Slide 1: Interactive workshop on climate and sustainability disclosure
THIS INTERACTIVE WORKSHOP ON CLIMATE AND SUSTAINABILITY DISCLOSURE WILL START MOMENTARILY
Slide 2: Learning objectives: understand the ISSB Standards
LEARNING OBJECTIVES Understand the ISSB Standards 15
Slide 3: Learning objectives: how to use the ISSB standards
LEARNING OBJECTIVES Understand how to use the ISSB standards 16
Slide 4: Learning objectives: develop a disclosure plan
LEARNING OBJECTIVES Identifying what steps can be taken to develop a disclosure plan 17
Slide 5: Modules overview
MODULE 1: PREPARE MODULE 2: ALIGN What is the case for and What do companies have to purpose of sustainability disclose to align with the reporting? How has the global baseline in IFRS S1 and reporting landscape evolved? S2? How can additional disclosures be integrated to meet geographical, sectoral
Slide 6: Agenda
AGENDA Duration: 3.5 hours Topic: 20 minutes Welcome & introductions 40 minutes Module 1 – Prepare 40 minutes Module 2 – Align part 1 5 minutes Brief stretch break 35 minutes Module 2 – Align part 2 35 minutes Module 3 – Implement 30 minutes Module 4 – Communicate 5 minutes Homework and additional r
Slide 7: Training materials
TRAINING MATERIALS Find all training materials on the SSE website –see link in chat. 20
Slide 8: A logo of a tool Description automatically generated A graph with a world map
A logo of a tool Description automatically generated A graph with a world map and text A cover of a book A cover of a book A screen shot of a document Description automatically generated Description automatically generated Description automatically generated Description automatically generated 21
Slide 9: Why did you join today's training?
Why did you join today’s training? Visit www.menti.com How much do you already and type the code that know? we are sharing in the chat 22
Slide 10: Disclaimer
Disclaimer The IFRS Foundation does not endorse any opinion, idea, information, approach, use case and/or solution mentioned or referred to in the examples featured. Any content owned or produced by third parties in this course should not be considered as representative of the views or the official
Slide 11: Module 1: Building a solid foundation of knowledge
MODULE 1 Building a solid foundation of knowledge 24
Slide 12: Prepare
PREPARE PURPOSE BASELINE LANDSCAPE GLOBAL BASELINE 25
Slide 13: Prepare: case for and drivers of sustainability reporting
PREPARE PURPOSE The case for and market drivers of sustainability reporting BASELINE LANDSCAPE GLOBAL BASELINE 26
Slide 14: Zoom poll 1
ZOOM 1. What are your reasons for disclosing sustainability-related POLL information? (Select all that apply) a. Regulatory requirements b. Sharing management’s objectives c. Societal expectations Select the d. Investor interest appropriate answer e. Other (indicate in the chat) f. We are not disclo
Slide 15: Growth in investor commitments
Growth in investor commitments 1 Digital financial reporting Digital financial reporting PRI DATABASE 28
Slide 16: Individual investor interest in ESG information
Individual investor interest in ESG 1 information Top drivers globally for rising interest in sustainable investing Percent of respondents ‘significantly’ or ‘somewhat more’ interested in sustainable investing due to the issue listed, over the last 12 months. Rank Driver for rising interest in susta
Slide 17: Effects on financial performance
Effects on financial performance 1 ▪ Changes in revenue mix or total revenue For example, a change in demand for products and services due to shifts in consumer preferences, or changes in production capacity from input disruption or impacts on workforce management and planning, etc. ▪ Changes in exp
Slide 18: Effects on financial position
Effects on financial position 1 ▪ Changes to assets and/or liabilities For example, changes to portfolio value, equity or liabilities or changes in carrying amount of assets from write-offs, asset impairment, early retirement of existing assets, acquisition of new assets, or re-pricing of assets, et
Slide 19: The evolving risk environment
The evolving risk environment 1 Digital financial reporting World Economic Forum Global Risk Report 2024 32
Slide 20: Connections between risks
Connections between risks 1 World Economic Forum Global Risk Report 2024 33
