ISSB ISSB Transition and Compliance 2

Question 1

Under ISSB standards, what is required when an entity determines that a particular sustainability topic is NOT material to its reporting?

Accepted Answer

The entity need not disclose information about immaterial topics but should have a documented process supporting the materiality determination

Answer

Materiality-based filtering means entities only disclose what is material; however, their materiality assessment process should be systematic and defensible.

Question 2

What does the ISSB mean by 'significant judgment' areas in sustainability disclosures, and what disclosure is required?

Accepted Answer

Where significant judgment was applied in preparing disclosures, entities must describe the nature of those judgments and key sources of uncertainty

Answer

IFRS S1 requires entities to disclose where significant judgment was exercised, including assumptions and estimation uncertainty, allowing users to assess information reliability.

Question 3

How does IFRS S1 address the situation where an entity cannot obtain information about its value chain?

Accepted Answer

If information about the value chain is not reasonably available, entities must disclose this fact and their efforts to obtain it

Answer

IFRS S1 acknowledges that value chain data may not always be available and requires disclosure of this limitation alongside efforts made to obtain the information.

Question 4

What is a 'sustainability-related financial disclosure' as defined in the ISSB framework?

Accepted Answer

A disclosure about sustainability-related risks or opportunities that could reasonably be expected to affect an entity's cash flows, financing access, or cost of capital

Answer

The ISSB definition focuses on financial relevance: disclosures are sustainability-related financial disclosures specifically when they bear on the entity's financial condition or prospects.

Question 5

Under IFRS S2, what must be disclosed about climate-related targets' underlying methodologies when using science-based approaches?

Accepted Answer

The methodology used, third-party validation status, and key assumptions — especially for Scope 3-inclusive science-based targets

Answer

Even for validated science-based targets, IFRS S2 requires transparency about methodology, assumptions, and validation status to allow investor assessment of credibility.

ISSB - International Sustainability Standards Board Practice Test

ISSB - International Sustainability Standards Board Practice Test

ISSB ISSB Transition and Compliance 2