ISSB Sustainability Reporting Framework Concepts 2 — Questions and Answers
Question 1: What is the purpose of SASB (Sustainability Accounting Standards Board) standards in the ISSB ecosystem?
- SASB provides industry-specific disclosure topics and metrics that supplement IFRS S1's general requirements across 77 industry standards (Correct answer)
- SASB replaced IFRS S1 for US-based companies after its acquisition by IFRS Foundation
- SASB only covers financial services and banking sector sustainability disclosures
- SASB standards are voluntary recommendations with no relationship to ISSB
Correct answer: SASB provides industry-specific disclosure topics and metrics that supplement IFRS S1's general requirements across 77 industry standards
SASB Standards identify industry-specific sustainability topics and quantitative metrics, and IFRS S1 references them as a source of guidance for entities in those industries.
Question 2: In ISSB's conceptual framework, what does 'comparability' as a qualitative characteristic require?
- Disclosures should enable users to identify and understand similarities and differences across entities and over time (Correct answer)
- All entities must use identical metrics regardless of industry or size
- Companies must disclose sustainability data in exactly the same format as their competitors
- Comparability requires third-party benchmarking against sector averages
Correct answer: Disclosures should enable users to identify and understand similarities and differences across entities and over time
Comparability under IFRS S1 means disclosures should be consistent within an entity over time and allow meaningful comparison across entities.
Question 3: What is the 'integrated reporting' concept pioneered by the IIRC and how did it influence ISSB?
- Integrated reporting focuses on how organizations create value across financial and non-financial capitals, influencing ISSB's connectivity concept (Correct answer)
- Integrated reporting is the formal name for IFRS S1 and IFRS S2 combined
- The IIRC created ISSB standards before merging into the IFRS Foundation
- Integrated reporting only covers governance disclosures, not sustainability metrics
Correct answer: Integrated reporting focuses on how organizations create value across financial and non-financial capitals, influencing ISSB's connectivity concept
The IIRC's integrated reporting framework emphasized value creation across multiple capitals, directly influencing ISSB's connectivity principle linking sustainability to financial outcomes.
Question 4: How does ISSB's framework address Scope 2 market-based emissions accounting?
- IFRS S2 requires entities to disclose both location-based and market-based Scope 2 emissions, allowing full transparency on renewable energy procurement (Correct answer)
- Only market-based Scope 2 is required because it reflects actual purchases
- Location-based Scope 2 is mandatory; market-based is optional
- Scope 2 methodology choice is left entirely to the preparer with no requirement to disclose which method is used
Correct answer: IFRS S2 requires entities to disclose both location-based and market-based Scope 2 emissions, allowing full transparency on renewable energy procurement
IFRS S2 requires both Scope 2 methodologies to be disclosed: location-based reflects grid average emissions, while market-based reflects actual contractual instruments like RECs.
Question 5: What is the 'Paris Agreement' and why is it significant to IFRS S2?
- The Paris Agreement is an international climate treaty aiming to limit global warming to 1.5–2°C, and IFRS S2 requires entities to consider scenarios consistent with its goals (Correct answer)
- The Paris Agreement created the ISSB as its official reporting framework body
- IFRS S2 mandates alignment with Paris Agreement targets for all disclosing entities
- The Paris Agreement only applies to governments and is not referenced in IFRS S2
Correct answer: The Paris Agreement is an international climate treaty aiming to limit global warming to 1.5–2°C, and IFRS S2 requires entities to consider scenarios consistent with its goals
IFRS S2 explicitly requires consideration of a 1.5°C scenario consistent with the Paris Agreement, making the treaty a central reference for climate scenario analysis.
Question 6: In the ISSB framework, what is the relationship between sustainability risks and 'enterprise value'?
- ISSB disclosures aim to provide information relevant to assessing enterprise value — cash flows, access to finance, and cost of capital — over time (Correct answer)
- Enterprise value is a specific metric entities must disclose under IFRS S1
- Sustainability risks only affect enterprise value in industries with physical climate exposure
- Enterprise value impacts are limited to Scope 1 emissions under ISSB guidance
Correct answer: ISSB disclosures aim to provide information relevant to assessing enterprise value — cash flows, access to finance, and cost of capital — over time
ISSB's investor focus is fundamentally about enterprise value — sustainability risks that affect an entity's future cash flows, financing costs, or capital access are material disclosures.
ISSB Sustainability Reporting Framework Concepts 2
What is the purpose of SASB (Sustainability Accounting Standards Board) standards in the ISSB ecosystem?