Slide 21: Evolution of sustainability-related financial disclosures
PREPARE PURPOSE BASELINE LANDSCAPE The evolution of sustainability-related financial disclosures GLOBAL BASELINE 34
Slide 22: Zoom poll 2
ZOOM 2. What frameworks are you POLL currently using? (Select all that apply) a. CDP (formerly Carbon Disclosure Project) b. Global Reporting Initiative (GRI) Select the c. Integrated Reporting appropriate answer d. Sustainability Accounting Standards Board (SASB) e. Task force on climate-related fi
Slide 23: Structure of the IFRS Foundation
36 Structure of the IFRS Foundation 1 Public accountability IFRS Foundation Monitoring Board Governance, strategy, oversight IFRS Foundation Trustees International Accounting International Sustainability Independent standard-setting Standards Board (IASB) Standards Board (ISSB) IFRS Interpretations
Slide 24: The evolution of reporting standards
The evolution of reporting standards 1 Responsible for Committed to jointly disclosure-specific identify and align materials of common disclosures Adoption monitored by Consolidated into Aligned with 37
Slide 25: Zoom poll 3
ZOOM POLL 3. Companies who disclose using the TCFD recommendations automatically comply with the ISSB Standards. a. True Select the b. False appropriate answer The zoom poll should appear on your screen momentarily. If it does not appear, feel free to answer in the chat box or message the hosts dire
Slide 26: Moving from TCFD to ISSB
Moving from TCFD to ISSB 1 ▪ TCFD culminated in 07/2023 and the IFRS Foundation has now assumed responsibility of TCFD monitoring (see news item here) ▪ In some cases, IFRS S2 uses different wording to capture the same information as the TCFD ▪ IFRS S2 requires more detailed information that is in l
Slide 27: Setting a global baseline
Setting a global baseline 1 Additional building block can be added to meet: ▪ Jurisdiction-specific requirements ▪ Broader multi-stakeholder needs ISSB Standards ▪ A comprehensive foundation of disclosures for global jurisdictional adoption ▪ Common language for comparable, decision-useful disclosur
Slide 28: Global backing for a global standard
Global backing for a global standard 1 Audit Market ISSB IOSCO standard- Jurisdictions participants setters provide endorses ISSB enhance and require by adopting voluntarily opt to comprehensive Standards develop assurance the Standards apply the Standards global baseline recommending standards thro
Slide 29: An overview of IFRS S1 and S2
PREPARE PURPOSE BASELINE LANDSCAPE GLOBAL BASELINE An overview of IFRS S1 and S2 42
Slide 30: Important terms
Important terms 1 ▪ Sustainability-Related Financial Information - Information about a company’s sustainability-related risks and opportunities that is useful to primary users of general- purpose financial reports in making decisions about providing resources to the company (IFRS S1.1). ▪ Sustainabi
Slide 31: Core content areas
Core content areas 1 RISK METRICS & GOVERNANCE STRATEGY MANAGEMENT TARGETS ▪ Governing Body ▪ Risks & Opportunities ▪ Processes for ▪ Metrics ▪ Effects on risk ▪ Management a) business model & management ▪ Targets supply chain, ▪ Overall risk b) strategy profile c) financial & cash flows ▪ Resilienc
Slide 32: IFRS S1: General requirements
IFRS S1: General requirements 1 ▪ Requires material information about sustainability-related risks and opportunities with the financial statements to meet investor information needs ▪ Applies Task Force on Climate-related Financial Disclosures (TCFD) architecture ▪ Requires industry-specific disclos
Slide 33: IFRS S2: Climate-related disclosures
IFRS S2: Climate-related disclosures 1 • Incorporates the TCFD recommendations • To meet investor information needs, IFRS S2: • is used in accordance with IFRS S1 • requires disclosure of material information about climate-related risks and opportunities, including physical and transition risks • re
Slide 34: IFRS S1 and S2 together
IFRS S1 and S2 together 1 IFRS S2 is to be applied in accordance with IFRS S1 because S1: ▪ Establishes important conceptual foundations, e.g.: connected information, value chains ▪ Provides important guidance on the assessment of materiality ▪ Sets out the qualitative characteristics of the informa
Slide 35: Conceptual foundations
