Canadian Consultation: General Requirements for Disclosure of Sustainability-related Financial Information Exposure Draft

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Consultation has concluded

Financial Reporting & Assurance Standards Canada is embarking on a consultation project to solicit feedback from Canadians on the International Sustainability Standards Board’s (ISSB) Exposure Draft IFRS S1 “General Requirements for Disclosure of Sustainability-related Financial Information” (General Requirements Exposure Draft).

Your feedback will inform the response letter sent to the ISSB by Canada’s standard-setting oversight councils. Ensuring Canadian perspectives are heard by the ISSB helps to ensure our country’s unique issues and perspectives are considered before a final standard is issued.

Financial Reporting & Assurance Standards Canada is embarking on a consultation project to solicit feedback from Canadians on the International Sustainability Standards Board’s (ISSB) Exposure Draft IFRS S1 “General Requirements for Disclosure of Sustainability-related Financial Information” (General Requirements Exposure Draft).

Your feedback will inform the response letter sent to the ISSB by Canada’s standard-setting oversight councils. Ensuring Canadian perspectives are heard by the ISSB helps to ensure our country’s unique issues and perspectives are considered before a final standard is issued.

  • CLOSED: This survey has concluded.

    Overall approach

    The Exposure Draft sets out overall requirements with the objective of disclosing sustainability-related financial information that is useful to the primary users of the entity’s general purpose financial reporting when they assess the entity’s enterprise value and decide whether to provide resources to the entity.

    The proposals in the Exposure Draft would require an entity to disclose material information about all significant sustainability-related risks and opportunities to which it is exposed.

    Consultation has concluded
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  • CLOSED: This survey has concluded.

    Application

    Paragraphs 53 and 54 require management to refer to other standards and frameworks in the absence of a specific IFRS Sustainability Disclosure Standard.

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  • CLOSED: This survey has concluded.

    Materiality

    The Exposure Draft appears to apply a materiality threshold to sustainability-related disclosures broadly. In particular, paragraph 60 indicates that “An entity need not provide a specific disclosure that would otherwise be required by an IFRS Sustainability Disclosure Standard if the information resulting from that disclosure is not material. This is the case even if the IFRS Sustainability Disclosure Standard contains a list of specific requirements or describes them as minimum requirements.” 

    This approach is different than some recent local proposals. For example:

    • Governance disclosure requirements proposed by the Canadian Securities Administrators (CSA) are not subject to a materiality threshold
    • Scope 1 and 2 greenhouse gas emissions disclosure requirements proposed by the U.S. Securities and Exchange Commission (SEC) are not subject to a materiality threshold

    Further, the definition of materiality under the Exposure Draft (based on enterprise value) differs from the traditional concept of materiality in financial reporting. We also note that recent CSA and SEC proposals do not include new definitions of materiality, but rather refer to existing definitions in securities law based on a reasonable investor test.

    Paragraph 57 - Material sustainability-related financial information
    Paragraph 5 - Enterprise value

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