Exposure Draft on IFRS S1 General Requirements for …

1 March 2022. Exposure Draft IFRS sustainability Disclosure Standard [ Draft ] IFRS S1 General Requirements for Disclosure of sustainability -related Financial Information Comments to be received by 29 July 2022. International sustainability Standards Board ED/2022/S1. Exposure Draft General Requirements for Disclosure of sustainability -related Financial Information Comments to be received by 29 July 2022. Exposure Draft ED/2022/S1 General Requirements for Disclosure of sustainability -related Financial Information is published by the International sustainability Standards Board (ISSB) for comment only. Comments need to be received by 29 July 2022 and should be submitted by email to or online at All comments will be on the public record and posted on our website at unless the respondent requests confidentiality. Such requests will not normally be granted unless supported by a good reason, for example, commercial confidence.

2 Please see our website for details on this policy and on how we use your personal data. If you would like to request confidentiality, please contact us at before submitting your letter. Disclaimer: To the extent permitted by applicable law, the ISSB and the IFRS Foundation (Foundation) expressly disclaim all liability howsoever arising from this publication or any translation thereof whether in contract, tort or otherwise to any person in respect of any claims or losses of any nature including direct, indirect, incidental or consequential loss, punitive damages, penalties or costs. Information contained in this publication does not constitute advice and should not be substituted for the services of an appropriately qualified professional. ISBN for this part: 978-1-914113-62-8. ISBN for complete publication (three parts): 978-1-914113-61-1. 2022 IFRS Foundation All rights reserved.

3 Reproduction and use rights are strictly limited. Please contact the Foundation for further details at Copies of ISSB publications may be ordered from the Foundation by emailing or visiting our shop at The Foundation has trade marks registered around the world (Marks) including IAS ', IASB ', the IASB logo, IFRIC ', IFRS ', the IFRS logo, IFRS for SMEs ', the IFRS for SMEs logo, International Accounting Standards ', International Financial Reporting Standards ', the Hexagon Device', NIIF '. and SIC '. Further details of the Foundation's Marks are available from the Foundation on request. The Foundation is a not-for-profit corporation under the General Corporation Law of the State of Delaware, USA and operates in England and Wales as an overseas company (Company number: FC023235) with its principal office in the Columbus Building, 7 Westferry Circus, Canary Wharf, London, E14 4HD.

4 General Requirements FOR DISCLOSURE OF sustainability -RELATED FINANCIAL INFORMATION. CONTENTS. from page INTRODUCTION 5. INVITATION TO COMMENT 8. [ Draft ] IFRS S1 General Requirements FOR. DISCLOSURE OF sustainability -RELATED FINANCIAL. INFORMATION 22. OBJECTIVE 22. SCOPE 23. CORE CONTENT 23. Governance 24. Strategy 25. Risk management 28. Metrics and targets 29. General FEATURES 30. Reporting entity 30. Connected information 31. Fair presentation 32. Materiality 33. Comparative information 34. Frequency of reporting 35. Location of information 36. Sources of estimation and outcome uncertainty 37. Errors 38. Statement of compliance 39. APPENDICES 40. A Defined terms 40. B Effective date 42. C Qualitative characteristics of useful sustainability -related financial information 43. APPROVAL BY THE ISSB CHAIR AND VICE-CHAIR OF Exposure Draft . IFRS S1 General Requirements FOR DISCLOSURE OF.

5 sustainability -RELATED FINANCIAL INFORMATION PUBLISHED IN. MARCH 2022 49. ILLUSTRATIVE GUIDANCE (see separate booklet). BASIS FOR CONCLUSIONS (see separate booklet). IFRS Foundation 3. Exposure Draft MARCH 2022. [ Draft ] IFRS S1 General Requirements for Disclosure of sustainability -related Financial Information is set out in paragraphs 1 92 and Appendices A C. All the paragraphs have equal authority. Paragraphs in bold type state the main principles. Terms defined in Appendix A are in italics the first time they appear in the [ Draft ] Standard. Definitions of other terms are given in other IFRS sustainability Disclosure Standards. The [ Draft ]. Standard should be read in the context of its objective and the Basis for Conclusions. 4 IFRS Foundation General Requirements FOR DISCLOSURE OF sustainability -RELATED FINANCIAL INFORMATION. Introduction Why is the ISSB publishing the Exposure Draft ?

6 These proposals respond to calls from primary users (investors, lenders and other creditors) of General purpose financial reporting for more consistent, complete, comparable and verifiable sustainability -related financial information to help them assess an entity's enterprise value. An entity's ability to remain resilient will rely on a range of resources and relationships. Such resources and relationships include its workforce, any specialised knowledge it has developed and its relationships with local communities and natural resources. Investors, lenders and other creditors, therefore, seek information about the significant sustainability -related risks and opportunities facing an entity to inform their decisions about providing resources to the entity. Such information supplements and complements the information contained in the entity's financial statements.

7 sustainability -related risks and opportunities arise from an entity's dependencies on resources and its impacts on resources, and the relationships the entity maintains that may be positively or negatively affected by those impacts and dependencies. When an entity's business model depends, for example, on a natural resource like water it is likely to be affected by changes in the quality, availability and pricing of that resource. When an entity's activities result in adverse, external impacts on, for example, local communities it could be subjected to stricter government regulation and consequences of reputational effects for example, negative effects on the entity's brand and higher recruitment costs. Furthermore, when an entity's business partners face significant sustainability -related risks and opportunities, the entity could be exposed to related consequences of its own.

8 When such impacts, dependencies and relationships create risks or opportunities, they can create or erode the value of the enterprise, the financial returns to providers of financial capital, and the assessment of enterprise value by primary users. Enterprise value reflects expectations of the amount, timing and certainty of future cash flows over the short, medium and long term and the value of those cash flows in the light of the entity's risk profile, and its access to finance and cost of capital. The information contained in its financial statements and the information included in an entity's sustainability -related financial disclosures are essential inputs to a primary user's assessment of an entity's enterprise value. The proposals would require an entity to disclose material information about all of the significant sustainability -related risks and opportunities to which it is exposed.

9 A summary of the proposals in the Exposure Draft The proposals set out the overall Requirements for disclosing sustainability -related financial information in order to provide primary users with a complete set of sustainability -related financial disclosures. The Exposure Draft is based on the General Requirements for disclosure of sustainability -related financial information prototype published on the IFRS Foundation website in November 2021, developed by the Technical IFRS Foundation 5. Exposure Draft MARCH 2022. Readiness Working Group (TRWG).1 The prototype and the Exposure Draft include the recommendations by the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) and components of the frameworks and standards of international sustainability bodies, as published in a prototype of a sustainability -related financial disclosure presentation standard in December The Exposure Draft includes proposals for definitions and Requirements that are consistent with the IASB's Conceptual Framework for Financial Reporting, IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

10 Proposals in the Exposure Draft would require an entity to disclose material information about all of the significant sustainability -related risks and opportunities to which it is exposed. The proposals include Requirements and guidance to support the disclosure of material information about significant sustainability -related risks and opportunities not specifically addressed by an IFRS sustainability Disclosure Standard. In such cases, to identify sustainability -related risks and opportunities and to disclose information about them, entities are directed to consider sources that include the disclosure topics in the industry-based sustainability Accounting Standards Board (SASB) Standards, the International sustainability Standards Board's (ISSB) non-mandatory guidance (such as the CDSB Framework application guidance for water- and biodiversity-related disclosures), the most recent pronouncements of other standard-setting bodies whose Requirements are designed to meet the needs of users of General purpose financial reporting, and the sustainability -related risks and opportunities identified by entities that operate in the same industries or geographies.