Conceptual Foundations 1 ▪ Fair presentation: A complete set of sustainability-related financial disclosures should fairly present all sustainability-related risks and opportunities that could reasonably affect the company's prospects ▪ Reporting company: The reporting company for sustainability-rel
Slide 36: Example: connected information
EXAMPLE Connection between decarbonization and net zero strategy and Connected information investment decisions Connection to future spending plans and targets 49 Example source: BHP Annual Report 2023 pg. 47
Slide 37: Zoom poll 4
ZOOM 4. What information should be POLL considered for connected information? (Select all that apply) Connections between: Select the a. Governance, strategy, risk management and metrics & targets appropriate answer b. Sustainability-related financial disclosures and financial statements The zoom po
Slide 38: Materiality
Materiality 1 ▪ An company shall disclose material information about the sustainability-related risks and opportunities that could reasonably be expected to affect the company’s prospects. ▪ Information is material if omitting, misstating or obscuring that information could reasonably be expected to
Slide 39: Additional guidance
Additional guidance 1 Application Guidance Accompanying Guidance Educational materials Guidance, sometimes Guidance issued alongside a Separate materials developed presented as an appendix to Standard to assist companies, to help companies apply the a Standard. This is just a demonstrating how the S
Slide 40: Zoom poll 5
ZOOM 5. Water is a vital input to your business, but the ISSB Standards POLL do not currently have a specific standard on water. What do you do: a. Do not disclose anything about water. Select the b. Consult the sources of guidance appropriate answer listed by ISSB. c. Engage a consultancy to help.
Slide 41: Module 1 Summary
Module 1 Summary 1 Start by understanding the benefits of improved disclosure There can be important benefits externally (ie investors interest) and internally (ie enhanced resilience and strategy) from applying the ISSB Standards Use the ISSB Standards as the baseline – build on top of that ISSB St
Slide 42: Module 1 Activity
MODULE 1 ACTIVITY 1 How will you build collective capacity and identify the responsible individuals for your disclosure? 1. Tone from the top: Identify who in your organization’s board and C-suite will be responsible for oversight of sustainability-related financial disclosures. 2. Integration: Iden
Slide 43: Skills and knowledge gaps
What will you do to identify the skills and knowledge gaps in your Visit www.menti.com and type the code that organization? we are sharing in the chat 56
Slide 44: Module 2: Applying the ISSB standards and additional disclosures
MODULE 2 Setting the direction: Applying the ISSB standards & integrating additional disclosures 57
Slide 45: Align
ALIGN APPLYING THE STANDARDS ADDITIONAL DISCLOSURES LANGUAGE 58
Slide 46: Applying the standards as the global baseline
ALIGN APPLYING THE Applying the IFRS Sustainability Disclosure STANDARDS Standards as the global baseline ADDITIONAL DISCLOSURES LANGUAGE 59
Slide 47: Core content
Core content 2 RISK METRICS & GOVERNANCE STRATEGY MANAGEMENT TARGETS ▪ Governing Body ▪ Risks & Opportunities ▪ Processes for ▪ Metrics ▪ Effects on risk ▪ Management a) business model & management ▪ Targets supply chain, ▪ Overall risk b) strategy profile c) financial & cash flows ▪ Resilience 60
Slide 48: Questions to evaluate (governance)
Questions to evaluate (governance) 2 Questions pertaining to the reporting company’s governance, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ Which Board and Management bodies or committees are responsible for sustainability and clim
Slide 49: Example: governance model (AIB)
Example source: AIB Group plc AFR Dec 2022, pg. 32 EXAMPLE Governance model Ensures that risks within the Group Supports the Group’s sustainable Oversees the quality and integrity are appropriately identified, business strategy which includes of the Group’s accounting policies, reported, assessed, m
Slide 50: Example: governance model (Toyota)
Example source: Toyota sustainability Data Book 2023, pg. 37 EXAMPLE Governance model Role of the Board What it has done to inform strategy Actions taken, including investment 63
Slide 51: Core content
