ISSB Updates Address ESG Issues while IASB Consults on Impairments
The International Sustainability Standards Board (ISSB) is seeking feedback, until August 09, 2023, on the exposure draft that sets out the methodology proposed by ISSB to amend the Sustainability Accounting Standards Board (SASB) Standards' metrics to enhance their international applicability. ISSB also published the Request for Information titled "Consultation on Agenda Priorities" to seek feedback on its priorities for the next two-year work plan; the feedback period closes on September 01, 2023. Furthermore, in an upcoming development, the International Accounting Standards Board (IASB) launched a call for stakeholder feedback on the impairment requirements in IFRS 9 and the related disclosures. This request for feedback constitutes the second aspect of the post-implementation review of the IFRS 9 Financial Instruments standard and its feedback period ends on September 27, 2023. The first aspect of the post-implementation review involved classification and measurement requirements while the third aspect will cover hedge accounting.
The recent ISSB consultation on aligning the existing SASB standards to improve their international applicability is one part of the efforts of the international standard-setting bodies to globally harmonize the rules for sustainability and climate risk disclosures. The exposure draft sets out the methodology for updating references to jurisdiction-specific laws and regulations in the SASB Standards to improve their international applicability. The draft also includes the proposed approach for updating the digital SASB Standards Taxonomy to reflect amendments made to the SASB Standards. However, the proposed scope of application of the methodology described in this draft excludes all SASB Standards metrics included in Exposure Draft IFRS S2 Climate-related Disclosures (Draft IFRS S2) published in March 2022. This is because the Draft IFRS S2 sets out proposed amendments to the climate-related metrics from the SASB Standards. ISSB will consider feedback on this Exposure Draft and decide how to proceed with the proposed amendments to the SASB Standards and corresponding updates to the SASB Standards Taxonomy. ISSB plans to promptly issue any related amendments to the SASB Standards and the SASB Standards Taxonomy to facilitate the implementation and application of IFRS S1. The SASB standards serve as an important source of guidance in the general requirements standard of ISSB (IFRS S1) by helping companies to identify sustainability-related risks and opportunities and to provide appropriate disclosures beyond climate (which is addressed by IFRS S2).
Another development from ISSB involves the priorities in its next two-year workplan. With this Request for Information on Agenda Priorities, ISSB also reflects on its mission to issue ISSB Standards that address "climate first, but not climate only." Through this
consultation, ISSB aims to research topics and, if appropriate, issue Standards that will ensure entities meet the information needs of investors on sustainability topics beyond climate. ISSB seeks feedback on four proposed projects:
- Three research projects on sustainability-related risks and opportunities associated with biodiversity, ecosystems, and ecosystem services; human capital; and human rights
- One research project on integration in reporting to explore how to integrate information in financial reporting beyond the requirements related to connected information in IFRS S1 and IFRS S2
ISSB has also published this Request for Information Consultation on Agenda Priorities to gather views on the strategic direction and balance of ISSB activities; the criteria for assessing which sustainability-related matters (including topics, industries and activities) to prioritize and add to the ISSB work plan; and the scope and structure of potential new research and standard-setting projects. The feedback received will inform the ISSB work plan and activities for the two-year period commencing 2024. The ISSB expects to discuss feedback on this Request for Information at public meetings in the second half of 2023.
Keywords: International, Banking, IFRS 9, ESG, Climate Change Risk, Reporting, Accounting, Financial Instruments, Taxonomy, SASB Standards, Disclosures, IFRS, IASB, ISSB
Featured Experts
Scott Dietz
Scott is a Director in the Regulatory and Accounting Solutions team responsible for providing accounting expertise across solutions, products, and services offered by Moody’s Analytics in the US. He has over 15 years of experience leading auditing, consulting and accounting policy initiatives for financial institutions.
James Partridge
Credit analytics expert helping clients understand, develop, and implement credit models for origination, monitoring, and regulatory reporting.
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Related Articles
OSFI Issues Phase2 Consultation on Climate Scenario Exercise for Banks
The Office of the Superintendent of Financial Institutions (OSFI) recently announced a consultation on the second phase of the Standardized Climate Scenario Exercise (SCSE) for banks and other financial institutions it regulates in Canada.
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.