Canadian Consultation: International Applicability of the SASB Standards

The International Sustainability Standards Board (ISSB) has published its Exposure Draft, Methodology for Enhancing the International Applicability of the SASB Standards and SASB Standards Taxonomy Updates to gain feedback on the proposed amendments designed to enhance the international applicability of the SASB Standards.

The amendments are intended to make the SASB Standards applicable in any jurisdiction and suitable for entities applying IFRS Accounting Standards or any other generally accepted accounting principle (GAAP).

The ISSB seeks feedback on the following components:

• the objective and effectiveness of the proposed methodology to update SASB Standards metrics
• the hierarchy, impacts, and criteria associated with the five proposed revision approaches;
• the proposed methodology to update the SASB Standards Taxonomy; and
• the considerations to inform future SASB Standards refinement.

Objectives and scope of the project

The objective of the proposed methodology is to enhance the international applicability of the SASB Standards without substantially changing the structure or original intent of the content.

The proposed methodology is designed to preserve the following characteristics of the original SASB Standards:

• structure and intent;
• decision-usefulness; and
• cost-effectiveness.

The scope of the proposed methodology applies only to those SASB Standards metrics not amended through the issuance of IFRS S2 Climate-related Disclosures. Such disclosures include sustainability-related topics such as biodiversity, community engagement and human capital management. This is because the SASB Standards metrics included in IFRS S2 Climate-related Disclosure are already subject to the proposed amendments to enhance their international applicability.

Metrics that are not currently internationally applicable represent 20% of the approximately 1,000 metrics included in the SASB Standards.

Key features of the proposed methodology

SASB Standards metrics updates

To amend SASB Standards that rely on jurisdiction-specific references, the ISSB proposes the application of the following five revision approaches (displayed in descending order of preference). Every disclosure topic, metric, and technical protocol amended using the methodology would apply these five revision approaches, either individually or in combination:

1. Substituting available internationally applicable references for standards, definitions, or calculation methods to replace jurisdiction-specific references.
2. Providing more generalized definitions for standards, definitions, or calculation processes to replace jurisdiction-specific references.
3. Adopting generalized jurisdictional references to enable preparers to use applicable jurisdictional laws, regulations, methodologies or guidance to replace jurisdiction-specific references.
4. Removing—in a limited number of cases—disclosure metrics that are ill-adapted for international application or have no identified international equivalents outside specific jurisdictions.
5. Removing and replacing jurisdiction-specific metrics when a relevant replacement can be identified to preserve the disclosure topic’s integrity, aligning with the intent of the original metric as much as possible based on research, to meet the needs of users of general purpose financial report.

SASB Standards Taxonomy updates

The SASB Standards Taxonomy describes how information included in the SASB Standards is captured or ‘tagged’ for digital reporting. Therefore, the digital tags used to label information reported when preparers apply the SASB Standards may have to be updated. The proposed amendments to the SASB Standards Taxonomy include changing, removing, and/or adding taxonomy concepts to align with amendments made to the SASB Standards.

Your input is needed!

FRAS Canada is seeking feedback on the ISSB’s Exposure Draft to ensure Canadian perspectives are considered by the ISSB before a methodology is issued.

Join our activities to ensure your voice is heard and help inform our response to the ISSB – here's how:

Project background

The ISSB assumed responsibility for the maintenance and enhancement of the SASB Standards when the Value Reporting Foundation consolidated into the IFRS Foundation in August 2022.

The ISSB has incorporated SASB content into its standards by:

• referencing the SASB standards as guidance in proposed IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information; and
• including industry-specific requirements, which are based on the SASB standards, in Appendix B of proposed IFRS S2 Climate-related Disclosures.

To ensure that SASB’s climate-related metrics would apply to global companies, the ISSB made limited changes to these metrics when they were included in IFRS S2. However, these changes have not yet been made to the metrics in the full SASB standards.

In May 2023, the ISSB published an Exposure Draft detailing its proposed methodology to amend SASB Standards metrics and the associated SASB Standards Taxonomy to enhance their international applicability. The ISSB is inviting comments on the proposals in the Exposure Draft.

What are the SASB standards?

The SASB Standards enable organizations to provide industry-based sustainability disclosures by identifying the subset of environmental, social and governance issues most relevant to financial performance and enterprise value for 77 industries. The standards are used by companies around the world in a variety of disclosure channels, including their annual reports, financial filings, company websites, sustainability reports, and more. They are now being embedded into the ISSB’s standards development process.

To learn more about the SASB Standards, visit https://www.sasb.org/about/.

FRAS Canada Staff Contact

Contact our staff via email: [email protected]