Core content 2 RISK METRICS & GOVERNANCE STRATEGY MANAGEMENT TARGETS ▪ Governing Body ▪ Risks & Opportunities ▪ Processes for ▪ Metrics ▪ Effects on risk ▪ Management a) business model & management ▪ Targets supply chain, ▪ Overall risk b) strategy profile c) financial & cash flows ▪ Resilience 64
Slide 52: Questions to evaluate (strategy)
Questions to evaluate (strategy) 2 Questions pertaining to the reporting company’s sustainability-related risks and opportunities, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ What risks and opportunities that could reasonably be exp
Slide 53: Example of risk identification
Example of risk identification 2 Example Source: Gold Fields Limited Integrated Annual Report 2023 pg. 26 66
Slide 54: Time horizons
Time horizons 2 Cash flow, investment Planning horizons for Assessment periods used Life of assets and business cycles strategic decision-making by investors and capital allocation • Time horizons are company specific and may include industry specific characteristics • You don’t have to stick to one
Slide 55: Questions to evaluate (strategy)
Questions to evaluate (strategy) 2 Questions pertaining to the current and anticipated effects of the sustainability-related risks and opportunities, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ What are the current and anticipated e
Slide 56: Example: effects on business model and value chain
Example Effects on the business model and value chain Example Source: BASF Report 2023 p. 27 69
Slide 57: Qualitative and quantitative disclosures
Qualitative and quantitative 2 disclosures When reporting the effects of sustainability-related risks and opportunities on a company’s current and anticipated financial performance, financial position and cash flows: ▪ A company is required to disclose both quantitative (a single amount or a range)
Slide 58: Example: financial effects
Additional slide for self-review Example source: Unilever Annual Report, pages 50-51 EXAMPLE financial effects If proactive approach is If reactive approach is taken to managing taken to managing climate change climate change 71
Slide 59: Questions to evaluate (strategy)
Questions to evaluate (strategy) 2 Questions pertaining to the resilience of organizational strategy and business model to sustainability risks, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ What is the company’s capacity to adjust to
Slide 60: Example: strategy and decision making
Example Strategy and decision making Current and anticipated changes to business model 73 Example source: Stora Enso Annual Report 2022, pg. 17
Slide 61: Example: scenario analysis
Example source: Solvay 2022 Annual Integrated Report, page 205 Example Scenario Analysis 74
Slide 62: Zoom poll 6
ZOOM 6. A company may choose to disclose only qualitative information and/or POLL combined quantitative information about current and anticipated financial effects when: (Select all that apply) Select the a. The company cannot separate the effects of a climate-related risk or opportunity from approp
Slide 63: Climate-specific considerations: strategy
CLIMATE-SPECIFIC CONSIDERATIONS STRATEGY 76
Slide 64: From TCFD to ISSB (Strategy)
From TCFD to ISSB (Strategy) 2 Disclosure requirements in IFRS S2 are broadly consistent with TCFD except, IFRS S2: ▪ Requires a company to refer to and consider the applicability of industry-based disclosure topics. ▪ Requires more detailed information on where in business model and value chain ris
Slide 65: Transition plans
Transition plans 2 An aspect of the company’s overall strategy that includes targets, actions or resources for the transition towards a lower-carbon economy, including, for example GHG emissions reductions plans. ▪ Align (internally) with strategy, business case and business motivation and decarboni
Slide 66: Transition plan resources
Transition plan resources 2 A cover of a book A cover of a book with solar panels Description automatically generated Description automatically generated Real Financial Sectoral Transition economy institutions pathways pathway disclosure Pathway expectations framework 79
Slide 67: Core content
Core content 2 RISK METRICS & GOVERNANCE STRATEGY MANAGEMENT TARGETS ▪ Governing Body ▪ Risks & Opportunities ▪ Processes for ▪ Metrics ▪ Effects on risk ▪ Management a) business model & management ▪ Targets supply chain, ▪ Overall risk b) strategy profile c) financial & cash flows ▪ Resilience 81
Slide 68: Questions to evaluate (risk mgmt.)
