Technical update

Sustainability

The IFRS Foundation has released details of how 36 jurisdictions worldwide have adopted or are preparing to adopt International Sustainability Standards Board (ISSB) rules within their national sustainability reporting regulations. It says that 17 governments have finalised these regulations: Australia, Bangladesh, Brazil, Chile, Ghana, Hong Kong, Jordan, Kenya, Malaysia, Mexico, Nigeria, Pakistan, Sri Lanka, Taiwan, Tanzania, Turkey and Zambia. The foundation has released details on these laws to guide ISSB users. Meanwhile, it reported that 19 governments have proposed or published fully or partly ISSB-aligned standards or requirements. These are Bolivia, Canada, China, Costa Rica, El Salvador, Indonesia, Japan, the Philippines, Rwanda, Singapore, South Korea, Switzerland, Thailand, Uganda, the UK and Zimbabwe, with the ISSB planning to soon release details on three other unnamed governments’ implementation plans.

The IFRS Foundation has released guidance on requirements in IFRS S2, Climate-related Disclosures, about measuring and disclosing greenhouse gas (GHG) emissions. This advice explains how the Greenhouse Gas Protocol (GHG Protocol), developed by the World Resources Institute and the World Business Council for Sustainable Development, can be used in IFRS S2 reporting, alongside contextual and more detailed advice on S2. This includes how a reporting company’s takeover by another may impact declarations.

The IFRS Foundation has also released e-learning modules to help companies understand the ISSB’s IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2.

Meanwhile, the GHG Protocol is updating its corporate suite of standards and guidance, including its Scope 2 Guidance, released in 2015. The revised standards will better help companies account for emissions from electricity, improving the reporting of usage in inventories and the impact of clean energy. The changes are being introduced by a new Independent Standards Board, supported by expert technical working groups.

The International Organisation of Securities Commissions has released a report on handling and regulating sustainable bonds, recommending greater clarity in existing or new regulations that align with internationally accepted principles and standards. It also stresses the need for guiding principles, helping provide clarity and consistency when categorising sustainable bond types.

The Taskforce on Nature-related Financial Disclosures has released a consultation paper on the measurement of ocean-related issues to improve the coverage, quality, consistency and comparability of measurement in assessments and disclosures by corporates and financial institutions. Challenges to tackle include disparities in the availability of and access to data; uncertainty about which metrics to prioritise; and insufficient understanding about interactions between ocean-related and nature-related issues concerning land, air and freshwater.

The European Financial Reporting Action Group has called for tenders for a service provider to conduct a cost-and-benefit analysis on revising the current European Sustainability Reporting Standards (ESRS). This follows a request from the European Commission to simplify and streamline the ESRS to reduce administrative burdens for reporting companies, while maintaining the quality and utility of sustainability disclosures.

Public sector

The International Public Sector Accounting Standards Board (IPSASB) has announced it will be splitting its project on climate-related disclosures into two phases following feedback to the landmark IPSASB SRS Exposure Draft 1, Climate-related Disclosures. The phased approach will meet the urgent need for public sector guidance while allowing additional time to address more complex reporting needs. Phase 1 will finalise the first-ever public sector sustainability standard already in development while Phase 2 will develop a separate standard for those specific public sector entities responsible for delivering climate-related public policy programs and their outcomes.

The International Public Sector Accounting Standards Board (IPSASB) has released IPSAS Exposure Draft (ED) 93, Definition of Material, amending IPSAS 1, Presentation of Financial Statements; IPSAS 3, Accounting Policies, Changes in Accounting Estimates and Errors; and the board’s Conceptual Framework. The board wants more consistent guidance on materiality across its financial reporting guidance. The changes would clarify that a public reporting entity should consider the information needs of primary users over other financial reporting users; and they would align the definition of material in IPSAS 1 with IPSASB’s conceptual framework in Chapter 3, ‘Qualitative Characteristics of the Conceptual Framework’.

The International Federation of Accountants (IFAC) and IPSASB have published guidance, Implementing International Public Sector Accounting Standards (IPSAS): IFAC Tools, which compiles resources helping governments and public bodies implement IPSAS. It includes advice on transitioning from cash to accrual systems and on building capacity and technical knowledge, offering training materials, templates and examples.