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