ISSB calls for SASB standards to be made globally applicable
The International Sustainability Standards Board (ISSB) has opened a three-month consultation asking industry for feedback on its proposed methodology to enhance the global applicability of the SASB Standards.
Launched in 2011, the SASB Standards aim to help businesses define ESG materiality on a sector-specific basis. In 2018, SASB launched its 77 industry-specific reporting standards for public companies to disclose material environmental risk.
In its 38-page long Exposure Draft published on May 11, the ISSB proposes a five-step methodology that suggests a review of the SASB standards, starting by scrapping jurisdiction-specific references.
More specifically, the proposed approach would:
- Replace jurisdiction-specific references with more internationally applicable ones
- Set out generalized references for standards, definitions or calculation processes
- Adopt generalized jurisdictional references to enable preparers to use any applicable regional laws, regulations, methodology or guidance instead of regional-specific ones
- Partially remove disclosure metrics that are ‘ill-adapted’ for global application or do not have global equivalents
- Remove jurisdiction-specific metrics when an equivalent replacing metric can be identified to meet the needs of users of general-purpose financial reports.
LINKS TO THE ISSB FRAMEWORK
The ISSB says it aims to revise the metrics before January 2024, which is when IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, part of the ISSB framework, will come into effect. But the methodology proposed in this Exposure Draft won’t apply to IFRS S2 Climate-related Disclosures.
‘The SASB Standards serve as an important source of guidance in the ISSB’s general requirements standard (IFRS S1) by helping companies to identify sustainability-related risks and opportunities and provide appropriate disclosures beyond climate (which is addressed by IFRS S2),’ the official statement reads.
According to the ISSB, over the past decade, the SASB framework has gained global traction, with its standards now being applied by more than 2,700 companies in more than 70 countries around the world.
‘The ISSB is committed to maintaining and enhancing the SASB Standards so that they continue to be effective in supporting companies to deliver industry-based sustainability disclosures to investors,’ says Jeffrey Hales, chair of the ISSB’s SASB Standards Board Advisor Group.
‘Through this project, we hope to make it easier for companies to apply the SASB Standards, regardless of where they operate, and help companies applying IFRS S1 to produce comparable and decision-useful disclosures.’
The consultation will remain open for comments until August 9, 2023. This week’s development follows last week’s announcement by the standard-setting body on the opening of another consultation in which it asks shareholders to provide feedback on its priorities for the next two years.