Issb Exposure Draft 2022 2 Climate Related Disclosures

March 2022
Exposure Draft
IFRS® Sustainability Disclosure Standard
[Draft] IFRS S2 Climate-related Disclosures

Comments to be received by 29 July 2022
International Sustainability Standards Board ED/2022/S2

Exposure Draft
Climate-related Disclosures
Comments to be received by 29 July 2022

Exposure Draft ED/2022/S2 Climate-related Disclosures is published by the International Sustainability
Standards Board (ISSB) for comment only. Comments need to be received by 29 July 2022 and should
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ISBN for this part: 978-1-914113-58-1
ISBN for complete publication (four parts): 978-1-914113-57-4
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CLIMATE-RELATED DISCLOSURES
CONTENTS
from page
INTRODUCTION 5
INVITATION TO COMMENT 8
[DRAFT] IFRS S2 CLIMATE-RELATED DISCLOSURES

OBJECTIVE 32
SCOPE 32
GOVERNANCE 32
STRATEGY 33
RISK MANAGEMENT 39
METRICS AND TARGETS 40
APPENDICES 44
A Defined terms 44
B Industry-based disclosure requirements (see separate booklet) 49
C Effective date 57
APPROVAL BY THE ISSB CHAIR AND VICE-CHAIR OF EXPOSURE DRAFT
IFRS S2 CLIMATE-RELATED DISCLOSURES PUBLISHED IN MARCH 2022 58
ILLUSTRATIVE GUIDANCE (see separate booklet)

BASIS FOR CONCLUSIONS (see separate booklet)
© IFRS Foundation 3
EXPOSURE DRAFT—MARCH 2022
[Draft] IFRS S2 Climate-related Disclosures is set out in paragraphs 1—24 and Appendices
A—C. All the paragraphs have equal authority. Paragraphs in bold type state the main
principles. Terms defined in Appendix A are in italics the first time they appear in the
[draft] Standard. Definitions of other terms are given in other IFRS Sustainability
Disclosure Standards. The [draft] Standard should be read in the context of its objective,
the Basis for Conclusions and [draft] IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information.
4 © IFRS Foundation
Introduction
Why is the ISSB publishing the Exposure Draft?

An entity’s relationship with the environment has become increasingly important.
Climate change presents significant risks for all entities, their activities and their
economic sectors. It also creates opportunities for entities focused on climate-change
mitigation and adaptation. Entities may be exposed to these risks and opportunities
directly, or through third parties such as suppliers and customers beyond their direct
operations because of interconnected global value chains.
The Exposure Draft was developed in response to calls from users of general purpose
financial reporting for more consistent, complete, comparable and verifiable
information, including consistent metrics and standardised qualitative disclosures, to
help them assess how climate-related matters and the associated risks and opportunities
affect:
• an entity’s financial position and financial performance;
• an amount, timing and certainty of the entity’s future cash flows over the short,
medium and long term and, therefore, the assessment of enterprise value by users of
general purpose financial reporting; and
• an entity’s strategy and business model.
Climate change affects all economic sectors. However, the degree and type of exposure
and the current and anticipated effects of climate-related risks and opportunities on the
assessment of enterprise value are likely to vary by sector, industry, geography and
entity. In assessing an entity’s financial and operating results and future cash flows,
users of general purpose financial reporting want insight into the governance, risk
management and strategic context in which such results are derived. Users also want to
understand an entity’s targets for managing climate-related risks and opportunities and
the metrics the entity uses to measure progress towards meeting the targets.
The proposals in the Exposure Draft are intended to facilitate the provision of
comparable information for global markets. These requirements are designed to enable
users of general purpose financial reporting to assess entities’ exposure to and
management of climate-related risks and opportunities, across markets, to facilitate
capital allocation and stewardship decisions.
A summary of the proposals in the Exposure Draft

The proposals in the Exposure Draft set out the requirements for identifying, measuring
and disclosing climate-related risks and opportunities.
The objective of the Exposure Draft is to require an entity to provide information about
its exposure to climate-related risks and opportunities. This information, along with
other information provided as part of an entity's general purpose financial reporting, will
assist users of the information in assessing the entity’s future cash flows, including their
amounts, timing and certainty, over the short, medium and long term. This information,
together with the value attributed by users to those cash flows, enables their assessment
of the entity's enterprise value.
The Exposure Draft is based on the climate-related disclosure prototype published on the
IFRS Foundation website in November 2021, developed by the Technical Readiness
Working Group (TRWG).1 The prototype and the Exposure Draft include the
recommendations by the Financial Stability Board's Task Force on Climate-related
Financial Disclosures (TCFD) and components of the frameworks and standards of
international sustainability bodies, as published in a prototype of a climate-related
financial disclosure standard in December 2020.2 Although presented separately, the
industry disclosure requirements (Appendix B) are an integral part of the Exposure Draft,
forming part of its requirements. The Appendix B disclosure requirements have been
derived from SASB Standards.3
The Exposure Draft would require an entity to provide information that enables users of
general purpose financial reporting to understand:
• governance—the governance processes, controls and procedures an entity uses to

monitor and manage climate-related risks and opportunities;
• strategy—the climate-related risks and opportunities that could enhance, threaten or

change an entity’s business model and strategy over the short, medium and long
term, including:
• whether and how information about climate-related risks and opportunities

inform management’s strategy and decision-making;
• the current and the anticipated effects of climate-related risks and opportunities
on its business model;
• the effects of climate-related risks and opportunities that could reasonably be

expected to affect the entity’s business model, strategy and cash flows, its access
to finance and its cost of capital, over the short, medium or long term;
• the resilience of its strategy (including its business model) to climate-related risks;
• risk management—how climate-related risks and opportunities are identified,

assessed, managed and mitigated by an entity;
• metrics and targets—the metrics and targets used to manage and monitor an entity’s
performance in relation to climate-related risks and opportunities, including:
• performance and outcome measures that support the qualitative disclosures

across governance, risk management and strategy disclosure requirements; and
• targets that an entity uses to measure its performance goals related to significant
climate-related risks and opportunities.
1 The Technical Readiness Working Group included the International Accounting Standards Board,
the Climate Disclosure Standards Board, the Financial Stability Board’s Task Force on Climate-
related Financial Disclosures, the Value Reporting Foundation (previously the SASB Foundation
and the International Integrated Reporting Council) and the World Economic Forum and its
Measuring Stakeholder Capitalism Initiative.
2 https://29kjwb3armds2g3gi4lq2sx1-wpengine.netdna-ssl.com/wp-content/uploads/Reporting-on-
enterprise-value_climate-prototype_Dec20.pdf
3 SASB Standards, a set of 77 industry-specific sustainability accounting standards designed to help
entities disclose material, decision-useful information to investors, are a key resource of the
Value Reporting Foundation, which is expected to consolidate into the IFRS Foundation by June
2022.
In highlighting the connections between its disclosures in accordance with [draft] IFRS S1
General Requirements for Disclosure of Sustainability-related Financial Information, an entity shall
refer to and consider the applicability of the interrelationships among each of these four
core elements, including between IFRS Sustainability Disclosure Standards. Disclosures
shall be presented in a way that enables users of general purpose financial reporting to
understand the interrelationships between those disclosures.
Due process provisions applicable to the Exposure Draft

The urgent need for the International Sustainability Standards Board (ISSB) to deliver its
initial Standards has been repeatedly highlighted, including in feedback to the September
2020 consultation on sustainability reporting held by the Trustees of the IFRS Foundation
(Trustees) and to the April 2021 Exposure Draft of proposed amendments to the IFRS
Foundation Constitution. The International Organization of Securities Commissions has
also emphasised the urgent need for disclosure standards on climate change. Such
urgency can pose significant challenges to standard-setting, which aims to achieve
effective outcomes by balancing timely responsiveness to market needs with the rigour of
formal due process.
The Trustees recognised the opportunity to use and build upon existing sustainability
standards and frameworks, including those developed in accordance with prior due
process by the organisations that developed them and that enjoy broad user and preparer
support. The main components of the Exposure Draft are based on work that has been
subject to extensive public consultation and redeliberation and have since garnered
significant market uptake. The Trustees viewed this as a signal that these foundational
standards and frameworks help to address the information needs of investors and other
capital market participants.
The Trustees noted the need for prompt action and the background to the content of the
Exposure Draft. However, they also noted that this does not negate the need for formal
due process and exposure by the ISSB. It is important that the ISSB’s stakeholders are
given the opportunity to provide feedback on the proposals consistent with the IFRS
Foundation’s inclusive and thorough due process.
To balance the need to advance the work of the ISSB on a timely basis while obtaining
input from interested parties, the Trustees decided to grant special powers to the Chair
and Vice-Chair of the ISSB to enable timely publication of initial exposure drafts for
stakeholder input. The Trustees agreed it would be appropriate that as the ISSB is being
established (that is, as a transitional measure) the ISSB Chair and Vice-Chair be provided
with the ability to publish exposure drafts of a climate-related disclosure standard and/or
a general requirements disclosure standard. This decision is reflected in paragraph 56 of
the IFRS Foundation’s Constitution published in November 2021.
The effect of this provision in the Constitution is only to enable the exposure drafts to be
published prior to the ISSB being quorate. The exposure drafts are subject to public
consultation and will be redeliberated by a quorate ISSB. The ISSB Chair and Vice-Chair’s
right was made subject to oversight by the Due Process Oversight Committee of the
Trustees who were consulted at a meeting convened on 21 March 2022 during which they
confirmed that they did not object to the ISSB Chair and Vice-Chair publishing these
exposure drafts.
Next steps
The Chair and Vice-Chair anticipate significant interest from stakeholders on the
Exposure Draft and on [draft] IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information which has been published at the same time as the Exposure
Draft. The ISSB will analyse and consider the comments and feedback it receives and will
decide how to proceed.
The ISSB intends to redeliberate the Exposure Draft in the second half of 2022 based on
feedback from stakeholders and seeks to issue the resulting IFRS Sustainability Disclosure
Standard based on these proposals expeditiously.
Invitation to comment
The Chair and Vice-Chair invite comments on the proposals in the Exposure Draft,
particularly on the questions set out below. Comments are most helpful if they:
(a) address the questions as stated;
(b) specify the paragraph(s) to which they relate;
(c) contain a clear rationale;
(d) identify any wording in the proposals that is difficult to translate; and
(e) include any alternative the ISSB should consider, if applicable.
The Chair and Vice-Chair are requesting comments only on matters addressed in the
Exposure Draft.
Questions for respondents
Question 1—Objective of the Exposure Draft

