March 2022 Proposals Exposure Draft Snapshot

1 March 2022 Proposals Exposure Draft Snapshot The International Sustainability standards Board (ISSB) proposes issuing two IFRS Sustainability Disclosure standards that would: require a company to disclose information that enables investors IFRS Sustainability Disclosure standards to assess the effect of significant sustainability-related risks and opportunities on its enterprise value; and [ Draft ] IFRS S1 establish disclosure requirements specific to climate-related risks and General Requirements for opportunities. Disclosure of Sustainability-related Project stage Financial Information The ISSB is seeking comments on the two proposed IFRS Sustainability Disclosure standards ( Exposure drafts). [ Draft ] IFRS S2. Climate-related Disclosures Next steps The ISSB will consider comments it receives on the Exposure drafts in developing its final requirements. It plans to consider the comments in the second half of 2022 and aims to finalise the requirements by the end of 2022.

2 Comment deadline 29 July 2022. Introduction Global capital markets demand better information The proposed IFRS S1 General Requirements The idea of a global baseline is supported by about sustainability-related matters to enable for Disclosure of Sustainability-related Financial G20 leaders, the International Organization of investors to factor in sustainability-related risks and Information (General Requirements Exposure Draft ) Securities Commissions (IOSCO) and others. opportunities in their assessment of enterprise value. would require companies to disclose information The ISSB is working closely with other international about all of their significant sustainability related risks organisations and jurisdictions to support the The ISSB has been created to meet this demand. and opportunities. incorporation of the global baseline into jurisdictional The ISSB has now published its first two proposed requirements and ensuring it is compatible with The proposed IFRS S2 Climate-related Disclosures IFRS Sustainability Disclosure standards which requirements aimed at broader stakeholder groups.

3 (Climate Exposure Draft ) focuses on climate related once finalised will form a comprehensive global Stakeholders are encouraged to respond to risks and opportunities. It incorporates the baseline of sustainability disclosures designed consultations by jurisdictions on sustainability reporting. recommendations of the Task Force on to meet the information needs of investors when Climate related Financial Disclosures (TCFD) and The ISSB will consult later this year on its future assessing enterprise value. includes metrics tailored to industry classifications standard-setting priorities. derived from the industry-based SASB standards . About the ISSB. September December March November March July At the UN Climate Change Conference (COP26). 2020 2020 2021 2021 2022 2022 in November 2021, the IFRS Foundation Trustees announced the creation of the ISSB, a new standard-setting board within the Trustees consult Group of five' Trustees establish Trustees announce ISSB publishes Consultation IFRS Foundation.

4 On demand for, publishes climate Technical Readiness creation of ISSB, two Exposure drafts comment deadline The ISSB's remit is to issue standards that and potential IFRS prototype, showing Working Group publication of TRWG for consultation: 29 July 2022. Foundation role in, how their work (TRWG), to provide prototypes and deliver a comprehensive global baseline of General Requirements sustainability-related could be combined recommendations to consolidation with sustainability related financial disclosures for for Disclosure of financial information to create global proposed new board Climate Disclosure the capital markets. It will operate alongside Sustainability related for global capital sustainability standards Board markets disclosure standards (CDSB) and Financial Information the International Accounting standards Board. Value Reporting Climate-related Both boards are overseen by the Trustees.

5 Foundation (which Disclosures The ISSB's standards will be called houses Integrated Reporting and IFRS Sustainability Disclosure standards . SASB standards ). Snapshot | Exposure Drafts IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures | March 2022 | 2. 1 Proposed IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information The General Requirements Exposure Draft Enterprise value is the total value of an entity's Information the General Requirements sets out the core content for a complete set of equity and net debt and reflects expectations of the Exposure Draft proposes a company be required sustainability related financial disclosures, establishing amount, timing and uncertainty of future cash flows to disclose and any information required by an a comprehensive baseline of sustainability-related over the short, medium and long term and the value IFRS Sustainability Disclosure Standard would financial information.

6 Attributed to those cash flows (reflecting the cost need to be disclosed as a part of a company's of capital). general purpose financial reporting. A consequence To comply with the proposed requirements, a Information that could be relevant to the is that the sustainability related financial disclosures company would disclose material information assessment of enterprise value is broader than would be required to be published at the same time about all significant sustainability related risks information reported in the financial statements. as the financial statements. and opportunities to which it is exposed the materiality judgement is made in the context of It includes information about a company's impacts the sustainability related financial information and dependencies on people, the planet and the necessary for users of general purpose financial economy when relevant to the assessment of the reporting (investors) to assess enterprise value.

7 Company's enterprise value. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information Core content The General Requirements Exposure Draft Governance Strategy proposes requiring the disclosure of information Information to enable investors to understand Information to enable investors to assess a about significant sustainability-related risks and the governance processes, controls and company's strategy for addressing significant opportunities. The sustainability-related financial procedures used to monitor and manage sustainability-related risks and opportunities, information disclosed would be centred on a significant sustainability-related risks whether these risks and opportunities are company's consideration of its governance, strategy and opportunities. incorporated into its strategic planning, and risk management and the metrics and targets including financial planning; and whether they it uses to measure, monitor and manage significant are core to its strategy.

8 Sustainability-related risks and opportunities. This approach is consistent with the recommendations of the TCFD, but extends them to sustainability-related risks and opportunities beyond those related to climate. Governance Risk management Metrics and targets Information to enable investors to understand Information to enable investors to understand Strategy the process by which a company identifies, how a company measures, monitors and assesses and manages current and manages significant sustainability-related Risk anticipated sustainability-related risks and risks and opportunities and assesses its management opportunities and whether that process is performance, including progress towards the integrated into its overall risk management targets it has set. Metrics processes. This information helps an investor and targets evaluate the company's overall risk profile and risk management processes.

9 Snapshot | Exposure Drafts IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures | March 2022 | 4. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information Fair presentation The proposed Standard provides guidance and examples for identifying appropriate metrics, including The proposed Standard would require The General Requirements Exposure Draft proposes cross-industry and industry-based metrics. the sustainability-related financial requiring companies to present fairly a complete set of information to be reported at the sustainability-related financial disclosures. Information related to a same time as the financial statements Fair presentation is the faithful representation company's value chain are reported. of information about sustainability-related risks and opportunities, applying the principles set out The proposed Standard requires disclosure of in the General Requirements Exposure Draft .

10 Material information about sustainability-related risks To identify significant sustainability-related risks and opportunities across a company's value chain. Connected information and opportunities and their related metrics and The proposed Standard defines a value chain as the full range of activities, resources and relationships The proposed Standard would require companies to targets a company would apply IFRS Sustainability provide information that allows investors to assess the Disclosure standards . A company would also related to a company's business model and the external environment in which it operates'. connections between different sustainability related be required to consider the disclosure topics in risks and opportunities. It would also require a the industry-based SASB standards , the ISSB's Relevant activities, resources and relationships company to disclose how sustainability related non mandatory guidance (such as the CDSB include those in the company's operations, such as financial information is related to information in its Framework application guidance for water- and human resources; those along its supply, marketing financial statements.)