20 December 2022 (Updated 19 April 2023)

What’s the issue?

The formation of the International Sustainability Standards Board (ISSB) brought together the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (together, the Value Reporting Foundation) with the Climate Disclosure Standards Board under the IFRS Foundation. The ISSB aims to build on existing content developed by different standard setters to create a global baseline for sustainability reporting that is focused on the needs of investors, lenders and other creditors.

The SASB standards are unique in taking an industry-based approach to investor-focused sustainability reporting across all sectors. In March 2022, the ISSB chair and vice-chair communicated their commitment to maintaining, enhancing and evolving the SASB standards.

The ISSBTM summary of feedback received on its proposals1 showed broad support from investors on the use of industry-specific materials. Many supported the concept, but were concerned they did not have enough time to evaluate the detail of the proposals. There were also many calls for the ISSB to make the detailed SASB-based requirements non-mandatory.

Industry-specific materials under IFRS® Sustainability Disclosure Standards will support investors’ understanding of sustainability-related risks and opportunities. Companies applying the SASB standards have a head start with identifying useful information.

Pat Woo
Partner, Head of Environmental, Social and Governance,
Hong Kong SAR, KPMG China

What was proposed?

In its proposals, the ISSB incorporated SASB content by:

  • listing the SASB standards as guidance in proposed IFRS S1; and
  • including industry-specific requirements in Appendix B of proposed IFRS S2.

Appendix B of proposed IFRS S2 provides industry-specific metrics across 11 sectors, comprising 68 industries, which are based on the SASB standards. These aim to help companies disclose information specific to their industry when describing how they monitor and measure climate-related risks and opportunities.

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

Patrick Chu
Partner, Head of ESG Reporting and Assurance
KPMG China

Pat Woo
Partner, Head of Environmental, Social and Governance, Hong Kong SAR
KPMG China

Irene Chu
Partner, ESG Advisory
KPMG China

Dana Chaput
Partner, ESG Advisory
KPMG China

Rani Kamaruddin
Partner, ESG Advisory
KPMG China

Angus Choi
Partner, ESG Advisory
KPMG China

Jonathon Ko
Partner, ESG Advisory
KPMG China

Derek Yuen
Partner, ESG Reporting and Assurance
KPMG China

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What’s the ISSB’s latest thinking?

The ISSB reflected on the importance of industry-specific disclosures to investors and recognised that these can drive relevant and comparable content. It has agreed that proposed IFRS S2 would still require industry-specific disclosures but for now it would classify the content in Appendix B of proposed IFRS S2 as illustrative examples.

To finalise the proposed IFRS S2, the ISSB plans to make changes to the two-step process through which a company would identify:

  • the climate-related risks and opportunities it is exposed to; and
  • provide disclosures related to those risks and opportunities.

Separately, it has also identified content in Appendix B that could be improved and it plans to:

  • enhance the international applicability of certain metrics; and
  • address some inconsistencies.

The ISSB made it clear that its intention is to make Appendix B mandatory in the future, subject to further consultation. It has begun discussing a plan to transition Appendix B from non-mandatory illustrative examples into mandatory industry-based requirements over time.

The ISSB plans to internationalise SASB’s non-climate-related metrics and will open for consultation in May 2023 for 90 days.

What’s the impact?

SASB standards will continue to feature heavily in IFRS Sustainability Disclosure Standards. This should comfort investors who support the use of the SASB standards and companies already applying them.

Regardless of the status of Appendix B in proposed IFRS S2, industry-specific disclosures would still be required.

The ISSB hopes that retaining SASB standards in Appendix B as non-mandatory illustrative examples would drive more companies to apply them. This would enable a broader range of stakeholders to provide feedback and contribute to future consultations on the detail and status of industry-specific materials.

Actions for management

  • Familiarise yourself with the SASB standards for your industry as well as the metrics in Appendix B of proposed IFRS S2.
  • Perform an impact assessment to understand where there are gaps between your current reporting and the proposals.
  • Consider adopting the SASB standards now, if you have not already done so. This would help you apply the future IFRS Sustainability Disclosure Standards.
  • Undertake a benchmarking exercise against industry peers to identify other relevant metrics to consider.
  • Consider responding to the consultation to enhance the international applicability of the non climate-related SASB metrics.

How did we get here?


Document version Reference
Proposed IFRS S1 ED/2022/S1 Published 31 March 2022
Proposed IFRS S2 ED/2022/S2 Published 31 March 2022
ISSB Board meeting: 20–23 September 2022; Frankfurt

AP3B and AP4B: Plan for redeliberations

Meeting summary

Topics that the ISSB discussed further include ‘industry-based requirements’
ISSB Board meeting: 18–21 October 2022; Montreal

AP6: Industry based materials

Meeting summary

The ISSB agreed that Appendix B in proposed IFRS S2 would be classified as ‘illustrative examples’
ISSB Board meeting: 13-15 December 2022; Montreal

AP4C: Climate-related disclosures Appendix B

Meeting summary

The ISSB agreed that it would make amendments to proposed IFRS S2 to classify the content in Appendix B as illustrative examples

It also discussed a plan to transition Appendix B to mandatory industry-based requirements over time, subject to future consultation

ISSB Board meeting: 19 April 2023; Frankfurt

AP8a: Ratification of the Methodology Exposure Draft

AP8b: Proposed Exposure Draft

The ISSB agreed to set a 90-day comment period for the Methodology Exposure Draft

1 Proposed IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and proposed IFRS S2 Climate-related Disclosures.

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