Paragraph 1 of the Exposure Draft sets out the proposed objective: an entity is required
to disclose information about its exposure to climate-related risks and opportunities,
enabling users of an entity’s general purpose financial reporting:
• to assess the effects of climate-related risks and opportunities on the entity’s

enterprise value;
• to understand how the entity’s use of resources, and corresponding inputs,

activities, outputs and outcomes support the entity’s response to and strategy for
managing its climate-related risks and opportunities; and
• to evaluate the entity’s ability to adapt its planning, business model and operations
to climate-related risks and opportunities.
Paragraphs BC21–BC22 of the Basis for Conclusions describe the reasoning behind the
Exposure Draft’s proposals.
(a) Do you agree with the objective that has been established for the Exposure
Draft? Why or why not?
(b) Does the objective focus on the information that would enable users of general
purpose financial reporting to assess the effects of climate-related risks and
opportunities on enterprise value?
(c) Do the disclosure requirements set out in the Exposure Draft meet the
objectives described in paragraph 1? Why or why not? If not, what do you
propose instead and why?
Question 2—Governance
Paragraphs 4 and 5 of the Exposure Draft propose that an entity be required to disclose
information that enables users of general purpose financial reporting to understand the
governance processes, controls and procedures used to monitor and manage climate-
related risks and opportunities. To achieve this objective, the Exposure Draft proposes
that an entity be required to disclose information about the governance body or bodies
(which can include a board, committee or equivalent body charged with governance)
with oversight of climate-related risks and opportunities, and a description of
management’s role regarding climate-related risks and opportunities.
The Exposure Draft’s proposed governance disclosure requirements are based on the
recommendations of the TCFD, but the Exposure Draft proposes more detailed
disclosure on some aspects of climate-related governance and management in order to
meet the information needs of users of general purpose financial reporting. For
example, the Exposure Draft proposes a requirement for preparers to disclose how the
governance body’s responsibilities for climate-related risks and opportunities are
reflected in the entity’s terms of reference, board mandates and other related policies.
The related TCFD’s recommendations are to: describe the board’s oversight of climate-
related risks and opportunities and management’s role in assessing and managing
climate-related risks and opportunities.
Do you agree with the proposed disclosure requirements for governance processes,
controls and procedures used to monitor and manage climate-related risks and
opportunities? Why or why not?
Question 3—Identification of climate-related risks and opportunities

Paragraph 9 of the Exposure Draft proposes that an entity be required to identify and
disclose a description of significant climate-related risks and opportunities and the time
horizon over which each could reasonably be expected to affect its business model,
strategy and cash flows, its access to finance and its cost of capital, over the short,
medium or long term. In identifying the significant climate-related risks and
opportunities described in paragraph 9(a), an entity would be required to refer to the
disclosure topics defined in the industry disclosure requirements (Appendix B).
(a) Are the proposed requirements to identify and to disclose a description of

significant climate-related risks and opportunities sufficiently clear? Why or
why not?
(b) Do you agree with the proposed requirement to consider the applicability of
disclosure topics (defined in the industry requirements) in the identification and
description of climate-related risks and opportunities? Why or why not? Do you
believe that this will lead to improved relevance and comparability of
disclosures? Why or why not? Are there any additional requirements that may
improve the relevance and comparability of such disclosures? If so, what would
you suggest and why?
Question 4—Concentrations of climate-related risks and opportunities in an entity’s

value chain
Paragraph 12 of the Exposure Draft proposes requiring disclosures that are designed to
enable users of general purpose financial reporting to understand the effects of
significant climate-related risks and opportunities on an entity’s business model,
including in its value chain. The disclosure requirements seek to balance measurement
challenges (for example, with respect to physical risks and the availability of reliable,
geographically-specific information) with the information necessary for users to
understand the effects of significant climate-related risks and opportunities in an
entity’s value chain.
As a result, the Exposure Draft includes proposals for qualitative disclosure

requirements about the current and anticipated effects of significant climate-related
risks and opportunities on an entity’s value chain. The proposals would also require an
entity to disclose where in an entity’s value chain significant climate-related risks and
opportunities are concentrated.
(a) Do you agree with the proposed disclosure requirements about the effects of
significant climate-related risks and opportunities on an entity’s business model
and value chain? Why or why not?
(b) Do you agree that the disclosure required about an entity’s concentration of
climate-related risks and opportunities should be qualitative rather than
quantitative? Why or why not? If not, what do you recommend and why?
Question 5—Transition plans and carbon offsets

Disclosing an entity’s transition plan towards a lower-carbon economy is important for
enabling users of general purpose financial reporting to assess the entity’s current and
planned responses to the decarbonisation-related risks and opportunities that can
reasonably be expected to affect its enterprise value.
Paragraph 13 of the Exposure Draft proposes a range of disclosures about an entity’s

transition plans. The Exposure Draft proposes requiring disclosure of information to
enable users of general purpose financial reporting to understand the effects of climate-
related risks and opportunities on an entity’s strategy and decision-making, including
its transition plans. This includes information about how it plans to achieve any
climate-related targets that it has set (this includes information about the use of carbon
offsets); its plans and critical assumptions for legacy assets; and quantitative and
qualitative information about the progress of plans previously disclosed by the entity.
An entity’s reliance on carbon offsets, how the offsets it uses are generated, and the
credibility and integrity of the scheme from which the entity obtains the offsets have
implications for the entity’s enterprise value over the short, medium and long term.
The Exposure Draft therefore includes disclosure requirements about the use of carbon
offsets in achieving an entity’s emissions targets. This proposal reflects the need for
users of general purpose financial reporting to understand an entity’s plan for reducing
emissions, the role played by carbon offsets and the quality of those offsets.
The Exposure Draft proposes that entities disclose information about the basis of the
offsets’ carbon removal (nature- or technology-based) and the third-party verification or
certification scheme for the offsets. Carbon offsets can be based on avoided emissions.
Avoided emissions are the potential lower future emissions of a product, service or
project when compared to a situation where the product, service or project did not
exist, or when it is compared to a baseline. Avoided-emission approaches in an entity’s
climate-related strategy are complementary to, but fundamentally different from, the
entity’s emission-inventory accounting and emission-reduction transition targets. The
Exposure Draft therefore proposes to include a requirement for entities to disclose
whether the carbon offset amount achieved is through carbon removal or emission
avoidance.
The Exposure Draft also proposes that an entity disclose any other significant factors
necessary for users of general purpose financial reporting to understand the credibility
of the offsets used by the entity such as information about assumptions of the
permanence of the offsets.
continued...
...continued
Question 5—Transition plans and carbon offsets

(a) Do you agree with the proposed disclosure requirements for transition plans?
Why or why not?
(b) Are there any additional disclosures related to transition plans that are
necessary (or some proposed that are not)? If so, please describe those
disclosures and explain why they would (or would not) be necessary.
(c) Do you think the proposed carbon offset disclosures will enable users of general
purpose financial reporting to understand an entity’s approach to reducing
emissions, the role played by carbon offsets and the credibility of those carbon
offsets? Why or why not? If not, what do you recommend and why?
(d) Do you think the proposed carbon offset requirements appropriately balance
costs for preparers with disclosure of information that will enable users of
general purpose financial reporting to understand an entity’s approach to
reducing emissions, the role played by carbon offsets and the soundness or
credibility of those carbon offsets? Why or why not? If not, what do you propose
instead and why?
Question 6—Current and anticipated effects

The Exposure Draft proposes requirements for an entity to disclose information about
the anticipated future effects of significant climate-related risks and opportunities. The
Exposure Draft proposes that, if such information is provided quantitatively, it can be
expressed as a single amount or as a range. Disclosing a range enables an entity to
communicate the significant variance of potential outcomes associated with the
monetised effect for an entity; whereas if the outcome is more certain, a single value
may be more appropriate.
The TCFD’s 2021 status report identified the disclosure of anticipated financial effects
of climate-related risks and opportunities using the TCFD Recommendations as an area
with little disclosure. Challenges include: difficulties of organisational alignment, data,
risk evaluation and the attribution of effects in financial accounts; longer time horizons
associated with climate-related risks and opportunities compared with business
horizons; and securing approval to disclose the results publicly. Disclosing the financial
effects of climate-related risks and opportunities is further complicated when an entity
provides specific information about the effects of climate-related risks and
opportunities on the entity. The financial effects could be due to a combination of other
sustainability-related risks and opportunities and not separable for the purposes of
climate-related disclosure (for example, if the value of an asset is considered to be at
risk it may be difficult to separately identify the effect of climate on the value of the
asset in isolation from other risks).
Similar concerns were raised by members of the TRWG in the development of the
climate-related disclosure prototype following conversations with some preparers. The
difficulty of providing single-point estimates due to the level of uncertainty regarding
both climate outcomes and the effect of those outcomes on a particular entity was also
highlighted. As a result, the proposals in the Exposure Draft seek to balance these
challenges with the provision of information for investors about how climate-related
issues affect an entity’s financial position and financial performance currently and over
the short, medium and long term by allowing anticipated monetary effects to be
disclosed as a range or a point estimate.
The Exposure Draft proposes that an entity be required to disclose the effects of
significant climate-related risks and opportunities on its financial position, financial
performance and cash flows for the reporting period, and the anticipated effects over
the short, medium and long term—including how climate-related risks and
opportunities are included in the entity’s financial planning (paragraph 14). The
requirements also seek to address potential measurement challenges by requiring
disclosure of quantitative information unless an entity is unable to provide the
information quantitatively, in which case it shall be provided qualitatively.
continued...
...continued
Question 6—Current and anticipated effects

(a) Do you agree with the proposal that entities shall disclose quantitative
information on the current and anticipated effects of climate-related risks and
opportunities unless they are unable to do so, in which case qualitative
information shall be provided (see paragraph 14)? Why or why not?
(b) Do you agree with the proposed disclosure requirements for the financial effects
of climate-related risks and opportunities on an entity’s financial performance,
financial position and cash flows for the reporting period? If not, what would
you suggest and why?
(c) Do you agree with the proposed disclosure requirements for the anticipated
effects of climate-related risks and opportunities on an entity’s financial
position and financial performance over the short, medium and long term? If
not, what would you suggest and why?
Question 7—Climate resilience

The likelihood, magnitude and timing of climate-related risks and opportunities
affecting an entity are often complex and uncertain. As a result, users of general
purpose financial reporting need to understand the resilience of an entity’s strategy
(including its business model) to climate change, factoring in the associated
uncertainties. Paragraph 15 of the Exposure Draft therefore includes requirements
related to an entity’s analysis of the resilience of its strategy to climate-related risks.
These requirements focus on:
• what the results of the analysis, such as impacts on the entity’s decisions and
performance, should enable users to understand; and
• whether the analysis has been conducted using:
• climate-related scenario analysis; or
• an alternative technique.
Scenario analysis is becoming increasingly well established as a tool to help entities and
investors understand the potential effects of climate change on business models,
strategies, financial performance and financial position. The work of the TCFD showed
that investors have sought to understand the assumptions used in scenario analysis,
and how an entity’s findings from the analysis inform its strategy and risk-
management decisions and plans. The TCFD also found that investors want to
understand what the outcomes indicate about the resilience of the entity’s strategy,
business model and future cash flows to a range of future climate scenarios (including
whether the entity has used a scenario aligned with the latest international agreement
on climate change). Corporate board committees (notably audit and risk) are also
increasingly requesting entity-specific climate-related risks to be included in risk
mapping with scenarios reflecting different climate outcomes and the severity of their
effects.
Although scenario analysis is a widely accepted process, its application to climate-

related matters in business, particularly at an individual entity level, and its application
across sectors is still evolving. Some sectors, such as extractives and minerals
processing, have used climate-related scenario analysis for many years; others, such as
consumer goods or technology and communications, are just beginning to explore
applying climate-related scenario analysis to their businesses.
Many entities use scenario analysis in risk management for other purposes. Where
robust data and practices have developed, entities thus have the analytical capacity to
undertake scenario analysis. However, at this time the application of climate-related
scenario analysis for entities is still developing.
continued...
...continued

