The Institute of Chartered Accountants of Pakistan (ICAP), under the Accounting Standards Board, has formed a working group to review the draft sustainability reporting standards published by the International Sustainability Standards Board (ISSB).
The IFRS Foundation established the ISSB at the 2021 United Nations Climate Change Conference (COP26) with the vision to develop comprehensive global high-quality IFRS Sustainability Disclosure Standards. ISSB has issued drafts of two IFRS Sustainability Disclosure Standards for stakeholder consultations and feedback. The draft standards include IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures.
IFRS S1 requires companies to provide material information about all the significant sustainability-related risks and opportunities necessary to assess enterprise value. These proposals respond to calls from primary users (investors, lenders, and other creditors) of general purpose financial reporting for more consistent, complete, comparable, and verifiable sustainability-related financial information to help them assess an entity’s enterprise value.
IFRS S2 contains requirements for disclosures of material information about significant climate-related risks and opportunities. These disclosures will provide information about how climate-related matters and the associated risks and opportunities affect the company’s financial position and financial performance and the time horizon and amounts involved will help stakeholders in assessing the enterprise value. The disclosures will also provide information about the company’s strategy and business model.
The sustainability reporting will be connected with the financial statements and corporate reporting as it will be part of the company’s annual general-purpose reporting. The draft standards do not specify the effective date, and it will be for the local jurisdictions to set the adoption date of the standards. ICAP working group is currently reviewing draft IFRS S1 and IFRS S2 with the objectives to collate the views of Pakistan stakeholders and highlight their concerns and advocate Pakistan’s interests before ISSB.