📜 The ISSB's Proposal
In response to market feedback, the International Sustainability Standards Board (ISSB) has published an Exposure Draft proposing targeted amendments to IFRS S2 Climate-related Disclosures. These amendments aim to provide relief for companies facing challenges with greenhouse gas (GHG) emissions disclosure requirements.
The proposed changes are designed to make it easier for companies to apply the Standards without sacrificing the decision-usefulness of the information provided to investors. The ISSB is committed to supporting the implementation of its Standards and ensuring they remain practical and effective.
🌱 Key Amendments
The proposed amendments include:
- Relief from measuring and disclosing Scope 3 Category 15 GHG emissions associated with derivatives and some financial activities.
- Relief from using the Global Industry Classification Standard (GICS) in certain cases for disaggregated financed emissions information.
- Clarification on using alternative measurement methods other than the Greenhouse Gas Protocol for GHG emissions.
- Permission to use jurisdiction-required Global Warming Potential (GWP) values that are not from the latest Intergovernmental Panel on Climate Change (IPCC).
These changes are designed to reduce the complexity and potential duplication of reporting, ultimately lowering the costs for companies.
💬 Expert Insight
Sue Lloyd, ISSB Vice-Chair, emphasized the importance of listening to market feedback and supporting preparers in applying the Standards. > "As a market-focused standard-setter, we have taken steps to respond in a timely manner by proposing targeted amendments helping preparers where possible, without causing too much disruption and ensuring that our Standards continue to enable the provision of decision-useful information to investors."
The ISSB aims to balance the needs of investors with the cost-effectiveness for preparers, ensuring that the amendments are practical and beneficial for all stakeholders involved.
🔮 The Road Ahead
The ISSB will gather and analyze stakeholder feedback on the Exposure Draft before finalizing the amendments by the end of 2025. Companies currently applying IFRS S1 and IFRS S2 can continue to do so, while jurisdictions with their own Standards based on ISSB Standards are encouraged to maintain consistency.
This approach aims to simplify reporting for preparers globally and maintain a consistent global baseline for sustainability disclosures.