Preparers raised other challenges and concerns associated with climate-related scenario
analysis, including: the speculative nature of the information that scenario analysis
generates, potential legal liability associated with disclosure (or miscommunication) of
such information, data availability and disclosure of confidential information about an
entity’s strategy. Nonetheless, by prompting the consideration of a range of possible
outcomes and explicitly incorporating multiple variables, scenario analysis provides
valuable information and perspectives as inputs to an entity’s strategic decision-making
and risk-management processes. Accordingly, information about an entity’s scenario
analysis of significant climate-related risks is important for users in assessing enterprise
value.
The Exposure Draft proposes that an entity be required to use climate-related scenario
analysis to assess its climate resilience unless it is unable to do so. If an entity is unable
to use climate-related scenario analysis, it shall use an alternative method or technique
to assess its climate resilience.
Requiring disclosure of information about climate-related scenario analysis as the only

tool to assess an entity’s climate resilience may be considered a challenging request
from the perspective of a number of preparers at this time—particularly in some
sectors. Therefore, the proposed requirements are designed to accommodate alternative
approaches to resilience assessment, such as qualitative analysis, single-point forecasts,
sensitivity analysis and stress tests. This approach would provide preparers, including
smaller entities, with relief, recognising that formal scenario analysis and related
disclosure can be resource intensive, represents an iterative learning process, and may
take multiple planning cycles to achieve. The Exposure Draft proposes that when an
entity uses an approach other than scenario analysis, it disclose similar information to
that generated by scenario analysis to provide investors with the information they need
to understand the approach used and the key underlying assumptions and parameters
associated with the approach and associated implications for the entity’s resilience over
the short, medium and long term.
It is, however, recommended that scenario analysis for significant climate-related risks
(and opportunities) should become the preferred option to meet the information needs
of users to understand the resilience of an entity’s strategy to significant climate-
related risks. As a result, the Exposure Draft proposes that entities that are unable to
conduct climate-related scenario analysis provide an explanation of why this analysis
was not conducted. Consideration was also given to whether climate-related scenario
analysis should be required by all entities with a later effective date than other
proposals in the Exposure Draft.
continued...
...continued

(a) Do you agree that the items listed in paragraph 15(a) reflect what users need to
understand about the climate resilience of an entity’s strategy? Why or why
not? If not, what do you suggest instead and why?
(b) The Exposure Draft proposes that if an entity is unable to perform climate-
related scenario analysis, that it can use alternative methods or techniques (for
example, qualitative analysis, single-point forecasts, sensitivity analysis and
stress tests) instead of scenario analysis to assess the climate resilience of its
strategy.
(i) Do you agree with this proposal? Why or why not?
(ii) Do you agree with the proposal that an entity that is unable to use
climate-related scenario analysis to assess the climate resilience of its
strategy be required to disclose the reason why? Why or why not?
(iii) Alternatively, should all entities be required to undertake climate-related

scenario analysis to assess climate resilience? If mandatory application
were required, would this affect your response to Question 14(c) and if
so, why?
(c) Do you agree with the proposed disclosures about an entity’s climate-related
scenario analysis? Why or why not?
(d) Do you agree with the proposed disclosure about alternative techniques (for
example, qualitative analysis, single-point forecasts, sensitivity analysis and
stress tests) used for the assessment of the climate resilience of an entity’s
strategy? Why or why not?
(e) Do the proposed disclosure requirements appropriately balance the costs of

applying the requirements with the benefits of information on an entity’s
strategic resilience to climate change? Why or why not? If not, what do you
recommend and why?
Question 8—Risk management

An objective of the Exposure Draft is to require an entity to provide information about
its exposure to climate-related risks and opportunities, to enable users of general
purpose financial reporting to assess the effects of climate-related risks and
opportunities on the entity’s enterprise value. Such disclosures include information for
users to understand the process, or processes, that an entity uses to identify, assess and
manage not only climate-related risks, but also climate-related opportunities.
Paragraphs 16 and 17 of the Exposure Draft would extend the remit of disclosures
about risk management beyond the TCFD Recommendations, which currently only
focus on climate-related risks. This proposal reflects both the view that risks and
opportunities can relate to or result from the same source of uncertainty, as well as the
evolution of common practice in risk management, which increasingly includes
opportunities in processes for identification, assessment, prioritisation and response.
Paragraphs BC101–BC104 of the Basis for Conclusions describe the reasoning behind
the Exposure Draft’s proposals.
Do you agree with the proposed disclosure requirements for the risk management
processes that an entity uses to identify, assess and manage climate-related risks and
opportunities? Why or why not? If not, what changes do you recommend and why?
Question 9—Cross-industry metric categories and greenhouse gas emissions

The Exposure Draft proposes incorporating the TCFD’s concept of cross-industry
metrics and metric categories with the aim of improving the comparability of
disclosures across reporting entities regardless of industry. The proposals in the
Exposure Draft would require an entity to disclose these metrics and metric categories
irrespective of its particular industry or sector (subject to materiality). In proposing
these requirements, the TCFD’s criteria were considered. These criteria were designed
to identify metrics and metric categories that are:
• indicative of basic aspects and drivers of climate-related risks and opportunities;
• useful for understanding how an entity is managing its climate-related risks and
opportunities;
• widely requested by climate reporting frameworks, lenders, investors, insurance

underwriters and regional and national disclosure requirements; and
• important for estimating the financial effects of climate change on entities.
The Exposure Draft thus proposes seven cross-industry metric categories that all
entities would be required to disclose: greenhouse gas (GHG) emissions on an absolute
basis and on an intensity basis; transition risks; physical risks; climate-related
opportunities; capital deployment towards climate-related risks and opportunities;
internal carbon prices; and the percentage of executive management remuneration that
is linked to climate-related considerations. The Exposure Draft proposes that the GHG
Protocol be applied to measure GHG emissions.
The GHG Protocol allows varied approaches to be taken to determine which emissions
an entity includes in the calculation of Scope 1, 2 and 3—including for example, how
the emissions of unconsolidated entities such as associates are included. This means
that the way in which information is provided about an entity’s investments in other
entities in their financial statements may not align with how its GHG emissions are
calculated. It also means that two entities with identical investments in other entities
could report different GHG emissions in relation to those investments by virtue of
choices made in applying the GHG Protocol.
To facilitate comparability despite the varied approaches allowed in the GHG Protocol,
the Exposure Draft proposes that an entity shall disclose:
• separately Scope 1 and Scope 2 emissions, for:
• the consolidated accounting group (the parent and its subsidiaries);
• the associates, joint ventures, unconsolidated subsidiaries or affiliates not

included in the consolidated accounting group; and
• the approach it used to include emissions for associates, joint ventures,

unconsolidated subsidiaries or affiliates not included in the consolidated accounting
group (for example, the equity share or operational control method in the GHG
Protocol Corporate Standard).
continued...
...continued

The disclosure of Scope 3 GHG emissions involves a number of challenges, including
those related to data availability, use of estimates, calculation methodologies and other
sources of uncertainty. However, despite these challenges, the disclosure of GHG
emissions, including Scope 3 emissions, is becoming more common and the quality of
the information provided across all sectors and jurisdictions is improving. This
development reflects an increasing recognition that Scope 3 emissions are an important
component of investment-risk analysis because, for most entities, they represent by far
the largest portion of an entity’s carbon footprint.
Entities in many industries face risks and opportunities related to activities that drive
Scope 3 emissions both up and down the value chain. For example, they may need to
address evolving and increasingly stringent energy efficiency standards through
product design (a transition risk) or seek to capture growing demand for energy-
efficient products or seek to enable or incentivise upstream emissions reduction
(climate opportunities). In combination with industry metrics related to these specific
drivers of risk and opportunity, Scope 3 data can help users evaluate the extent to
which an entity is adapting to the transition to a lower-carbon economy. Thus,
information about Scope 3 GHG emissions enables entities and their investors to
identify the most significant GHG reduction opportunities across an entity’s entire
value chain, informing strategic and operational decisions regarding relevant inputs,
activities and outputs.
For Scope 3 emissions, the Exposure Draft proposes that:
• an entity shall include upstream and downstream emissions in its measure of Scope
3 emissions;
• an entity shall disclose an explanation of the activities included within its measure
of Scope 3 emissions, to enable users of general purpose financial reporting to
understand which Scope 3 emissions have been included in, or excluded from, those
reported;
• if the entity includes emissions information provided by entities in its value chain
in its measure of Scope 3 greenhouse gas emissions, it shall explain the basis for
that measurement; and
• if the entity excludes those greenhouse gas emissions, it shall state the reason for
omitting them, for example, because it is unable to obtain a faithful measure.
Aside from the GHG emissions category, the other cross-industry metric categories are
defined broadly in the Exposure Draft. However, the Exposure Draft includes non-
mandatory Illustrative Guidance for each cross-industry metric category to guide
entities.
continued...
...continued

(a) The cross-industry requirements are intended to provide a common set of core,
climate-related disclosures applicable across sectors and industries. Do you agree
with the seven proposed cross-industry metric categories including their
applicability across industries and business models and their usefulness in the
assessment of enterprise value? Why or why not? If not, what do you suggest
and why?
(b) Are there any additional cross-industry metric categories related to climate-
related risks and opportunities that would be useful to facilitate cross-industry
comparisons and assessments of enterprise value (or some proposed that are
not)? If so, please describe those disclosures and explain why they would or
would not be useful to users of general purpose financial reporting.
(c) Do you agree that entities should be required to use the GHG Protocol to define
and measure Scope 1, Scope 2 and Scope 3 emissions? Why or why not? Should
other methodologies be allowed? Why or why not?
(d) Do you agree with the proposals that an entity be required to provide an
aggregation of all seven greenhouse gases for Scope 1, Scope 2, and Scope 3—
expressed in CO2 equivalent; or should the disclosures on Scope 1, Scope 2 and
Scope 3 emissions be disaggregated by constituent greenhouse gas (for example,
disclosing methane (CH4) separately from nitrous oxide (NO2))?
(e) Do you agree that entities should be required to separately disclose Scope 1 and
Scope 2 emissions for:
(i) the consolidated entity; and
(ii) for any associates, joint ventures, unconsolidated subsidiaries and

affiliates? Why or why not?
(f) Do you agree with the proposed inclusion of absolute gross Scope 3 emissions as
a cross-industry metric category for disclosure by all entities, subject to
materiality? If not, what would you suggest and why?
Question 10—Targets
Paragraph 23 of the Exposure Draft proposes that an entity be required to disclose
information about its emission-reduction targets, including the objective of the target
(for example, mitigation, adaptation or conformance with sector or science-based
initiatives), as well as information about how the entity’s targets compare with those
prescribed in the latest international agreement on climate change.
The ‘latest international agreement on climate change’ is defined as the latest

agreement between members of the United Nations Framework Convention on Climate
Change (UNFCCC). The agreements made under the UNFCCC set norms and targets for a
reduction in greenhouse gases. At the time of publication of the Exposure Draft, the
latest such agreement is the Paris Agreement (April 2016); its signatories agreed to limit
global warming to well below 2 degrees Celsius above pre-industrial levels, and to
pursue efforts to limit warming to 1.5 degrees Celsius above pre-industrial levels. Until
the Paris Agreement is replaced, the effect of the proposals in the Exposure Draft is that
an entity is required to reference the targets set out in the Paris Agreement when
disclosing whether or to what degree its own targets compare to the targets in the Paris
Agreement.
(a) Do you agree with the proposed disclosure about climate-related targets? Why
or why not?
(b) Do you think the proposed definition of ‘latest international agreement on

climate change’ is sufficiently clear? If not, what would you suggest and why?
Question 11—Industry-based requirements

