ISSB Resources 3 — Questions and Answers
Question 1: Under IFRS S1, which governance body is primarily responsible for overseeing sustainability-related resource risks?
- The Chief Financial Officer acting unilaterally
- The dedicated sustainability department
- The board of directors or equivalent governing body (Correct answer)
- The entity's external auditors
Correct answer: The board of directors or equivalent governing body
IFRS S1 requires disclosure of oversight by the board of directors or equivalent governing body for all sustainability-related risks and opportunities, including resource-related ones.
Question 2: What does ISSB require entities to disclose about human capital as a resource under its standards?
- Only the total headcount of permanent employees globally
- Workforce composition, skills, and labor practices material to the entity's ability to execute its strategy (Correct answer)
- Detailed individual employee performance reviews tied to sustainability KPIs
- Only executive compensation packages linked to sustainability targets
Correct answer: Workforce composition, skills, and labor practices material to the entity's ability to execute its strategy
ISSB standards require disclosure of human capital elements — including workforce composition, development, and labor practices — that are material to how the entity executes its sustainability-linked strategy.
Question 3: Under ISSB, what are 'transition risks' in the context of resource management?
- Risks that extreme weather events will physically damage an entity's resource infrastructure
- Risks associated with the societal shift to a lower-carbon economy that affects resource-intensive businesses (Correct answer)
- Risks of increased employee turnover in resource management roles
- Risks of supply chain disruption caused by geopolitical events
Correct answer: Risks associated with the societal shift to a lower-carbon economy that affects resource-intensive businesses
Transition risks arise from policy changes, technology shifts, and market forces associated with moving to a lower-carbon economy, and they directly affect the economic viability of resource-intensive activities.
Question 4: Under IFRS S1, how should an entity approach resource disclosures when some sustainability data is unavailable?
- Omit those disclosures entirely until data becomes available
- Use reasonable estimates and disclose the methodologies, assumptions, and data sources used (Correct answer)
- Defer reporting to the next period when complete data may exist
- Engage a third-party auditor to supply the missing data before filing
Correct answer: Use reasonable estimates and disclose the methodologies, assumptions, and data sources used
IFRS S1 permits the use of estimates when actual resource data is unavailable, requiring transparent disclosure of the methodologies, assumptions, and sources underlying those estimates.
Question 5: Which ISSB concept describes how resource issues that are not currently financially material may become so as conditions evolve?
- Asset impairment testing thresholds
- Sustainability-related interdependencies mapping
- Dynamic materiality (Correct answer)
- Forward-looking risk escalation
Correct answer: Dynamic materiality
Dynamic materiality recognizes that sustainability-related resource risks can cross the threshold of financial materiality over time as markets, regulations, and climate conditions change.
Question 6: Under IFRS S2, what must an entity disclose when it holds significant intellectual property in resource-efficient technologies?
- Full patent filings, technical specifications, and R&D expenditures
- How those assets contribute to its climate-related risk management strategy and opportunities (Correct answer)
- The precise monetary valuation of all intellectual property assets on the balance sheet
- Nothing — intellectual property assets are explicitly excluded from ISSB climate disclosures
Correct answer: How those assets contribute to its climate-related risk management strategy and opportunities
IFRS S2 strategy disclosures cover resources, capabilities, and competitive advantages — including proprietary resource-efficient technologies — and how they are used to manage climate-related risks and opportunities.
Question 7: Under IFRS S1, what must entities disclose about resource allocation decisions linked to their sustainability strategy?
- No resource allocation disclosures are required under IFRS S1
- Only planned capital expenditure amounts for the next fiscal year
- Plans for deploying or adjusting resources — capital, workforce, and technology — in response to sustainability-related risks and opportunities (Correct answer)
- Only disclosures specifically required by national law in the entity's home jurisdiction
Correct answer: Plans for deploying or adjusting resources — capital, workforce, and technology — in response to sustainability-related risks and opportunities
IFRS S1 requires entities to disclose forward-looking plans for how they will deploy or adjust capital, human resources, and technology in response to material sustainability-related risks and opportunities.
ISSB Resources 3
Under IFRS S1, which governance body is primarily responsible for overseeing sustainability-related resource risks?