Questions to evaluate (risk mgmt.) 2 Questions pertaining a reporting company’s risk management processes of sustainability-related risks and opportunities, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ What processes and policies are
Slide 69: Climate-specific considerations: risk management
CLIMATE-SPECIFIC CONSIDERATIONS RISK MANAGEMENT 83
Slide 70: From TCFD to ISSB (Risk Mgmt)
From TCFD to ISSB (Risk Mgmt) 2 Disclosure requirements in IFRS S2 are broadly consistent with TCFD except, IFRS S2 requires: ▪ More detailed information about the input parameters used to identify risks, whether and how a climate-related scenario analysis is used to inform risk identification, and
Slide 71: Climate-related risks
Climate-related risks 2 Types of Risk Examples Financial effects Transition Risks ▪ Increased pricing of GHG emissions ▪ cash flows, ▪ Enhanced reporting obligations ▪ access to finance ▪ Policy & Legal ▪ Exposure to litigation ▪ cost of capital ▪ Technology ▪ Cost of transition to lower-emission ▪
Slide 72: Climate-related opportunities
Climate-related opportunities 2 Financial effects Types of Examples Opportunities ▪ cash flows, ▪ Improving resource efficiency across value ▪ access to finance ▪ Resource chain ▪ cost of capital Efficiency ▪ Use of lower-emission sources of energy ▪ over the short, ▪ Energy Source ▪ Use of supporti
Slide 73: Example: risks and opportunity assessment
Example source: NATS Transition Plan: 5 Year Plan, page Example Risks and opportunity assesment Current acute risks and Future acute risks and The outcome of chronic impacts impacts changes may be positive in some respects, but strategy will need to respond 87
Slide 74: Core content
Core content 2 RISK METRICS & GOVERNANCE STRATEGY MANAGEMENT TARGETS ▪ Governing Body ▪ Risks & Opportunities ▪ Processes for ▪ Metrics • Effects on risk ▪ Management a) business model & management ▪ Targets supply chain, ▪ Overall risk b) strategy profile c) financial & cash flows ▪ Resilience 88
Slide 75: Questions to evaluate (metrics)
Questions to evaluate (metrics) 2 Questions pertaining to the metrics used by a reporting company, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ What metrics are being used to measure and monitor sustainability-related risks and oppor
Slide 76: Metrics considerations
Metrics considerations 2 Metrics must: ▪ Enable primary users to understand the company’s performance on sustainability-related risks and opportunities ▪ Be reported by an applicable IFRS Sustainability Disclosure Standard – e.g. IFRS S2 ▪ Include metrics the company uses ▪ Be associated with indust
Slide 77: Questions to evaluate (targets)
Questions to evaluate (targets) 2 Questions pertaining to the targets used by a reporting company, that can help identify key information that can assist a company to meet some of the disclosure requirements: ▪ Are targets set by the company or by law or regulation? ▪ Are the targets used qualitativ
Slide 78: Example: linking strategy, targets and assumptions
Example Linking strategy, targets and assumptions Example source: ArcelorMittal’s 2022 Annual Report, pg. 60&61 92
Slide 79: Example: linking strategy, targets and assumptions
Additional slide for self-review Example Linking strategy, targets and assumptions Example source: ArcelorMittal’s 2022 Annual Report, pg. 62 93
Slide 80: Climate-specific considerations: metrics & targets
CLIMATE-SPECIFIC CONSIDERATIONS METRICS & TARGETS 94
Slide 81: From TCFD to ISSB (metrics)
From TCFD to ISSB (metrics) 2 Disclosure requirements in IFRS S2 are broadly consistent with TCFD except, IFRS S2: ▪ Requires disclosure of industry-based metrics ▪ Requires additional disclosures related to a company’s GHG emissions ▪ Sets out a Scope 3 measurement framework to provide guidance for
Slide 82: From TCFD to ISSB (targets)
From TCFD to ISSB (targets) 2 Disclosure requirements in IFRS S2 are broadly consistent with TCFD except, IFRS S2: ▪ Requires disclosures about how the latest international agreement on climate change has informed the target and whether the target has been validated by a third party ▪ Requires discl
Slide 83: GHG emissions metrics
GHG emissions metrics 2 Companies shall disclose (measured in accordance with the GHG Protocol Corporate Standard): ▪ Scope 1: direct emissions ▪ Scope 2: indirect emissions from the generation of purchased energy consumed by the company ▪ Scope 3: all other indirect emissions that occur in the comp
Slide 84: Example: GHG emissions
Example GHG emissions breakdown by type GHG metrics GHG emissions breakdown by source 98 Source: Enel, 2022 Sustainability Report, pg. 148
Slide 85: Zoom poll 7