The Exposure Draft proposes industry-based disclosure requirements in Appendix B
that address significant sustainability-related risks and opportunities related to climate
change. Because the requirements are industry-based, only a subset will apply to a
particular entity. The requirements have been derived from the SASB Standards. This is
consistent with the responses to the Trustees’ 2020 consultation on sustainability that
recommended that the ISSB build upon existing sustainability standards and
frameworks. This approach is also consistent with the TRWG's climate-related
disclosure prototype.
The proposed industry-based disclosure requirements are largely unchanged from the
equivalent requirements in the SASB Standards. However, the requirements included in
the Exposure Draft include some targeted amendments relative to the existing SASB
Standards. The proposed enhancements have been developed since the publication of
the TRWG's climate-related disclosure prototype.
The first set of proposed changes address the international applicability of a subset of
metrics that cited jurisdiction-specific regulations or standards. In this case, the
Exposure Draft proposes amendments (relative to the SASB Standards) to include
references to international standards and definitions or, where appropriate,
jurisdictional equivalents.
the Exposure Draft’s proposals to improve the international applicability of the
industry-based requirements.
(a) Do you agree with the approach taken to revising the SASB Standards to
improve the international applicability, including that it will enable entities to
apply the requirements regardless of jurisdiction without reducing the clarity of
the guidance or substantively altering its meaning? If not, what alternative
approach would you suggest and why?
(b) Do you agree with the proposed amendments that are intended to improve the
international applicability of a subset of industry disclosure requirements? If
not, why not?
(c) Do you agree that the proposed amendments will enable an entity that has used
the relevant SASB Standards in prior periods to continue to provide information
consistent with the equivalent disclosures in prior periods? If not, why not?
The second set of proposed changes relative to existing SASB Standards address
emerging consensus on the measurement and disclosure of financed or facilitated
emissions in the financial sector. To address this, the Exposure Draft proposes adding
disclosure topics and associated metrics in four industries: commercial banks,
investment banks, insurance and asset management. The proposed requirements relate
to the lending, underwriting and/or investment activities that finance or facilitate
emissions. The proposal builds on the GHG Protocol Corporate Value Chain (Scope 3)
Standard which includes guidance on calculating indirect emissions resulting from
Category 15 (investments).
continued...
...continued

the Exposure Draft’s proposals for financed or facilitated emissions.
(d) Do you agree with the proposed industry-based disclosure requirements for
financed and facilitated emissions, or would the cross-industry requirement to
disclose Scope 3 emissions (which includes Category 15: Investments) facilitate
adequate disclosure? Why or why not?
(e) Do you agree with the industries classified as ‘carbon-related’ in the proposals
for commercial banks and insurance entities? Why or why not? Are there other
industries you would include in this classification? If so, why?
(f) Do you agree with the proposed requirement to disclose both absolute- and
intensity-based financed emissions? Why or why not?
(g) Do you agree with the proposals to require disclosure of the methodology used
to calculate financed emissions? If not, what would you suggest and why?
(h) Do you agree that an entity be required to use the GHG Protocol Corporate
Value Chain (Scope 3) Accounting and Reporting Standard to provide the
proposed disclosures on financed emissions without the ISSB prescribing a more
specific methodology (such as that of the Partnership for Carbon Accounting
Financials (PCAF) Global GHG Accounting & Reporting Standard for the
Financial Industry)? If you don’t agree, what methodology would you suggest
and why?
(i) In the proposal for entities in the asset management and custody activities
industry, does the disclosure of financed emissions associated with total assets
under management provide useful information for the assessment of the
entity's indirect transition risk exposure? Why or why not?
continued...
...continued

Overall, the proposed industry-based approach acknowledges that climate-related risks
and opportunities tend to manifest differently in relation to an entity’s business model,
the underlying economic activities in which it is engaged and the natural resources
upon which its business depends or which its activities affect. This affects the
assessment of enterprise value. The Exposure Draft thus incorporates industry-based
requirements derived from the SASB Standards.
The SASB Standards were developed by an independent standard-setting board through

a rigorous and open due process over nearly 10 years with the aim of enabling entities
to communicate sustainability information relevant to assessments of enterprise value
to investors in a cost-effective manner. The outcomes of that process identify and define
the sustainability-related risks and opportunities (disclosure topics) most likely to have
a significant effect on the enterprise value of an entity in a given industry. Further,
they set out standardised measures to help investors assess an entity’s performance on
the topic.
the Exposure Draft’s proposals related to the industry-based disclosure requirements.
While the industry-based requirements in Appendix B are an integral part of the

Exposure Draft, forming part of its requirements, it is noted that the requirements can
also inform the fulfilment of other requirements in the Exposure Draft, such as the
identification of significant climate-related risks and opportunities (see paragraphs
BC49–BC52).
(j) Do you agree with the proposed industry-based requirements? Why or why not?
If not, what do you suggest and why?
(k) Are there any additional industry-based requirements that address climate-
related risks and opportunities that are necessary to enable users of general
purpose financial reporting to assess enterprise value (or are some proposed that
are not)? If so, please describe those disclosures and explain why they are or are
not necessary.
(l) In noting that the industry classifications are used to establish the applicability
of the industry-based disclosure requirements, do you have any comments or
suggestions on the industry descriptions that define the activities to which the
requirements will apply? Why or why not? If not, what do you suggest and
why?
Question 12—Costs, benefits and likely effects

Paragraphs BC46–BC48 of the Basis for Conclusions set out the commitment to ensure
that implementing the Exposure Draft proposals appropriately balances costs and
benefits.
(a) Do you have any comments on the likely benefits of implementing the proposals
and the likely costs of implementing them that the ISSB should consider in
analysing the likely effects of these proposals?
(b) Do you have any comments on the costs of ongoing application of the proposals
that the ISSB should consider?
(c) Are there any disclosure requirements included in the Exposure Draft for which
the benefits would not outweigh the costs associated with preparing that
information? Why or why not?
Question 13—Verifiability and enforceability

Paragraphs C21–24 of [draft] IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information describes verifiability as one of the enhancing qualitative
characteristics of sustainability-related financial information. Verifiability helps give
investors and creditors confidence that information is complete, neutral and accurate.
Verifiable information is more useful to investors and creditors than information that
is not verifiable.
Information is verifiable if it is possible to corroborate either the information itself or

the inputs used to derive it. Verifiability means that various knowledgeable and
independent observers could reach consensus, although not necessarily complete
agreement, that a particular depiction is a faithful representation.
Are there any disclosure requirements proposed in the Exposure Draft that would
present particular challenges to verify or to enforce (or that cannot be verified or
enforced) by auditors and regulators? If you have identified any disclosure
requirements that present challenges, please provide your reasoning.
Question 14—Effective date

Because the Exposure Draft is building upon sustainability-related and integrated
reporting frameworks used by some entities, some may be able to apply a retrospective
approach to provide comparative information in the first year of application. However,
it is acknowledged that entities will vary in their ability to use a retrospective approach.
Acknowledging this situation and to facilitate timely application of the proposals in the
Exposure Draft, it is proposed that an entity is not required to disclose comparative
information in the first period of application.
[Draft] IFRS S1 General Requirements for Disclosure of Sustainability-related Financial

Information requires entities to disclose all material information about sustainability-
related risks and opportunities. It is intended that [draft] IFRS S1 General Requirements for
Disclosure of Sustainability-related Financial Information be applied in conjunction with the
Exposure Draft. This could pose challenges for preparers, given that the Exposure Draft
proposes disclosure requirements for climate-related risks and opportunities, which are
a subset of those sustainability-related risks and opportunities. Therefore, the
requirements included in [draft] IFRS S1 General Requirements for Disclosure of Sustainability-
related Financial Information could take longer to implement.
the Exposure Draft's proposals.
(a) Do you think that the effective date of the Exposure Draft should be earlier,
later or the same as that of [draft] IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information? Why?
(b) When the ISSB sets the effective date, how long does this need to be after a final
Standard is issued? Please explain the reason for your answer including specific
information about the preparation that will be required by entities applying the
proposals in the Exposure Draft.
(c) Do you think that entities could apply any of the disclosure requirements
included in the Exposure Draft earlier than others? (For example, could
disclosure requirements related to governance be applied earlier than those
related to the resilience of an entity’s strategy?) If so, which requirements could
be applied earlier and do you believe that some requirements in the Exposure
Draft should be required to be applied earlier than others?
Question 15—Digital reporting

The ISSB plans to prioritise enabling digital consumption of sustainability-related
financial information prepared in accordance with IFRS Sustainability Disclosure
Standards from the outset of its work. The primary benefit of digital consumption of
sustainability-related financial information, as compared to paper-based consumption,
is improved accessibility, enabling easier extraction and comparison of information. To
facilitate digital consumption of information provided in accordance with IFRS
Sustainability Disclosure Standards, an IFRS Sustainability Disclosures Taxonomy is
being developed by the IFRS Foundation. The Exposure Draft and [draft] IFRS S1 General
Requirements for Disclosure of Sustainability-related Financial Information Standards are the
sources for the Taxonomy.
It is intended that a staff draft of the Taxonomy will be published shortly after the
release of the Exposure Draft, accompanied by a staff paper which will include an
overview of the essential proposals for the Taxonomy. At a later date, an Exposure Draft
of Taxonomy proposals is planned to be published by the ISSB for public consultation.
Do you have any comments or suggestions relating to the drafting of the Exposure
Draft that would facilitate the development of a Taxonomy and digital reporting (for
example, any particular disclosure requirements that could be difficult to tag digitally)?
Question 16—Global baseline

IFRS Sustainability Disclosure Standards are intended to meet the needs of the users of
general purpose financial reporting to enable them to make assessments of enterprise
value, providing a comprehensive global baseline for the assessment of enterprise value.
Other stakeholders are also interested in the effects of climate change. Those needs may
be met by requirements set by others including regulators and jurisdictions. The ISSB
intends that such requirements by others could build on the comprehensive global
baseline established by the IFRS Sustainability Disclosure Standards.
Are there any particular aspects of the proposals in the Exposure Draft that you believe
would limit the ability of IFRS Sustainability Disclosure Standards to be used in this
manner? If so, what aspects and why? What would you suggest instead and why?
Question 17—Other comments

