ISSB Update January 2025

Research and standard-setting

Research projects on Biodiversity, Ecosystems and Ecosystem Services and Human Capital (Agenda Papers 3, 3A and 4)

The ISSB met on 29 January 2025 to receive updates on its research projects. It discussed:

• findings on evidence of investor interest in risks and opportunities related to biodiversity, ecosystems and ecosystem services; and
• information about matters related to biodiversity, ecosystems, ecosystem services and human capital that an entity applying IFRS Accounting Standards might present or disclose in its financial statements.

The ISSB was not asked to make any decisions.

Next step

The ISSB will receive further updates on these research projects.

Applying Standards

Supporting the Implementation of IFRS S1 and IFRS S2 (Agenda Paper 9)

The ISSB met on 29 January 2025 to continue discussions on supporting the implementation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

The ISSB discussed proposed amendments to IFRS S2, specifically:

• whether they meet the criteria the ISSB set in November 2024 for evaluating potential amendments to IFRS S1 or IFRS S2 (amendment criteria for application challenges);
• whether to propose them at this time; and
• how they could be developed to respond to application challenges identified in implementing IFRS S2.

Evaluating potential amendments to IFRS S2 using the ISSB criteria for evaluating potential amendments to IFRS S1 or IFRS S2 and Specific aspects of the potential amendments to IFRS S2 (Agenda Papers 9A and 9B)

The ISSB discussed amending IFRS S2 in response to application challenges identified in implementing IFRS S2. These challenges relate to:

1. the measurement and disclosure of Scope 3 Category 15 greenhouse gas (GHG) emissions associated with derivatives and specific financial activities; and
2. the applicability of the jurisdictional relief in IFRS S2 for measuring GHG emissions as it relates to:
   1. the use of global warming potential (GWP) values based on a 100-year time horizon from the latest Intergovernmental Panel on Climate Change assessment available at the reporting date (latest IPCC assessment), if a jurisdictional authority or an exchange on which an entity is listed requires the entity to use other GWP values not based on the latest IPCC assessment; and
   2. the use of a method other than the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) (GHG Protocol Corporate Standard) for measuring GHG emissions, if a jurisdictional authority or an exchange on which an entity is listed requires the entity to use a measurement method other than the GHG Protocol Corporate Standard for a part of the entity.

The ISSB decided:

1. the proposed amendments to IFRS S2 meet the amendment criteria for application challenges; and
2. it will propose amendments to these requirements at this time.

All 14 ISSB members agreed with these decisions.

The ISSB tentatively decided to propose to amend IFRS S2:

1. to permit entities to exclude Scope 3 Category 15 GHG emissions associated with derivatives, facilitated emissions and insurance-associated emissions from the measurement and disclosure of Scope 3 Category 15 GHG emissions. Specifically, the ISSB decided to propose:
   1. providing the Scope 3 Category 15 GHG emissions relief by amending the requirement to disclose GHG emissions in paragraph 29(a)(i)(3) of IFRS S2 to exclude specific GHG emissions as set out in a(ii), instead of adding a transition relief.
      All 14 ISSB members agreed with this decision.
   2. limiting the scope of the relief for Scope 3 Category 15 GHG emissions by requiring an entity to disclose financed emissions as defined in IFRS S2 and not requiring an entity to measure and disclose GHG emissions associated with derivatives.
      All 14 ISSB members agreed with this decision.
   3. requiring an entity to disclose the amount of derivatives and specific financial activities it excluded from the measurement and disclosure of Scope 3 Category 15 GHG emissions as a result of this limitation in scope.
      Eight of 14 ISSB members agreed with this decision.
   4. requiring an entity to explain the derivatives it excluded from the measurement and disclosure of Scope 3 Category 15 GHG emissions as a result of this limitation in scope (for example, whether the entity excluded derivatives that meet the definition in IFRS 9 Financial Instruments).
      Twelve of 14 ISSB members agreed with this decision.
2. to extend the jurisdictional relief so that, if an entity, in whole or in part, is required by a jurisdictional authority or exchange on which it is listed to use GWP values that are not from the latest IPCC assessment, the entity would be permitted to use those GWP values instead of the GWP values from the latest IPCC assessment.
   All 14 ISSB members agreed with this decision.
3. to clarify the jurisdictional relief so that, if an entity, in whole or in part, is required by a jurisdictional authority or exchange on which it is listed to use a method other than the GHG Protocol Corporate Standard to measure GHG emissions, the entity would be permitted to use this method instead of the GHG Protocol Corporate Standard.
   All 14 ISSB members agreed with this decision.

Application challenges and concerns associated with the requirement to use the Global Industry Classification Standard (GICS) in IFRS S2 (Agenda Paper 9C)

The ISSB discussed proposed amendments to IFRS S2 in response to application challenges identified in implementing the Standard that relate to the use of the Global Industry Classification Standard (GICS) in applying requirements related to financed emissions.

The ISSB decided:

1. the proposed amendments to IFRS S2 meet the amendment criteria for application challenges; and
2. it will propose amendments to these requirements at this time.

All 14 ISSB members agreed with these decisions.

The ISSB tentatively decided to propose:

1. to amend the requirement for an entity to use GICS when disaggregating specific financed emissions information. The amendment would require an entity to use:
   1. GICS, if the entity currently uses GICS in any part of the entity to classify its lending and investment activities.
   2. in circumstances not described in (i), an alternative industry-classification system if the entity or part of the entity is required by a jurisdictional authority or an exchange on which it is listed to use that system to disaggregate its lending and investment portfolios for other reporting purposes. If the entity uses more than one industry-classification system, the entity would be required to disaggregate specific financed emissions information using:
      1. a classification system used to report climate-related financial information; or
      2. in the absence of (1), a classification system used for providing financial information for other reporting purposes.
   3. in circumstances not described in (i)–(ii), an industry-classification system of the entity’s choice that enables it to provide disaggregated financed emissions information in a manner that is useful to users of general purpose financial reports.
      Twelve of 14 ISSB members agreed with these decisions.
2. to add a requirement to disclose the industry-classification system the entity uses to disaggregate financed emissions information and explain the basis for the selection, if the entity uses a system other than GICS.
   All 14 ISSB members agreed with this decision.

Due process steps and permission to ballot (Agenda Paper 9D)

The ISSB discussed the due process steps for developing the proposed amendments to IFRS S2.

All 14 ISSB members confirmed they were satisfied the ISSB has complied with the applicable due process requirements and has undertaken sufficient consultation and analysis to begin the process for balloting an exposure draft of proposed amendments to IFRS S2.

No ISSB member indicated an intention to dissent from the proposals in the exposure draft, but one ISSB member indicated they might do so.

The ISSB tentatively decided to allow a 60-day comment period for the exposure draft (subject to approval by the Due Process Oversight Committee).

All 14 ISSB members agreed with this decision.

The ISSB tentatively decided to set the effective date such that the issued amendments would be effective as soon as possible and to permit early application of the amendments.

All 14 ISSB members agreed with this decision.

Next step

The ISSB will begin the balloting process and plans to publish an exposure draft in the second quarter of 2025.