As we’ve addressed many times previously, the International Sustainability Standards Board issued its first two exposure drafts, General Sustainability-related Disclosures (S1)and Climate-related Disclosures (S2), which were both open for comment until July 29, 2022.

The S2 exposure draft proposes industry-based disclosure requirements derived from the existing SASB Standards (these aren’t included in the body of the exposure draft, but rather within separate industry-based volumes, summarized in an appendix). The document explains that this is “consistent with the responses to the Trustees’ 2020 consultation on sustainability that recommended that the ISSB build upon existing sustainability standards and frameworks,” and notes that the proposed industry-based disclosure requirements are largely unchanged from the equivalent requirements in the SASB Standards. However, the exposure draft proposes some targeted amendments to include references to international standards and definitions or, where appropriate, jurisdictional equivalents; and to “address emerging consensus on the measurement and disclosure of financed or facilitated emissions in the financial sector (by) adding disclosure topics and associated metrics in four industries: commercial banks, investment banks, insurance and asset management.”

These comments are from the Hong Kong Securities and Futures Commission:

• We support the introduction of a set of industry-based requirements to promote consistency and comparability of sustainability disclosure. Nevertheless, there are diverse views in respect of the status and implementation of the industry-based requirements which are attached as Appendix B of the Climate Exposure Draft (comprising 68 volumes of standards spanning over 600 pages). We appreciate that efforts have been made to internationalize these industry-based standards which are transposed from the SASB metrics, however, they remain quite true to their original form and do not sufficiently incorporate standards used in other jurisdictions. In addition, the disclosure topics seem to go beyond climate issues and address other sustainability topics such as marine resources, biodiversity and labour issues. In light of this, mandating the disclosure of industry-based metrics may discourage full adoption of the eventual ISSB climate standard by some jurisdictions, thereby undermining the objective of a global baseline disclosure standard. Given the sheer volume and importance of these industry-based requirements, it would be worthwhile subjecting the requirements to the ISSB’s proper due process and separate market consultation. Until then, the requirements could serve as non-binding guidance.

The thoughts of the Canadian Securities Administrators were similar:

• we do not think that the SASB-based industry requirements for climate-related disclosures should be mandatory at this time. In considering the volume and specialist nature of this content, issuers may face significant challenges in implementing the industry-based requirements, especially smaller issuers who typically have fewer resources and less expertise with sustainability reporting. We encourage the ISSB to consider implementing these industry-based requirements as guidance to assist issuers when preparing their disclosures with the possibility that such requirements be made mandatory in the future. We believe that introducing industry-based sustainability reporting in this manner could better facilitate widespread adoption. Should the ISSB seek to have such requirements made mandatory in the future, stakeholders would benefit from having a comment period that is solely dedicated to reviewing these disclosure requirements.

The Securities and Exchange Board of India said among things that “some of the metrics may not be material for an entity, taking into account the jurisdiction where it operates or its business model.” They suggested “that industry-based metrics should not be included as requirements under the IFRS Standards and should only be regarded as reference points for entities in determining their own metrics, taking into account their particular circumstances.” The Securities Analysts Association of Japan thought that this aspect of the requirements raised too many issues to be resolved without unacceptably delaying the project as a whole. They suggested that “the ISSB should consolidate and systematize the disclosure topics (and they) should be stipulated in the text… An entity is required to refer to the systematized disclosure topics in identifying information related to significant climate-related risks and opportunities.” The industry-based requirements would then be developed more fully on a separate timeline. The Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation also thought (in common with their view on the other sources of guidance that we covered here) that the industry-based standards should be treated “as reference material or guidelines, as opposed to mandating them in the Standards.” Likewise, the Malaysian Accounting Standards Board suggested allowing “a transitional period (during which these aspects) should be made as ‘best practice’ instead of having the same authority of other parts of the Standard.”

In this post, as you’ll note, I mainly cited a particular genre of respondents. Still – and bearing in mind as always the imperative of finalizing the draft standards as soon as possible while taking adequate account of the views of 697 respondents (and an even greater number on the other more general exposure draft) – one imagines the kind of approach consistently suggested above might constitute the fastest way to a short-term finish line…

The opinions expressed are solely those of the author.