Do you have any other comments on the proposals set out in the Exposure Draft?
How to comment
Please submit your comments electronically:
Survey and comment letter https://www.ifrs.org/projects/work-plan/climate-related-

online disclosures/exposure-draft-and-comment-letters/
Comment letter by email [email protected]
Your comments will be on the public record and posted on our website unless you
request confidentiality and we grant your request. We normally grant such requests only
if they are supported by a good reason, for example, commercial confidence. Please see
our website for details on this policy and on how we use your personal data. If you would
like to request confidentiality, please contact us at [email protected] before
submitting your survey response or letter.
Deadline
The ISSB will consider all written comments and responses to the survey received by
29 July 2022.
[Draft] IFRS S2 Climate-related Disclosures
Objective
1 The objective of [draft] IFRS S2 Climate-related Disclosures is to require an
entity to disclose information about its exposure to significant climate-
related risks and opportunities, enabling users of an entity’s general purpose
financial reporting:
(a) to assess the effects of significant climate-related risks and

opportunities on the entity’s enterprise value;
(b) to understand how the entity’s use of resources, and corresponding

inputs, activities, outputs and outcomes support the entity’s
response to and strategy for managing its significant climate-related
risks and opportunities; and
(c) to evaluate the entity’s ability to adapt its planning, business model
and operations to significant climate-related risks and
opportunities.
2 An entity shall apply this [draft] Standard in preparing and disclosing climate-
related disclosures in accordance with [draft] IFRS S1 General Requirements for
Disclosure of Sustainability-related Financial Information.
Scope
3 This [draft] Standard applies to:
(a) climate-related risks the entity is exposed to, including but not
restricted to:
(i) physical risks from climate change (physical risks); and
(ii) risks associated with the transition to a lower-carbon

economy (transition risks); and
(b) climate-related opportunities available to the entity.
Governance
4 The objective of climate-related financial disclosures on governance is to
enable users of general purpose financial reporting to understand the
governance processes, controls and procedures used to monitor and
manage climate-related risks and opportunities.
5 To achieve this objective, an entity shall disclose information about the

governance body or bodies (which can include a board, committee or
equivalent body charged with governance) with oversight of climate-related
risks and opportunities, and information about management’s role in those
processes. Specifically, an entity shall disclose:
(a) the identity of the body or individual within a body responsible for
oversight of climate-related risks and opportunities;
(b) how the body’s responsibilities for climate-related risks and

opportunities are reflected in the entity’s terms of reference, board
mandates and other related policies;
(c) how the body ensures that the appropriate skills and competencies are
available to oversee strategies designed to respond to climate-related
risks and opportunities;
(d) how and how often the body and its committees (audit, risk or other
committees) are informed about climate-related risks and
opportunities;
(e) how the body and its committees consider climate-related risks and
opportunities when overseeing the entity’s strategy, its decisions on
major transactions, and its risk management policies, including any
assessment of trade-offs and analysis of sensitivity to uncertainty that
may be required;
(f) how the body and its committees oversee the setting of targets related
to significant climate-related risks and opportunities, and monitor
progress towards them (see paragraphs 23–24), including whether and
how related performance metrics are included in remuneration
policies (see paragraph 21(g)); and
(g) a description of management’s role in assessing and managing climate-

related risks and opportunities, including whether that role is
delegated to a specific management-level position or committee and
how oversight is exercised over that position or committee. The
description shall include information about whether dedicated
controls and procedures are applied to management of climate-related
risks and opportunities and, if so, how they are integrated with other
internal functions.
6 In preparing disclosures to fulfil the requirements in paragraph 5, an entity

shall avoid unnecessary duplication in accordance with [draft] IFRS S1 General
Requirements for Disclosure of Sustainability-related Financial Information (see
paragraph 78). For example, although an entity shall provide the information
required by paragraph 5, when its oversight of sustainability-related risks and
opportunities is managed on an integrated basis, providing integrated
governance disclosures rather than separate disclosures for each significant
sustainability-related risk and opportunity would reduce duplication.
Strategy
7 The objective of climate-related financial disclosures on strategy is to
enable users of general purpose financial reporting to understand an
entity’s strategy for addressing significant climate-related risks and
opportunities.
8 To achieve this objective, an entity shall disclose information about:
(a) the significant climate-related risks and opportunities that it

reasonably expects could affect its business model, strategy and cash
flows, its access to finance and its cost of capital, over the short,
medium or long term (see paragraphs 9–11);
(b) the effects of significant climate-related risks and opportunities on its

business model and value chain (see paragraph 12);
(c) the effects of significant climate-related risks and opportunities on its

strategy and decision-making, including its transition plans (see
paragraph 13);
(d) the effects of significant climate-related risks and opportunities on its

financial position, financial performance and cash flows for the
reporting period, and the anticipated effects over the short, medium
and long term—including how climate-related risks and opportunities
are included in the entity’s financial planning (see paragraph 14); and
(e) the climate resilience of its strategy (including its business model) to
significant physical risks and significant transition risks (see
paragraph 15).
Climate-related risks and opportunities

9 An entity shall disclose information that enables users of general purpose
financial reporting to understand the significant climate-related risks and
opportunities that could reasonably be expected to affect the entity’s business
model, strategy and cash flows, its access to finance and its cost of capital,
over the short, medium or long term. Specifically, the entity shall disclose:
(a) a description of significant climate-related risks and opportunities and

the time horizon over which each could reasonably be expected to
affect its business model, strategy and cash flows, its access to finance
and its cost of capital, over the short, medium or long term.
(b) how it defines short, medium and long term and how these definitions
are linked to the entity’s strategic planning horizons and capital
allocation plans.
(c) whether the risks identified are physical risks or transition risks. For
example, acute physical risks could include the increased severity of
extreme weather events such as cyclones and floods, and examples of
chronic physical risks include rising sea levels or rising mean
temperatures. Transition risks could include regulatory, technological,
market, legal or reputational risks.
10 In identifying the significant climate-related risks and opportunities described

in paragraph 9(a), an entity shall refer to the disclosure topics defined in the
industry disclosure requirements (Appendix B).
11 In preparing disclosures to fulfil the requirements in paragraphs 12–15, an

entity shall refer to and consider the applicability of cross-industry metric
categories and the industry-based metrics associated with disclosure topics, as
described in paragraph 20.

financial reporting to understand its assessment of the current and
anticipated effects of significant climate-related risks and opportunities on its
business model. Specifically, an entity shall disclose:
(a) a description of the current and anticipated effects of significant

climate-related risks and opportunities on its value chain; and
(b) a description of where in its value chain significant climate-related

risks and opportunities are concentrated (for example, geographical
areas, facilities or types of assets, inputs, outputs or distribution
channels).
Strategy and decision-making

financial reporting to understand the effects of significant climate-related
risks and opportunities on its strategy and decision-making, including its
transition plans. Specifically, an entity shall disclose:
(a) how it is responding to significant climate-related risks and

opportunities including how it plans to achieve any climate-related
targets it has set. This shall include:
(i) information about current and anticipated changes to its

business model, including:
(1) about changes the entity is making in strategy and

resource allocation to address the risks and
opportunities identified in paragraph 12. Examples of
these changes include resource allocations resulting
from demand or supply changes, or from new business
lines; resource allocations arising from business
development through capital expenditures or additional
expenditure on operations or research and
development; and acquisitions and divestments. This
information includes plans and critical assumptions for
legacy assets, including strategies to manage carbon-
energy- and water-intensive operations, and to
decommission carbon-energy- and water-intensive
assets.
(2) information about direct adaptation and mitigation

efforts it is undertaking (for example, through changes
in production processes, workforce adjustments,
changes in materials used, product specifications or
through introduction of efficiency measures).
(3) information about indirect adaptation and mitigation

efforts it is undertaking (for example, by working with
customers and supply chains or use of procurement).
(ii) how these plans will be resourced.
(b) information regarding climate-related targets for these plans

including:
(i) the processes in place for review of the targets;
(ii) the amount of the entity’s emission target to be achieved

through emission reductions within the entity’s value chain;
(iii) the intended use of carbon offsets in achieving emissions targets.

In explaining the intended use of carbon offsets the entity shall
disclose information including:
(1) the extent to which the targets rely on the use of carbon
offsets;
(2) whether the offsets will be subject to a third-party offset

verification or certification scheme (certified carbon offset),
and if so, which scheme, or schemes;
(3) the type of carbon offset, including whether the offset

will be nature-based or based on technological carbon
removals and whether the amount intended to be
achieved is through carbon removal or emission
avoidance; and
(4) any other significant factors necessary for users to

understand the credibility and integrity of offsets
intended to be used by the entity (for example,
assumptions regarding the permanence of the carbon
offset).
(c) quantitative and qualitative information about the progress of plans

disclosed in prior reporting periods in accordance with
paragraph 13(a)–(b). Related requirements are provided in
paragraph 20.
Financial position, financial performance and cash flows

financial reporting to understand the effects of significant climate-related
risks and opportunities on its financial position, financial performance and
cash flows for the reporting period, and the anticipated effects over the short,
medium and long term—including how climate-related risks and
opportunities are included in the entity’s financial planning. An entity shall
disclose quantitative information unless it is unable to do so. If an entity is
unable to provide quantitative information, it shall provide qualitative
information. When providing quantitative information, an entity can disclose
single amounts or a range. Specifically, an entity shall disclose:
(a) how significant climate-related risks and opportunities have affected

its most recently reported financial position, financial performance
and cash flows;
(b) information about the climate-related risks and opportunities

identified in paragraph 14(a) for which there is a significant risk that
there will be a material adjustment to the carrying amounts of assets
and liabilities reported in the financial statements within the next
financial year;
(c) how it expects its financial position to change over time, given its
strategy to address significant climate-related risks and opportunities,
reflecting:
(i) its current and committed investment plans and their

anticipated effects on its financial position (for example, capital
expenditure, major acquisitions and divestments, joint
ventures, business transformation, innovation, new business
areas and asset retirements);
(ii) its planned sources of funding to implement its strategy;
(d) how it expects its financial performance to change over time, given its
strategy to address significant climate-related risks and opportunities
(for example, increased revenue from or costs of products and services
aligned with a lower-carbon economy, consistent with the latest
international agreement on climate change; physical damage to assets from
climate events; and the costs of climate adaptation or mitigation); and
(e) if the entity is unable to disclose quantitative information for

paragraph 14(a)–(d), an explanation of why that is the case.
Climate resilience
financial reporting to understand the resilience of the entity’s strategy
(including its business model) to climate-related changes, developments or
uncertainties—taking into consideration an entity’s identified significant
climate-related risks and opportunities and related uncertainties. The entity
shall use climate-related scenario analysis to assess its climate resilience unless it
is unable to do so. If an entity is unable to use climate-related scenario
analysis, it shall use an alternative method or technique to assess its climate
resilience. When providing quantitative information, an entity can disclose
single amounts or a range. Specifically, the entity shall disclose:
(a) the results of the analysis of climate resilience, which shall enable
users to understand:
(i) the implications, if any, of the entity’s findings for its strategy,
including how it would need to respond to the effects identified
in paragraph 15(b)(i)(8) or 15(b)(ii)(6);
(ii) the significant areas of uncertainty considered in the analysis

of climate resilience;
(iii) the entity’s capacity to adjust or adapt its strategy and business
model over the short, medium and long term to climate
developments in terms of:
(1) the availability of, and flexibility in, existing financial

resources, including capital, to address climate-related
risks, and/or to be redirected to take advantage of
climate-related opportunities;
(2) the ability to redeploy, repurpose, upgrade or

decommission existing assets; and
(3) the effect of current or planned investments in climate-

related mitigation, adaptation or opportunities for
climate resilience.
(b) how the analysis has been conducted, including:
(i) when climate-related scenario analysis is used:
(1) which scenarios were used for the assessment and the
sources of the scenarios used;
(2) whether the analysis has been conducted by comparing

a diverse range of climate-related scenarios;
(3) whether the scenarios used are associated with

transition risks or increased physical risks;
(4) whether the entity has used, among its scenarios, a

scenario aligned with the latest international agreement
on climate change;
(5) an explanation of why the entity has decided that its

chosen scenarios are relevant to assessing its resilience
to climate-related risks and opportunities;
(6) the time horizons used in the analysis;
(7) the inputs used in the analysis, including—but not

limited to—the scope of risks (for example, the scope of
physical risks included in the scenario analysis), the
scope of operations covered (for example, the operating
locations used), and details of the assumptions (for
example, geospatial coordinates specific to entity
locations or national- or regional-level broad
assumptions); and
(8) assumptions about the way the transition to a lower-

carbon economy will affect the entity, including policy
assumptions for the jurisdictions in which the entity
operates; assumptions about macroeconomic trends;
energy usage and mix; and technology.
(ii) when climate-related scenario analysis is not used:
(1) an explanation of the methods or techniques used to

assess the entity’s climate resilience (for example,
single-point forecasts, sensitivity analysis or qualitative
analysis);
(2) the climate-related assumptions used in the analysis

