ISSB IFRS S1 General Requirements 3 — Questions and Answers
Question 1: Under IFRS S1, what time horizons must entities consider when assessing sustainability risks and opportunities?
- Short, medium, and long term — with the entity defining specific periods given its business context (Correct answer)
- Only the 12-month financial year period
- Exactly 1, 5, and 30 years as defined by ISSB
- Whatever single horizon regulators in the entity's jurisdiction specify
Correct answer: Short, medium, and long term — with the entity defining specific periods given its business context
IFRS S1 requires consideration of short, medium, and long-term horizons, with the entity defining the specific time periods appropriate to its business.
Question 2: How does IFRS S1 address the relationship between sustainability risks and an entity's business model?
- Entities must explain how sustainability risks affect or may affect their business model, value chain, and strategy (Correct answer)
- Business model disclosures are reserved for IFRS S2 climate disclosures only
- Sustainability risks are disclosed separately from business model analysis
- Only companies in extractive industries must link sustainability to business model
Correct answer: Entities must explain how sustainability risks affect or may affect their business model, value chain, and strategy
IFRS S1 requires entities to disclose how sustainability risks and opportunities affect their business model and value chain as part of strategy disclosures.
Question 3: Under IFRS S1, what must an entity disclose about its risk management process for sustainability issues?
- Processes used to identify, assess, prioritize, and monitor sustainability risks and whether integrated with overall risk management (Correct answer)
- Only a list of identified risks without describing the process
- Quantitative risk scores for each sustainability topic
- Insurance coverage amounts for sustainability-related losses
Correct answer: Processes used to identify, assess, prioritize, and monitor sustainability risks and whether integrated with overall risk management
IFRS S1 requires disclosure of the processes and whether they are integrated into the entity's overall enterprise risk management framework.
Question 4: What does IFRS S1 require entities to disclose about their sustainability-related targets?
- Targets set and performance against them, including the metrics used, time frame, and any milestones (Correct answer)
- Only aspirational long-term goals without interim milestones
- Targets are voluntary disclosures under IFRS S1
- Only science-based targets aligned with the Paris Agreement
Correct answer: Targets set and performance against them, including the metrics used, time frame, and any milestones
IFRS S1 requires disclosure of specific targets, the metrics used to measure progress, the time frame, and performance against those targets.
Question 5: Under IFRS S1, which qualitative characteristic requires sustainability disclosures to be free from material error and bias?
- Faithful representation (Correct answer)
- Relevance
- Comparability
- Timeliness
Correct answer: Faithful representation
Faithful representation requires sustainability disclosures to be complete, neutral, and free from material error — a core qualitative characteristic borrowed from IFRS accounting standards.
Question 6: How does IFRS S1 handle situations where information about sustainability risks is commercially sensitive?
- Entities may omit specific details if disclosure would be seriously prejudicial, but must indicate the nature of the omission (Correct answer)
- Commercial sensitivity is not recognized; all required information must be disclosed
- Commercially sensitive information is fully exempt with no disclosure required
- Entities must seek ISSB approval before omitting sensitive details
Correct answer: Entities may omit specific details if disclosure would be seriously prejudicial, but must indicate the nature of the omission
IFRS S1 allows omission of genuinely commercially sensitive information, but entities must disclose that information has been omitted and explain why.
ISSB IFRS S1 General Requirements 3
Under IFRS S1, what time horizons must entities consider when assessing sustainability risks and opportunities?