The International Sustainability Standards Board (ISSB) has proposed amendments to IFRS S2 Climate-related Disclosures to simplify the application of requirements for GHG emissions disclosure.
The proposed amendments aim to reduce the disclosure of Scope-3 Category 15 GHG emissions associated with derivatives and financial activities and the use of the Global Industry Classification Standard.
According to ISSB, the reliefs aim to assist preparers in implementing IFRS S2 by mitigating the risk of duplication of reporting and the associated costs.
They also clarify jurisdictional relief for using alternative GHG emission measurement methods and permission to use Global Warming Potential (GWP) values that are not from the latest Intergovernmental Panel on Climate Change (IPCC).
This would allow an entity to use an alternative industry-classification system when disaggregating financed emissions information.
The proposed amendments aim to address application challenges and are part of the ISSB’s commitment to promoting the implementation of ISSB Standards.
Companies that are currently utilizing IFRS S1 and IFRS S2 as of June 2023 can continue to do so. Jurisdictions with ISSB standards will be encouraged to maintain consistency for efficient global reporting and global baseline maintenance.
Sue Lloyd, ISSB Vice-Chair, said, “As a market-focused standard-setter, we have taken steps to respond in a timely manner by proposing targeted amendments helping preparers where possible, without causing too much disruption and ensuring that our standards continue to enable the provision of decision-useful information to investors.”
Clarifying GHG Emissions Measurement Amendments in a nutshell:
• Relief from measuring and disclosing Scope 3 Category 15 GHG emissions from derivatives and financial activities.
• Relief from using the Global Industry Classification Standard (GICS) in disclosing disaggregated financed emissions information.
• Clarification on jurisdictional relief to use other measurement methods than the Greenhouse Gas Protocol.
• Permission to use jurisdiction-required Global Warming Potential (GWP) values not from the latest IPCC.
The reliefs would support preparers in applying IFRS S2 by reducing the risk of potential duplication of reporting and the related costs associated with applying the standards, ISSB said.