including whether it includes a range of hypothetical
outcomes;
(3) an explanation of why the entity has decided that the

chosen climate-related assumptions are relevant to
assessing its resilience to climate-related risks and
opportunities;
(4) the time horizons used in the analysis;
(5) the inputs used in the analysis, including—but not

limited to—the scope of risks (for example, the scope of
physical risks included in the analysis), the scope of
operations covered (for example, the operating locations
used), and details of the assumptions (for example,
geospatial coordinates specific to entity locations or
national- or regional-level broad assumptions);
(6) assumptions about the way the transition to a lower-

carbon economy will affect the entity, including policy
assumptions for the jurisdictions in which the entity
operates; assumptions about macroeconomic trends;
energy usage and mix; and technology; and
(7) an explanation of why the entity was unable to use

climate-related scenario analysis to assess the climate
resilience of its strategy.
Risk management
16 The objective of climate-related financial disclosures on risk management
is to enable users of general purpose financial reporting to understand the
process, or processes, by which climate-related risks and opportunities are
identified, assessed and managed.
17 To achieve this objective, an entity shall disclose:
(a) the process, or processes, it uses to identify climate-related:
(i) risks; and
(ii) opportunities;
(b) the process, or processes, it uses to identify climate-related risks for

risk management purposes, including when applicable:
(i) how it assesses the likelihood and effects associated with such
risks (such as the qualitative factors, quantitative thresholds
and other criteria used);
(ii) how it prioritises climate-related risks relative to other types of

risks, including its use of risk-assessment tools (for example,
science-based risk-assessment tools);
(iii) the input parameters it uses (for example, data sources, the
scope of operations covered and the detail used in
assumptions); and
(iv) whether it has changed the processes used compared to the

prior reporting period;
(c) the process, or processes, it uses to identify, assess and prioritise

climate-related opportunities;
(d) the process, or processes, it uses to monitor and manage the climate-
related:
(i) risks, including related policies; and
(ii) opportunities, including related policies;
(e) the extent to which and how the climate-related risk identification,
assessment and management process, or processes, are integrated into
the entity’s overall risk management process; and
(f) the extent to which and how the climate-related opportunity

identification, assessment and management process, or processes, are
integrated into the entity’s overall management process.
18 In preparing disclosures to fulfil the requirements in paragraph 17, an entity

shall avoid unnecessary duplication in accordance with [draft] IFRS S1 General
Requirements for Disclosure of Sustainability-related Financial Information (see
paragraph 78). For example, although an entity shall provide the information
required by paragraph 17, when its oversight of sustainability-related risks
and opportunities is managed on an integrated basis, providing integrated risk
management disclosures rather than separate disclosures for each significant
sustainability-related risk and opportunity would reduce duplication.
Metrics and targets

19 The objective of climate-related financial disclosures on metrics and targets
is to enable users of general purpose financial reporting to understand how
an entity measures, monitors and manages its significant climate-related
risks and opportunities. These disclosures shall enable users to understand
how the entity assesses its performance, including progress towards the
targets it has set.
20 To achieve this objective, an entity shall disclose:
(a) information relevant to the cross-industry metric categories (see

paragraph 21), which are relevant to entities regardless of industry and
business model;
(b) industry-based metrics (as set out in Appendix B) which are associated
with disclosure topics and relevant to entities that participate within
an industry, or whose business models and underlying activities share
common features with those of the industry;
(c) other metrics used by the board or management to measure progress

towards the targets identified in paragraph 20(d); and
(d) targets set by the entity to mitigate or adapt to climate-related risks or

maximise climate-related opportunities.
21 An entity shall disclose information relevant to the cross-industry metric

categories of:
(a) greenhouse gas emissions—the entity shall disclose:
(i) its absolute gross greenhouse gas emissions generated during

the reporting period, measured in accordance with the
Greenhouse Gas Protocol Corporate Standard, expressed as metric
tonnes of CO2 equivalent, classified as:
(1) Scope 1 emissions;
(ii) its greenhouse gas emissions intensity for each scope in

paragraph 21(a)(i)(1)–(3), expressed as metric tonnes of CO2
equivalent per unit of physical or economic output;
(iii) for Scope 1 and Scope 2 emissions disclosed in accordance with

paragraph 21(a)(i)(1)–(2), the entity shall disclose emissions
separately for:
(1) the consolidated accounting group (the parent and its

subsidiaries);
(2) associates, joint ventures, unconsolidated subsidiaries or

affiliates not included in paragraph 21(a)(iii)(1);
(iv) the approach it used to include emissions for the entities

included in paragraph 21(a)(iii)(2) (for example, the equity share
or operational control method in the Greenhouse Gas Protocol
Corporate Standard);
(v) the reason, or reasons, for the entity’s choice of approach in

paragraph 21(a)(iv) and how that relates to the disclosure
objective in paragraph 19;
(vi) for Scope 3 emissions disclosed in accordance with

paragraph 21(a)(i)(3):
(1) an entity shall include upstream and downstream

emissions in its measure of Scope 3 emissions;
(2) an entity shall disclose the categories included within

its measure of Scope 3 emissions, to enable users of
general purpose financial reporting to understand
which Scope 3 emissions have been included in, or
excluded from, those reported;
(3) when the entity’s measure of Scope 3 emissions includes

information provided by entities in its value chain, it
shall explain the basis for that measurement;
(4) if the entity excludes those greenhouse gas emissions in

paragraph 21(a)(vi)(3), it shall state the reason for
omitting them, for example, because it is unable to
obtain a faithful measure;
(b) transition risks—the amount and percentage of assets or business

activities vulnerable to transition risks;
(c) physical risks—the amount and percentage of assets or business

activities vulnerable to physical risks;
(d) climate-related opportunities—the amount and percentage of assets or

business activities aligned with climate-related opportunities;
(e) capital deployment—the amount of capital expenditure, financing or

investment deployed towards climate-related risks and opportunities;
(f) internal carbon prices:
(i) the price for each metric tonne of greenhouse gas emissions
that the entity uses to assess the costs of its emissions;
(ii) an explanation of how the entity is applying the carbon price in

decision-making (for example, investment decisions, transfer
pricing and scenario analysis);
(g) remuneration:
(i) the percentage of executive management remuneration

recognised in the current period that is linked to climate-
related considerations; and
(ii) a description of how climate-related considerations are factored

into executive remuneration (also see paragraph 5(f)).
22 In preparing disclosures to fulfil the requirements in paragraph 21(b)–(g), an

entity shall
(a) consider whether industry-based metrics associated with disclosure

topics, as described in paragraph 20(b), including those defined in an
applicable IFRS Sustainability Disclosure Standard or those that
otherwise satisfy [draft] IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information could be used in whole or part

to meet the requirements; and
(b) in accordance with paragraphs 37–38 of [draft] IFRS S1 General

Requirements for Disclosure of Sustainability-related Financial Information,
consider the relationship of these amounts with the amounts
recognised and disclosed in the accompanying financial statements (for
example, the carrying amount of assets used should be consistent with
amounts included in the financial statements and when possible the
connections between information in these disclosures and amounts in
the financial statements should be explained).
23 An entity shall disclose its climate-related targets. For each climate-related

target, an entity shall disclose:
(a) metrics used to assess progress towards reaching the target and
achieving its strategic goals;
(b) the specific target the entity has set for addressing climate-related
risks and opportunities;
(c) whether this target is an absolute target or an intensity target;
(d) the objective of the target (for example, mitigation, adaptation or

conformance with sector or science-based initiatives);
(e) how the target compares with those created in the latest international
agreement on climate change and whether it has been validated by a
third party;
(f) whether the target was derived using a sectoral decarbonisation

approach;
(g) the period over which the target applies;
(h) the base period from which progress is measured; and
(i) any milestones or interim targets.
24 In identifying, selecting and disclosing the metrics described in

paragraph 23(a), an entity shall refer to and consider the applicability of
industry-based metrics, as described in paragraph 20(b), including those
defined in Appendix B, those included in an applicable IFRS Sustainability
Disclosure Standard, or those that otherwise satisfy [draft] IFRS S1 General
Requirements for Disclosure of Sustainability-related Financial Information.
Appendix A
Defined terms
This appendix is an integral part of [draft] IFRS S2 and has the same authority as the other parts of
the [draft] Standard.
Absolute target A target defined by a change in absolute emissions over time,

for example, reducing CO2 emissions by 25% below 1994 levels
by 2010.
Carbon offset An emissions unit issued by a carbon crediting programme that
represents an emission reduction or removal of a greenhouse
gas emission. Carbon offsets are uniquely serialised, issued,
tracked and cancelled by means of an electronic registry.
Certified carbon offset Certified carbon offset credits are carbon offsets that take the
form of transferable or tradable instruments, certified by
governments or independent certification bodies, representing
a removal of emissions of one metric tonne of CO2, or an
equivalent amount of other greenhouse gases.
This links to the Kyoto Protocol, which included three market-

based mechanisms (Article 6, 12, 17)—emissions trading, the
clean development mechanism and joint implementation
giving the parties a degree of flexibility in meeting their
emission-reduction targets.
Climate resilience The capacity of an entity to adjust to uncertainty related to
climate change. This involves the capacity to manage climate-
related risks and benefits from climate-related opportunities,
including the ability to respond and adapt to transition risks
and physical risks.
Climate-related Scenario analysis is a process for identifying and assessing a
scenario analysis potential range of outcomes of future events under conditions
of uncertainty. In the case of climate change, climate-related
scenario analysis allows an entity to explore and develop an
understanding of how the physical risks and transition risks
of climate change may affect its businesses, strategies and
financial performance over time.
Climate-related risks Climate-related risks refer to the potential negative effects of
and opportunities climate change on an entity. Physical risks emanating from
climate change can be event-driven (acute) such as increased
severity of extreme weather events (for example, cyclones,
droughts, floods and fires). They can also relate to longer-term
shifts (chronic) in precipitation and temperature and increased
variability in weather patterns (which could result in, for
example, sea-level rise). Climate-related risks can also be
associated with the transition to a lower-carbon global
economy, the most common of which relate to policy and legal
actions, changes in technology, market responses and

reputational considerations.
Climate-related opportunities refer to the potentially positive

climate-change generated outcomes for an entity. Global efforts
to mitigate and adapt to climate change can produce climate-
related opportunities for entities. For example, a power
generating company could increase its revenue due to a
growing demand for cooling (achieved by using electricity) in
regions that experience more heatwaves. Climate-related
opportunities will vary depending on the region, market and
industry in which an entity operates.
Climate-related risks and opportunities include climate-related

risks and climate-related opportunities as previously described.
CO2 equivalent The universal unit of measurement to show the global warming
potential of each of the seven greenhouse gases, expressed in
terms of the global warming potential of one unit of carbon
dioxide for 100 years. This unit is used to evaluate releasing (or
avoiding releasing) any greenhouse gas against a common
basis.
Greenhouse gases The seven greenhouse gases listed in the Kyoto Protocol–carbon
dioxide (CO2); methane (CH4); nitrous oxide (N2O);
hydrofluorocarbons (HFCs); nitrogen trifluoride (NF3);
perfluorocarbons (PFCs); and sulphur hexafluoride (SF6).
Greenhouse Gas The Greenhouse Gas Protocol Initiative is a multi-stakeholder

