ISSB Resources 5 — Questions and Answers
Question 1: Under IFRS S2, what does the GHG Protocol's Global Warming Potential (GWP) metric accomplish for resource-related emissions reporting?
- It measures the geographic distribution of GHG emissions sources across an entity's supply chain
- It converts emissions of different greenhouse gases into a common CO₂-equivalent unit for consistent aggregation (Correct answer)
- It calculates the financial liability associated with emissions per metric ton of CO₂
- It measures the physical volume of GHG emissions relative to resource extraction activity
Correct answer: It converts emissions of different greenhouse gases into a common CO₂-equivalent unit for consistent aggregation
GWP converts the warming effect of different greenhouse gases — such as methane and nitrous oxide from resource use — into CO₂-equivalent units, enabling consistent aggregation and comparability across an entity's operations.
Question 2: Under ISSB, what distinguishes 'cross-industry' resource metrics from 'industry-specific' ones?
- Cross-industry metrics cover only Scope 1; industry-specific metrics cover Scope 2 and Scope 3
- Cross-industry metrics are required of all entities regardless of sector; industry-specific ones apply only to relevant industries (Correct answer)
- Cross-industry metrics are voluntary guidance, while industry-specific metrics are mandatory under IFRS S2
- Cross-industry metrics are set by national regulators, while industry-specific metrics are defined by ISSB
Correct answer: Cross-industry metrics are required of all entities regardless of sector; industry-specific ones apply only to relevant industries
IFRS S2 defines cross-industry metrics (such as Scope 1, 2, and 3 emissions and energy consumption) that all entities must report, while industry-specific resource metrics from SASB apply only to relevant sectors.
Question 3: What is the primary purpose of scenario analysis in ISSB resource risk disclosures under IFRS S2?
- It is an optional tool recommended only for companies with revenues exceeding $1 billion
- It must be used to assess and disclose the resilience of an entity's strategy and resource base across different climate futures (Correct answer)
- It replaces quantitative resource metrics in the sustainability report when data is unavailable
- It is only required for entities that operate in climate-vulnerable geographic regions
Correct answer: It must be used to assess and disclose the resilience of an entity's strategy and resource base across different climate futures
IFRS S2 requires entities to use climate scenario analysis to assess and disclose the resilience of their strategies — including resource dependencies — against a range of plausible climate pathways.
Question 4: Under ISSB, how should an entity approach biodiversity as a natural resource dependency in its disclosures?
- Biodiversity is explicitly excluded from ISSB standards and is only addressed by GRI 304
- When biodiversity is material to the entity's risks or opportunities, it must be disclosed under IFRS S1's general requirements (Correct answer)
- Biodiversity disclosures are only required if the entity operates within legally designated protected areas
- Only entities in agriculture, forestry, or fishing sectors are required to disclose biodiversity dependencies
Correct answer: When biodiversity is material to the entity's risks or opportunities, it must be disclosed under IFRS S1's general requirements
Under IFRS S1, any material sustainability-related risk or opportunity — including reliance on biodiversity as a natural resource — must be disclosed when it could reasonably affect the entity's financial performance, regardless of sector.
Question 5: Under IFRS S2, what is the minimum greenhouse gas emissions scope that all entities must disclose, irrespective of materiality?
- Scope 1 direct emissions only
- Scope 1 and Scope 2 emissions (Correct answer)
- Scope 1, Scope 2, and all Scope 3 categories
- Only Scope 3 value chain emissions from upstream suppliers
Correct answer: Scope 1 and Scope 2 emissions
IFRS S2 requires all entities to disclose Scope 1 (direct) and Scope 2 (purchased energy) emissions as a baseline, with Scope 3 required when it is material or when the entity has set Scope 3 targets.
Question 6: Under ISSB, why are resource-related 'opportunities' disclosed alongside risks?
- To offset negative risk disclosures for investor relations and reputational management purposes
- To provide a complete picture of how sustainability-related resource factors affect the entity's long-term value creation prospects (Correct answer)
- To comply with mandatory green marketing regulations in key operating jurisdictions
- To qualify for preferential green bond financing terms from institutional lenders
Correct answer: To provide a complete picture of how sustainability-related resource factors affect the entity's long-term value creation prospects
ISSB requires disclosure of both risks and opportunities because investors need a balanced, complete picture of how resource-related sustainability factors affect an entity's ability to create value over short, medium, and long-term horizons.
Question 7: Under IFRS S1, when must sustainability-related resource disclosures be published relative to the entity's financial statements?
- They may be published up to 12 months after the financial statements are filed
- They must be published at the same time as the entity's related financial statements (Correct answer)
- They may be published quarterly on a rolling basis, separate from the annual financial report
- No specific timing requirement is specified; entities choose their own publication schedule
Correct answer: They must be published at the same time as the entity's related financial statements
IFRS S1 requires sustainability-related financial disclosures to be published simultaneously with the entity's related financial statements so investors can consider both sets of information together.
ISSB Resources 5
Under IFRS S2, what does the GHG Protocol's Global Warming Potential (GWP) metric accomplish for resource-related emissions reporting?