ZOOM 7. What is the objective of POLL metrics?: (Select all that apply) To enable report users to: a. Understand performance in relation to company’s sustainability-related Select the risks and opportunities. appropriate answer b. Understand progress towards any targets. The zoom poll should appear
Slide 86: Integrating other disclosure requirements
ALIGN BASELINE ADDITIONAL Integrating other disclosure requirements that DISCLOSURES companies may be required to comply with LANGUAGE 100
Slide 87: Building on the baseline
Building on the baseline 2 Listing Policy Industry Other requirements objectives standards stakeholders 101
Slide 88: Jurisdictional consultations
Jurisdictional consultations 2 Jurisdictional progress towards the adoption or other use of ISSB Standards Americas Asia/Oceania EMEA Bolivia Australia Pakistan EU Brazil Bangladesh Philippines Kenya Canada China Singapore Nigeria Costa Rica Hong Kong SAR South Korea Türkiye Japan Sri Lankai United
Slide 89: Strategic relationships support interoperability
Strategic relationships support 2 interoperability ▪ CDP – ISSB’s climate standard is the foundational baseline for CDP’s climate disclosure ▪ GHG Protocol – governance arrangements so that the ISSB is actively engaged in updates to the GHG Protocol Corporate Standard ▪ GRI – seeks to deliver full i
Slide 90: ISSB and GRI
ISSB and GRI 2 ▪ GRI and IFRS Foundation are committed to jointly identify and align common disclosures that address information needs under the distinct scopes and purposes of respective standards, for both thematic and sector-based standard-setting ▪ GRI and IFRS Foundation published analysis and
Slide 91: ESRS and ISSB
ESRS and ISSB 2 IFRS Sustainability ESRS: Disclosure Standards: High degree of Additional requirements for alignment in stakeholders interested in Additional requirements climate-related impacts (that do not create risks (eg financed emissions) disclosures* or opportunities for a company’s prospects
Slide 92: Integrated Reporting
Integrated Reporting 2 ▪ The Integrated Reporting Framework and the requirements in IFRS S1 and IFRS S2 are complementary tools for investor- focused communications ▪ When used together with the ISSB Standards, the Integrated Reporting Framework can support a holistic view of the value creation proc
Slide 93: Integrated Reporting (2)
Additional slide for self-review Integrated Reporting (2) 2 ▪ IFRS S1 and IFRS S2 are complementary standards to integrated reporting ▪ → they can help populating an integrated report with material and comparable standardised disclosures for users → IFRS S1 and IFRS S2 can help to strengthen the qua
Slide 94: Zoom poll 8
ZOOM 8. My disclosure objectives should consider… POLL a. The ISSB Standards only. b. The ISSB Standards and regulatory requirements. Select the c. Just regulatory requirements. d. The ISSB Standards, regulatory appropriate answer requirements and other sources of guidance. The zoom poll should appe
Slide 95: Module 2 Summary
Module 2 Summary 2 Connectivity is key While disclosure is based around core content areas (governance, strategy, risk management and metrics & targets), it’s important to remember the connections between them and ensure the same assumptions are being used to the extent possible throughout Baseline
Slide 96: Align Activity
ALIGN ACTIVITY 2 Identify where you are now and where you want to be 1. Conduct a gap analysis to determine what areas your organization is not yet communicating to investors on. There is a simplified checklist in the homework sheet which can be used to start to identify key aspects of disclosure th
Slide 97: Tools to identify gaps in disclosures
What tools can you use to identify the gaps in your current Visit www.menti.com and type the code that disclosures? we are sharing in the chat 111
Slide 98: Module 3: The backbone of effective disclosure
MODULE 3 The backbone of effective disclosure – processes and practices 112
Slide 99: Implement
IMPLEMENT IDENTIFY BASELINE EVALUATE INTEGRATE 113
Slide 100: Identifying sustainability-related risks and opportunities
IMPLEMENT IDENTIFY Identifying sustainability-related risks and opportunities BASELINE EVALUATE INTEGRATE 114
Slide 101: Guidance for developing sustainability disclosures
Guidance for developing sustainability 3 disclosures Which risks & opportunities? Which information? To identify relevant risks and opportunities, a To identify what information to disclose, a company uses company uses ISSB Standards and shall consider: ISSB Standards, and for matters other than cli
Slide 102: Identifying sustainability-related risks and opportunities