Protocol Corporate partnership of businesses, non-governmental organisations
Standard (NGOs), governments, and others convened by the World
Resources Institute, a US-based environmental NGO, and the
World Business Council for Sustainable Development, a Geneva-
based coalition of 170 international companies. Launched in
1998, the initiative’s mission is to develop internationally
accepted greenhouse gas accounting and reporting standards
for business and to promote their broad adoption.
The Greenhouse Gas Protocol Corporate Standard provides

standards and guidance for companies and other types of
organisations preparing a greenhouse gas emissions inventory.
It covers the accounting and reporting of the seven greenhouse
gases covered by the Kyoto Protocol.
Intensity target A target defined by a change in the ratio of emissions to a
business metric over time, for example, reduce CO2 per tonne
of cement by 12% by 2008.
Internal carbon price Price used by entities to assess the financial implications of
changes to investment, production and consumption patterns,
as well as potential technological progress and future
emissions-abatement costs. Entities’ internal carbon prices can
be used for a range of business applications. There are two

types of internal carbon prices commonly used by entities.
The first type is a shadow price, which is a theoretical cost or

notional amount that the entity does not charge but that can be
used in assessing the economic implications or trade-offs for
such things as risk impacts, new investments, net present value
of projects, and the cost—benefit of various initiatives.
The second type is an internal tax or fee, which is a carbon

price charged to a business activity, product line, or other
business unit based on its greenhouse gas emissions (these
internal taxes or fees are similar to intracompany transfer
pricing).
Latest international The latest international agreement on climate change is an
agreement on climate agreement by states, as members of the United Nations
change Framework Convention on Climate Change to combat climate
change. The agreements set norms and targets for a reduction
in greenhouse gases.
Legacy asset An asset that has remained on an entity’s statement of
financial position for a long period of time and has since
become obsolete or has lost nearly all of its initial value.
Physical risks Risks resulting from climate change that can be event-driven
(acute) or from longer-term shifts (chronic) in climate patterns.
These risks may carry financial implications for entities, such
as direct damage to assets, and indirect effects of supply-chain
disruption. Entities’ financial performance may also be affected
by changes in water availability, sourcing and quality; and
extreme temperature changes affecting entities’ premises,
operations, supply chain, transportation needs and employee
safety.
Scope 1 emissions Direct greenhouse gas emissions that occur from sources that
are owned or controlled by an entity, for example, emissions
from combustion in owned or controlled boilers, furnaces,
vehicles or emissions from chemical production in owned or
controlled process equipment.
Scope 2 emissions Indirect greenhouse gas emissions that occur from the
generation of purchased electricity, heat or steam consumed by
an entity. Purchased electricity is defined as electricity that is
purchased or otherwise brought into an entity’s boundary.
Scope 2 emissions physically occur at the facility where
electricity is generated.
Scope 3 emissions Indirect emissions outside of Scope 2 emissions that occur in
the value chain of the reporting entity, including both
upstream and downstream emissions. For the purposes of this
standard, Scope 3 emissions include these categories (consistent
with the GHG Protocol):
(1) purchased goods and services;
(2) capital goods;
(3) fuel- and energy-related activities not included in

Scope 1 emissions or Scope 2 emissions;
(4) upstream transportation and distribution;
(5) waste generated in operations;
(6) business travel;
(7) employee commuting;
(8) upstream leased assets;
(9) downstream transportation and distribution;
(10) processing of sold products;
(11) use of sold products;
(12) end-of-life treatment of sold products;
(13) downstream leased assets;
(14) franchises; and
(15) investments.
Scope 3 emissions could include—the extraction and

production of purchased materials and fuels; transport-related
activities in vehicles not owned or controlled by the reporting
entity; electricity-related activity (for example, transmission
and distribution losses), outsourced activities, and waste
disposal.
Transition plan An aspect of an entity’s overall strategy that lays out the
entity’s targets and actions for its transition towards a lower-
carbon economy, including actions such as reducing its
greenhouse gas emissions.
Transition risks Moving to a lower-carbon economy may entail extensive policy,
legal, technology and market changes to address mitigation and
adaptation requirements relating to climate change. Depending
on the nature, speed and focus of these changes, transition
risks may pose varying levels of financial and reputational risk
to entities.
Terms defined in other [draft] Standards and used in this [draft]

Standard with the same meaning
Business model An entity’s system of transforming inputs through its business

activities into outputs and outcomes that aims to fulfil the
entity’s strategic purposes and create value over the short,
medium and long term.
Disclosure topic A specific sustainability-related risk or opportunity based on
the activities conducted by entities within a particular industry
as set out in an IFRS Sustainability Disclosure Standard or an
industry-based SASB Standard.
Enterprise value The total value of an entity. It is the sum of the value of the
entity’s equity (market capitalisation) and the value of the
entity’s net debt.
General purpose The provision of financial information about a reporting entity
financial reporting that is useful to primary users in making decisions relating to
providing resources to the entity. Those decisions involve
decisions about:
(a) buying, selling or holding equity and debt instruments;
(b) providing or selling loans and other forms of credit; or
(c) exercising rights to vote on, or otherwise influence,

management’s actions that affect the use of the entity’s
economic resources.
General purpose financial reporting encompasses—but is not

restricted to—an entity’s general purpose financial statements
and sustainability-related financial disclosures.
Users Existing and potential investors, lenders and other creditors.
Value chain The full range of activities, resources and relationships related
to a reporting entity’s business model and the external
environment in which it operates.
A value chain encompasses the activities, resources and

relationships an entity uses and relies on to create its products
or services from conception to delivery, consumption and end-
of-life. Relevant activities, resources and relationships include
those in the entity’s operations, such as human resource; those
along its supply, marketing and distribution channels, such as
materials and service sourcing and product and service sale and
delivery; and the financing, geographical, geopolitical and
regulatory environments in which the entity operates.
Appendix B
Industry-based disclosure requirements
Introduction
B1 This [draft] Standard sets out the requirements for identifying, measuring and
disclosing information related to an entity’s significant climate-related risks
and opportunities that are associated with specific business models, economic
activities and other common features characterised by participation in an
industry. In applying this [draft] Standard, an entity that participates in a
particular industry would be required to provide the information set out in
these requirements.
B2 The industry-based disclosure requirements have been derived from SASB

Standards (see paragraphs B10–B12). They are largely unchanged from the
equivalent requirements in the SASB Standards. Where changes are proposed,
these have been marked up for ease of reference. Because the requirements
are industry-based, only a subset is likely to apply to a particular entity (see
paragraphs B13–B15).
Structure and terminology

B3 The industry-based disclosure requirements are organised by industry,
enabling an entity to identify the requirements that are applicable to its
business model and associated activities. For each industry, disclosure topic(s)
related to climate-related risks or opportunities are identified. A set of metrics
is associated with each disclosure topic. The disclosure topics represent those
climate-related risks and opportunities that have been identified as those that
are most likely to be significant to entities in that industry, and the associated
metrics are those that have been identified as being most likely to result in
the disclosure of information that is relevant to an assessment of enterprise
value.
B4 The industry-based disclosure requirements in this Appendix contain:
(a) Industry descriptions, which are intended to clarify the scope of

application by defining the relevant business models, underlying
economic activities, common sustainability-related impacts and
dependencies and other shared features that are characteristic of
participation in the industry;
(b) Disclosure topics, which define a specific sustainability-related risk or

opportunity based on the activities conducted by entities within a
particular industry, including a brief description of how management
or mismanagement may affect an entity’s enterprise value;
(c) Metrics, which accompany disclosure topics and are designed to, either
individually or as part of a set, present useful information regarding
performance on a specific disclosure topic;
(d) Technical protocols, which provide guidance on definitions, scope,

implementation and compilation; and
(e) Activity metrics, which quantify the scale of specific activities or

operations by an entity and are intended for use in conjunction with
metrics to normalise data and facilitate comparison.
Application
Materiality
B5 The objective of this Standard is to require entities to provide material
information about their exposure to climate-related risks and opportunities
that is useful to users of general-purpose financial reporting in assessing the
entity’s enterprise value and making decisions about whether to provide
economic resources to the entity.
B6 As described in paragraph B3, the disclosures set out in Appendix B and its
related volumes have been identified as those that are likely to be useful to
users of general purpose financial reporting in making assessments of an
entity’s enterprise value. However, the responsibility for making materiality
judgements and determinations rests with the reporting entity for all
requirements in IFRS Sustainability Disclosure Standards, including this
Standard. Therefore, an entity shall disclose information related to a specific
requirement when it concludes that the information is material to the users
of the information in assessing the enterprise value of the entity.
B7 The disclosure topics and associated metrics in this Standard are not
exhaustive. An entity shall consider the full range of climate-related risks and
opportunities it faces, including those not identified in this Standard, and
shall describe those it has concluded are significant in accordance with
paragraph 9(a). Accordingly, an entity may need to provide information
related to additional topics not included in these industry-based requirements
—as well as associated metrics used by the entity—to meet the requirements
of this Standard, particularly when an entity faces climate-related risks or
opportunities that are emerging rapidly or associated with unique aspects of
its business model or circumstances.
Selecting the appropriate industry (or industries)

B8 The industry-based requirements are organised according to the Sustainable
Industry Classification System® (SICS®). In preparing disclosures in accordance
with the industry-based requirements, an entity shall identify the industry or
industries it has selected. As a starting point, an entity can identify its primary
industry classification on the SASB Standards website.4
4 The IFRS Foundation expects to incorporate the body of work developed by the Value Reporting
Foundation, including SASB Standards, into its materials before publication of any standard
arising from the Exposure Draft.
B9 Some entities participate in a broad range of activities that are likely to span
more than one industry. For entities whose operations are integrated
horizontally across industries (such as conglomerates) or vertically through
the value chain, more than one set of industry-based requirements may be
required to be applied to meet the objective of completeness and address the
full range of climate-related disclosure topics reasonably likely to make an
impact on an entity's ability to create enterprise value.
Compatibility with SASB Standards

B10 The industry-based requirements have been derived from SASB Standards. An
entity that has, in a prior reporting period, used SASB Standards as a basis for
preparing sustainability-related financial disclosures will find that—except for
the items identified in paragraph B11—the requirements are consistent with
SASB Standards. Such consistency includes the:
(a) industry classifications;
(b) disclosure topics;
(c) metrics and technical protocols; and
(d) activity metrics.
B11 There are two proposed differences between SASB Standards and the industry-
based requirements in this Standard, which are indicated in the appropriate
volumes (see paragraph B16). These differences are marked up for ease of
reference, with additions underscored and deletions struck through. These
differences include:
(a) a subset of industry-based requirements that include proposed

modifications to make them more applicable globally; and
(b) disclosure topics that have been proposed to be added to four

industries in the financial sector, along with associated metrics, to
address risks from financed and facilitated emissions.
B12 Where applicable, the industry-based requirements are accompanied by the

relevant SASB metric code from which they were derived to assist preparers
who have used SASB Standards in their transition to IFRS Sustainability
Disclosure Standards.
Identifying significant risks and opportunities and

preparing disclosures
B13 Paragraph 9(a) requires an entity to identify and describe the significant
climate-related risks and opportunities to which it is exposed. In fulfilling this
requirement, preparers are likely to find the industry-based requirements to
be a useful starting point to identify risks and opportunities. In particular, the
disclosure topics define climate-related risks or opportunities that have been
identified as being likely to result in the disclosure of useful information
based on the activities conducted by entities within a particular industry.
Example
An entity in the automobiles industry might review the requirements and
determine that the disclosure topic on ‘Fuel Economy and Use-phase
Emissions’ is relevant to its circumstances. The disclosure topic notes that
‘the combustion of petroleum-based fuels by motor vehicles accounts for a
significant share of greenhouse gas emissions that contribute to global
climate change’ and that ‘more stringent emissions standards and changing
consumer demands are driving the expansion of markets for electric vehicles
and hybrids, as well as for conventional vehicles with high fuel efficiency.’
Accordingly, the disclosure topic can be either a transition risk—if the entity
is challenged to mitigate the risk of changing buyer preferences and adapt
its business model—or a climate-related opportunity—if the entity innovates
to meet or exceed regulatory standards and capture an increasing share of
an evolving market.
B14 In paragraphs 12–15, the Standard requires an entity to provide additional

