting previous estimates based on prior information from the supply chain (paragraph B50);
  • disclosing comparative information when the company’s structure changes, such as buying or selling a subsidiary (paragraph 70). 

The TIG is a public forum to discuss implementation issues companies face when adopting the new IFRS S1 and S2 standards for sustainability and climate-related disclosures.

Its purpose is to gather and analyse stakeholder questions, report to the ISSB, and serve as a learning platform for stakeholders.

But although the committee reached a clear consensus on the staff analysis of the two issues up for discussion on 13 June, there were nonetheless calls for the ISSB to review its rules.

ISSB members will now consider the TIG’s discussions and add their observations.

During the discussion of paragraph B50 of IFRS S1, TIG members explored the requirement to revise prior estimates based on older data from a company’s value chain.

In the scenario presented, a company estimates its Scope 3 greenhouse gas emissions using prior period information from an underlying issuer.

Sue Lloyd at ISSB

Sue Lloyd at ISSB

When new information becomes available, the standard as written requires a company to revise its previous estimate, although this revision does not reflect actual changes in emissions and leads to identical figures for both periods.

TIG members were clear that entities must apply IFRS S1’s requirement to revise prior estimates even when current data is based on older information.

However, they emphasised the importance of materiality assessments in determining whether such revisions are necessary and the need to disclose useful, relevant information.

Despite this, some TIG members suggested the board consider amending IFRS S1.

TIG member Yvonne Kam noted the practical challenges of applying the requirement and suggested the board consider potential amendments to address these challenges. However, Lloyd quashed hopes of quick-fix changes.

She said the board was aware of the potential consequences of the standard and had made a deliberate decision to differentiate between sustainability reporting and accounting requirements.

She also noted that this feedback was not new information the board had overlooked.

During its earlier meeting in March, the TIG considered a similar issue related to the requirement in IFRS S1, Paragraph B50, concerning the revision of previously reported estimates when new information reveals that past conditions were different than reported.

Although reports of the TIG’s discussions have no formal regulatory status, the ISSB warned that constituents should not ignore it since regulatory authorities follow the TIG’s input.

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