ISSB looks to ease Scope 3 disclosure requirements

The International Sustainability Standards Board (ISSB) has proposed changes to requirements under IFRS S2 to offer clarity around existing reliefs and provide further relief in relation to specific Greenhouse Gas emissions disclosures.

The ISSB provided an exposure draft, suggesting changes to IFRS S2 Climate-related Disclosures following feedback around challenges in application, namely for financial services organisations.

The proposals look to provide:

• relief from measuring and disclosing Scope 3 Category 15 GHG emissions associated with derivatives and some financial activities;
• relief from the use of the Global Industry Classification Standard (GICS), in some circumstances, in disclosing disaggregated financed emissions information;clarification on the jurisdictional relief to use a measurement method other than the Greenhouse Gas Protocol for measuring GHG emissions; and
• permission to use jurisdiction-required Global Warming Potential (GWP) values that are not from the latest Intergovernmental Panel on Climate Change (IPCC).

"The amendments are not focused on reductions in disclosures about GHG emissions but are instead making it easier for companies to apply the Standards while retaining the decision-usefulness of information provided to investors," the ISSB said.

It added that, with optionality embedded in the design of the amendments, companies can choose whether to apply the reliefs, and jurisdictions can choose whether to adopt them without impacting their degree of alignment with ISSB Standards.

The reliefs would support preparers in applying IFRS S2 by reducing the risk of potential duplication of reporting and the related costs associated with applying the Standards, it said.

Commenting, ISSB vice-chair Sue Lloyd said it "is the role of a responsible standard-setter to listen to market feedback from the earliest implementation stages, and to support preparers in the application of our 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," she said.

"Proposing these amendments to a relatively new Standard is not a decision that was taken lightly-we have carefully considered the need for such amendments and have sought to balance the needs of investors while considering cost-effectiveness for preparers.

"Our due process is fundamentally important to us. We always consult our stakeholders when proposing changes to our Standards and are balancing the need to respond to stakeholders' needs on a timely basis with giving all interested parties the opportunity to participate in providing feedback by setting a 60-day comment period."

Stakeholders have until June 27 to comment on the proposals.