ISSB Guide 5 — Questions and Answers
Question 1: What is the effective date for IFRS S1 and IFRS S2 as published by the ISSB?
- Annual periods beginning on or after January 1, 2022
- Annual periods beginning on or after January 1, 2023
- Annual periods beginning on or after January 1, 2024 (Correct answer)
- Annual periods beginning on or after January 1, 2025
Correct answer: Annual periods beginning on or after January 1, 2024
IFRS S1 and IFRS S2, published in June 2023, are effective for annual reporting periods beginning on or after January 1, 2024.
Question 2: Which first-year transitional relief in IFRS S1 allows entities to publish sustainability disclosures separately from the financial statements?
- The Scope 3 emissions relief
- The comparative period relief
- The timing relief permitting later publication of sustainability disclosures (Correct answer)
- The qualitative-only reporting relief
Correct answer: The timing relief permitting later publication of sustainability disclosures
A timing relief in IFRS S1 allows first-year adopters to publish their sustainability disclosures after the financial statements, easing the preparation burden in the initial period.
Question 3: Under ISSB's first-year transitional provisions, which of the following is an entity NOT required to provide?
- Governance disclosures about oversight of sustainability risks
- Comparative period sustainability-related financial information (Correct answer)
- Identification of material sustainability-related risks and opportunities
- Description of the entity's risk management processes for sustainability
Correct answer: Comparative period sustainability-related financial information
In the first reporting period, entities are exempt from providing prior-period comparative sustainability disclosures, acknowledging the retrospective challenges of first-time adoption.
Question 4: Where does ISSB guidance recommend entities include their sustainability-related financial disclosures?
- A standalone sustainability report published separately from financial statements
- As part of the general purpose financial report, such as in management commentary (Correct answer)
- Exclusively on the entity's investor relations website
- In regulatory filings that are distinct from annual financial reports
Correct answer: As part of the general purpose financial report, such as in management commentary
ISSB recommends sustainability disclosures be included in the general purpose financial report to reinforce the connectivity between sustainability and financial information.
Question 5: What is the current ISSB position on external assurance of sustainability disclosures?
- External assurance is mandatory for all disclosures from the first reporting period
- The standards do not mandate assurance but acknowledge its importance; jurisdictions may add requirements (Correct answer)
- Internal audit is the only required form of assurance under IFRS S1
- Assurance is explicitly prohibited until the IAASB finalizes sustainability assurance standards
Correct answer: The standards do not mandate assurance but acknowledge its importance; jurisdictions may add requirements
IFRS S1 and IFRS S2 do not currently mandate external assurance, though ISSB recognizes assurance's importance and jurisdictions may impose it through their own adoption frameworks.
Question 6: In IFRS S2 governance disclosures, what does 'skills and competencies' specifically refer to?
- Employee sustainability training programs and certifications
- The qualifications of board members to oversee climate-related risks and opportunities (Correct answer)
- Technical skills required to operate sustainability reporting software
- Professional credentials held by the sustainability reporting team
Correct answer: The qualifications of board members to oversee climate-related risks and opportunities
Governance disclosures require entities to describe the skills and competencies at the board level that enable effective oversight of sustainability-related risks and opportunities.
Question 7: Under IFRS S2, what must an entity disclose regarding carbon credits used to meet GHG targets?
- The purchase price and counterparty for every carbon credit transaction
- Whether carbon credits are used to meet GHG targets and the nature and quantity of those credits (Correct answer)
- Only Scope 1 offsets need to be disclosed; Scope 2 and 3 offsets are exempt
- Carbon credits must be verified by an independent third party before disclosure
Correct answer: Whether carbon credits are used to meet GHG targets and the nature and quantity of those credits
IFRS S2 requires entities to disclose whether they use carbon credits toward their GHG targets and, if so, the type, quantity, and quality criteria of the credits used.
ISSB Guide 5
What is the effective date for IFRS S1 and IFRS S2 as published by the ISSB?