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ISSB Provides Updates On Proposed Sustainability And Climate Disclosure Standards – Securities


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The International Sustainability Standards Board (the
ISSB“) published on
October 21
an update, as well as two additional updates on November 1 and November 3 (collectively, the
Updates“), on its initial proposed
climate and sustainability related disclosure standards – the
Exposure Draft IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information
Sustainability Standards“) and
Exposure Draft IFRS S2 Climate-related Disclosures (the
Climate Standards“). These updates were
released based on feedback received during a 120 day consultation

Both the Sustainability Standards and the Climate Standards
(together, the “ISSB Standards“) aim to
capture information regarding an entity’s governance, strategy,
risk management, and metrics and targets as they relate to specific
sustainability and climate matters.

Once finalized, the ISSB Standards are designed and anticipated
to serve as a comprehensive global baseline for sustainability and
climate-related disclosures and to set out requirements for the
disclosure of material information about a company’s related
risks and opportunities. Our previous post including detailed
information and insights on the ISSB Standards is available here.

Key Decisions

The ISSB communicated these key decisions in the Updates:

Updating Definitions of Materiality

  • The ISSB confirmed that its requirements will focus on meeting
    the information needs of investors.

  • The ISSB decided to modify language that was not clearly
    understood, including by removing the term ‘enterprise
    value’ from the objective and the assessment of materiality and
    removing the term ‘significant’ to describe which
    sustainability risks and opportunities to disclose. The ISSB will
    refine its articulation of these concepts.

  • The ISSB confirmed it will use the same definition of
    ‘material’ as is used in IFRS Accounting Standards. The
    ISSB will consider further guidance on how to determine what is
    material information.

  • In a podcast episode summarizing the International
    Accounting Standard Board’s (IASB) key decisions taken during
    the meeting on October 21, the ISSB Chair and Vice-Chair shed light
    on the rationale to remove the definition of ‘enterprise
    value’ from the ISSB Standards, citing confusion and conflict
    with other jurisdictional definitions.

Greenhouse Gas Emissions and Scenario Analysis

For Scopes 1 and 2 greenhouse gas
(“GHG“) emissions, the ISSB agreed to
the following disclosure policies:

  • For an entity to disclose its absolute gross GHG emissions
    generated during the reporting period;

  • For an entity to disclose the approach used to include its
    Scope 1 and 2 GHG emissions; and

  • the reason(s) for the entity’s choice of approach and how
    that relates to the disclosure objective.

For Scope 3 GHG emissions, the ISSB agreed to:

  • proceed with its proposal to require entities to disclose Scope
    3 GHG emissions, subject to certain means of relief; and

  • confirm that Scope 3 GHG emissions disclosures would include
    information about which of the 15 categories of Scope 3 GHG
    emissions in the GHG Protocol Corporate Value Chain (Scope
    3) Accounting and Reporting Standard are included within
    Scope 3 GHG emissions.

As data availability and quality were common challenges raised
in feedback on disclosure of Scope 3 GHG emissions, the ISSB is
considering implementing potential means of relief to address these
concerns. Potential forms of relief to be considered include:

  • a later effective date for Scope 3 GHG emissions

  • collaborating with securities regulators to provide “safe
    harbor” provisions;

  • preparing implementation guidance for disclosure about Scope 3
    GHG emissions;

  • introducing data quality tiers that assess an entity’s
    underlying data;

  • providing guidance on when the ‘scope’ of Scope 3 GHG
    emissions must be reassessed; and

  • providing guidance for scenarios where reporting cycles for
    entities in the value chain do not align with each other and/or
    with that of the reporting entity.

On November 1, the ISSB confirmed that entities
are required to use climate-related scenario analysis to report on
climate resilience and to identify climate-related risks and
opportunities to support their disclosure.

The ISSB agreed to provide application support to entities
including making use of materials developed by the Task Force on
Climate-Related Financial Disclosure (“TCFD“) to provide
guidance within the Climate Standards on how to undertake scenario
analysis, for example:

  • The ISSB will refer to TCFD guidance that sets out types of
    scenario analysis, including quantitative, partially quantitative,
    and qualitative.

  • The ISSB agreed that it would build on the TCFD guidance,
    specifying that scenario analysis must be applied but setting out
    the required approach that is scalable to an entity’s

  • At a minimum, an entity would need to undertake the qualitative
    form of scenario analysis as a basis for its resilience

  • The ISSB will provide guidance on which climate scenarios an
    entity should use, depending on their circumstances, including
    industry and country exposure, to provide relevant information to
    investors. This guidance will specify where the inclusion of a
    Paris-aligned scenario may be relevant.

  • The ISSB will also acknowledge in its guidance that
    ‘off-the-shelf scenarios’, such as those of the Network for
    Greening the Financial System, may be useful resources for

Interoperability and TCFD Architecture

In the Updates, the ISSB also focused on clarifying key aspects
related to interoperability with other jurisdictions and
sustainability standards and confirmed the use of the TCFD
architecture as the basis of the ISSB Standards.

On November 3, the ISSB published a third update
on enhancement of interoperability of the ISSB Standards with other
international and jurisdictional sustainability-related standards
including a requirement that when meeting the ISSB Standards,
entities must consider Sustainability Accounting Standards Board
standards both when identifying what sustainability matters to
report on and in developing appropriate disclosures.


The ISSB intends to complete its revisions to the ISSB Standards
by the end of 2022, with a target to publish the final iteration as
early as possible in 2023.

Update on Canada’s Climate-Related Disclosure Regime

In its comments during the ISSB’s consultation process, the
Canadian Securities Administrators (the
CSA“) expressed its commitment to less
stringent requirements, referencing the high burdens faced by
smaller issuers in meeting the standards proposed by the ISSB and
the lack of maturity and consensus surrounding the assumptions,
methodologies, and timeframes for assessing climate resilience. The
CSA further suggested that the proposed ISSB requirements on
disclosure of Scope 3 GHG emissions be on a voluntary basis and
introduced through a phased approach.[1]

In a recent press release, the CSA announced it is
currently assessing the impacts of international developments on
its own proposed climate-related disclosure rule, acknowledging the
“substantive differences” between proposed National
Instrument 51-107 – Disclosure of Climate Related Matters
(“NI 51-107“), which was published in
October 2021, and the TCFD-based proposal published by the US
Securities and Exchange Commission in the spring of 2022, in
addition to the ISSB Standards. Consequently, it now appears
unlikely that NI 51-107 will be finalized before the end of



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