disclosure on the significant climate-related risks identified and described in
paragraph 9(a). In preparing such disclosure, entities shall refer to the metrics
associated with the industry-based requirements, in accordance with
paragraph 11.
Example
The automaker (see previous example) would disclose information about the
‘Fuel Economy and Use-phase Emissions’ disclosure topic in accordance with
the industry-based requirements in this Standard. For example, the entity
would use the associated metrics—including the fuel economy of the
entity’s fleet (metric TR-AU-410a.1) and its sales of zero-emission vehicles
(metric TR-AU-410a.2). These disclosures would help fulfil the industry-based
requirements and those related to metrics and targets. However, the entity
might also use them to fulfil the requirement in paragraph 13(c) to disclose
quantitative information about the progress of plans disclosed in accordance
with paragraph 13(a), helping users understand how the entity plans to
achieve the climate-related targets it has set. Investors have emphasised that
disclosures related to an entity’s climate-related transition plan should detail
specific actions and activities the entity is undertaking—or plans to
undertake—to support the transition.
Preparing information to fulfil cross-industry metric

categories
B15 Similarly, an entity shall review and consider whether the industry-based
requirements for disclosing quantitative information would meet the
requirements for disclosures related to cross-industry metric categories in
paragraph 21(a)–(e). For example:
(a) paragraph 21(a) requires the disclosure of the entity’s gross Scope 1
greenhouse gas emissions, which an entity in the semiconductors
industry might enhance by disclosing the percentage of Scope 1
emissions associated with perfluorinated compounds (see metric
TC-SC-110a.1);
(b) paragraph 21(c) requires the disclosure of quantitative information

related to an entity’s physical climate risk exposure, which an entity in
the agricultural products industry might fulfil by disclosing the
percentage of key crops sourced from water-stressed regions (see
metric FB-AG-440a.2);
(c) paragraph 21(d) requires the disclosure of quantitative information

related to an entity’s climate-related opportunities, which an entity in
the chemicals industry might fulfil by disclosing its revenue from
products designed for use-phase resource efficiency (see metric
RT-CH-410a.1); and
(d) paragraph 21(e) requires the disclosure of quantitative information

about an entity’s climate-related capital deployment, which an oil and
gas entity might fulfil by disclosing the amount it has invested in
renewable energy (see metric EM-EP-420a.3).
B16 Regardless of whether a preparer identifies a direct or explicit connection

between a specific cross-industry metric category and a given industry-based
disclosure topic or its corresponding metric(s), the entity shall refer to its full
set(s) of relevant industry-based requirements with a view to presenting fairly
the climate-related risks and opportunities to which it is exposed.
B17 The industry-based disclosure requirements associated with this Standard are
published in separate, industry-based volumes, labelled as Volumes B1–B68 of
this Standard, as outlined in Table 1.
Table 1–Volumes B1–B68: Industry-based requirements
SICS® sector and industry Volume

Consumer Goods
Apparel, Accessories & Footwear B1 (CG-AA)
Appliance Manufacturing B2 (CG-AM)
Building Products & Furnishings B3 (CG-BF)
E-Commerce B4 (CG-EC)
Household & Personal Products B5 (CG-HP)
Multiline and Specialty Retailers & Distributors B6 (CG-MR)
Toys & Sporting Goods
continued...
...continued

Extractives & Minerals Processing
Coal Operations B7 (EM-CO)
Construction Materials B8 (EM-CM)
Iron & Steel Producers B9 (EM-IS)
Metals & Mining B10 (EM-MM)
Oil & Gas–Exploration & Production B11 (EM-EP)
Oil & Gas–Midstream B12 (EM-MD)
Oil & Gas–Refining & Marketing B13 (EM-RM)
Oil & Gas–Services B14 (EM-SV)
Financials
Asset Management & Custody Activities B15 (FN-AC)
Commercial Banks B16 (FN-CB)
Consumer Finance
Insurance B17 (FN-IN)
Investment Banking & Brokerage B18 (FN-IB)
Mortgage Finance B19 (FN-MF)
Security & Commodity Exchanges
Food & Beverage
Agricultural Products B20 (FB-AG)
Alcoholic Beverages B21 (FB-AB)
Food Retailers & Distributors B22 (FB-FR)
Meat, Poultry & Dairy B23 (FB-MP)
Non-Alcoholic Beverages B24 (FB-NB)
Processed Foods B25 (FB-PF)
Restaurants B26 (FB-RN)
Tobacco
Health Care
Biotechnology & Pharmaceuticals
Drug Retailers B27 (HC-DR)
Health Care Delivery B28 (HC-DY)
Health Care Distributors B29 (HC-DI)
Managed Care B30 (HC-MC)
Medical Equipment & Supplies B31 (HC-MS)
continued...
...continued

Infrastructure
Electric Utilities & Power Generators B32 (IF-EU)
Engineering & Construction Services B33 (IF-EN)
Gas Utilities & Distributors B34 (IF-GU)
Home Builders B35 (IF-HB)
Real Estate B36 (IF-RE)
Real Estate Services B37 (IF-RS)
Waste Management B38 (IF-WM)
Water Utilities & Services B39 (IF-WU)
Renewable Resources & Alternative Energy
Biofuels B40 (RR-BI)
Forestry Management B41 (RR-FM)
Fuel Cells & Industrial Batteries B42 (RR-FC)
Pulp & Paper Products B43 (RR-PP)
Solar Technology & Project Developers B44 (RR-ST)
Wind Technology & Project Developers B45 (RR-WT)
Resource Transformation
Aerospace & Defense B46 (RT-AE)
Chemicals B47 (RT-CH)
Containers & Packaging B48 (RT-CP)
Electrical & Electronic Equipment B49 (RT-EE)
Industrial Machinery & Goods B50 (RT-IG)
Services
Advertising & Marketing
Casinos & Gaming B51 (SV-CA)
Education
Hotels & Lodging B52 (SV-HL)
Leisure Facilities B53 (SV-LF)
Media & Entertainment
Professional & Commercial Services
continued...
...continued

Technology & Communications
Electronic Manufacturing Services & Original Design B54 (TC-ES)
Manufacturing
Hardware B55 (TC-HW)
Internet Media & Services B56 (TC-IM)
Semiconductors B57 (TC-SC)
Software & IT Services B58 (TC-SI)
Telecommunication Services B59 (TC-TL)
Transportation
Air Freight & Logistics B60 (TR-AF)
Airlines B61 (TR-AL)
Auto Parts B62 (TR-AP)
Automobiles B63 (TR-AU)
Car Rental & Leasing B64 (TR-CR)
Cruise Lines B65 (TR-CL)
Marine Transportation B66 (TR-MT)
Rail Transportation B67 (TR-RA)
Road Transportation B68 (TR-RO)
Appendix C
Effective date
C1 An entity shall apply this [draft] Standard for annual reporting periods
beginning on or after 1 January 20XX. Earlier application is permitted. If an
entity applies this [draft] Standard earlier, it shall disclose that fact.
C2 An entity is not required to provide the disclosures specified in this [draft]

Standard for any period before the date of initial application. Accordingly,
comparative information is not required to be disclosed in the first period in
which an entity applies this [draft] Standard.
Approval by the ISSB Chair and Vice-Chair of Exposure Draft

IFRS S2 Climate-related Disclosures published in March 2022
The Exposure Draft IFRS S2 Climate-related Disclosures was approved for publication by the
Chair and Vice-Chair of the International Sustainability Standards Board.
Emmanuel Faber Chair

Suzanne Lloyd Vice-Chair
Columbus Building
7 Westferry Circus
Canary Wharf
London E14 4HD, UK
Tel +44 (0) 20 7246 6410

Email [email protected]
ifrs.org
International Financial Reporting Standards®,

IFRS Foundation®, IFRS®, IAS®, IFRIC®, SIC®, IASB®, ISSBTM

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March 2022

[Draft] IFRS S2 Climate-related Disclosures

International Sustainability Standards Board ED/2022/S2

Comments to be received by 29 July 2022

ISBN for this part: 978-1-914113-58-1

ISBN for complete publication (four parts): 978-1-914113-57-4

© 2022 IFRS Foundation

Copies of ISSB publications may be ordered from the Foundation by emailing

[DRAFT] IFRS S2 CLIMATE-RELATED DISCLOSURES

ILLUSTRATIVE GUIDANCE (see separate booklet)

Why is the ISSB publishing the Exposure Draft?

• an entity’s financial position and financial performance;

• an entity’s strategy and business model.

A summary of the proposals in the Exposure Draft

• governance—the governance processes, controls and procedures an entity uses to

• strategy—the climate-related risks and opportunities that could enhance, threaten or

• whether and how information about climate-related risks and opportunities

• the effects of climate-related risks and opportunities that could reasonably be

• risk management—how climate-related risks and opportunities are identified,

• performance and outcome measures that support the qualitative disclosures

Due process provisions applicable to the Exposure Draft

(a) address the questions as stated;

(b) specify the paragraph(s) to which they relate;

(c) contain a clear rationale;

(e) include any alternative the ISSB should consider, if applicable.

Questions for respondents

Question 1—Objective of the Exposure Draft

• to assess the effects of climate-related risks and opportunities on the entity’s

• to understand how the entity’s use of resources, and corresponding inputs,

Question 3—Identification of climate-related risks and opportunities

(a) Are the proposed requirements to identify and to disclose a description of

Question 4—Concentrations of climate-related risks and opportunities in an entity’s

As a result, the Exposure Draft includes proposals for qualitative disclosure

Question 5—Transition plans and carbon offsets

Paragraph 13 of the Exposure Draft proposes a range of disclosures about an entity’s

Question 5—Transition plans and carbon offsets

Question 6—Current and anticipated effects

Question 6—Current and anticipated effects

Question 7—Climate resilience

• whether the analysis has been conducted using:

• climate-related scenario analysis; or

Although scenario analysis is a widely accepted process, its application to climate-

Question 7—Climate resilience

Requiring disclosure of information about climate-related scenario analysis as the only

Question 7—Climate resilience

(i) Do you agree with this proposal? Why or why not?

(iii) Alternatively, should all entities be required to undertake climate-related

(e) Do the proposed disclosure requirements appropriately balance the costs of

Question 8—Risk management

Question 9—Cross-industry metric categories and greenhouse gas emissions

• indicative of basic aspects and drivers of climate-related risks and opportunities;

• widely requested by climate reporting frameworks, lenders, investors, insurance

• important for estimating the financial effects of climate change on entities.

• separately Scope 1 and Scope 2 emissions, for:

• the consolidated accounting group (the parent and its subsidiaries);

• the associates, joint ventures, unconsolidated subsidiaries or affiliates not

• the approach it used to include emissions for associates, joint ventures,

Question 9—Cross-industry metric categories and greenhouse gas emissions

For Scope 3 emissions, the Exposure Draft proposes that:

Question 9—Cross-industry metric categories and greenhouse gas emissions