Additional slide for self-review Identifying sustainability-related risks 3 and opportunities Generally, risks and opportunities come from interactions between the company and its: Stakeholders Society Natural with whom it works in which it resources upon and serves operates which it draws Together,
Slide 103: Connecting the dots
Additional slide for self-review Connecting the dots 3 The resources and relationships that a company depends on and affects can take various forms, such as natural, manufactured, intellectual, human, social or financial. These can be: ▪ internal—such as the ability to attract and retain talent ▪ ex
Slide 104: Example: identifying risks, starting with megatrends
Example Identifying risks, starting with megatrends Example source: Yara Integrated Report 2022, Pg’s 17 and 19 118
Slide 105: Example of identifying opportunities
Example of identifying opportunities Example source: Neste Annual Report 2023, Pg. 59 119
Slide 106: Proportionality mechanisms
Proportionality Mechanisms 3 In applying specific requirements, a company is required to use all reasonable and supportable information that is available at the reporting date without undue cost or effort Reasonable and supportable information is information that: ▪ is specific to the company ▪ take
Slide 107: Evaluating risks and opportunities and testing resilience
IMPLEMENT IDENTIFY BASELINE EVALUATE Evaluating the risks and opportunities and testing resilience INTEGRATE 121
Slide 108: Resilience & addressing uncertainty
Resilience & addressing uncertainty 3 Use climate-related scenario analysis to assess your climate resilience Climate resilience assessment Inputs and key assumptions ▪ Implications of climate change for ▪ Use relevant scenarios, and the company’s strategy and provide information about business mode
Slide 109: Example: scenario analysis
Example Scenario Analysis Alignment Example source: CEMEX, 2022 Integrated Report, p. 258 123
Slide 110: Future events and uncertain outcomes
Future events and uncertain 3 outcomes When judging whether information about possible future events with uncertain outcomes is material, a company is required to consider: ▪ All pertinent facts and circumstances that could affect possible outcomes; ▪ Potential effects on the amount, timing and unce
Slide 111: Development of new processes and integration
IMPLEMENT IDENTIFY BASELINE EVALUATE INTEGRATE Development of new processes and integration of new considerations 125
Slide 112: Considerations when creating or adjusting processes
Considerations when creating or 3 adjusting processes A company’s management should assess existing systems and processes or determine whether new systems and processes are needed. Management may consider: ▪ Gap analysis –check for gaps in existing systems and processes; ▪ Suitability – evaluate exi
Slide 113: Using a disclosure plan
Using a disclosure plan 3 By developing a disclosure plan as a stand-alone strategy or as part of a wider disclosure strategy, you can: ▪ Take control of your narrative ▪ Support internal collaboration, knowledge sharing and cross-functional team discussions with staff ▪ Create a reference point and
Slide 114: Example: developing a disclosure plan
Example Developing a disclosure plan Example source: Hammerson ESG Databook 2022, page 7 128
Slide 115: Zoom poll 9
ZOOM 9. Is a disclosure plan is POLL required by the IFRS Sustainability Disclosure Standards? Select the a. Yes, you must disclose your plan. appropriate answer b. No, but it’s a very helpful tool! The zoom poll should appear on your screen momentarily. If it does not appear, feel free to answer in
Slide 116: Zoom poll 10
ZOOM 10. A disclosure plan can help a company to: POLL (Select all that apply) a. Take control of its narrative within general purpose financial reports. b. Support collaboration, knowledge- Select the sharing and cross-functional team appropriate answer discussions. c. Act as a reference point and
Slide 117: Module 3 Summary
Module 3 Summary 3 Connections are key (within and outside a company) Risks and opportunities come from interactions between the company and its stakeholders, society and nature. These interactions will connect to multiple sections of disclosures and should be connected appropriately. Use consistent
Slide 118: Implement Activity
IMPLEMENT ACTIVITY 3 Building on the gaps identified in the previous section, identify which of the gaps require new processes or systems in place to achieve your disclosure objectives ▪ Data collection: Identify how you can collect the data that is not being collected but is required to be disclose
Slide 119: Existing systems and processes for data collection
What existing systems and processes for data collection can be Visit www.menti.com and type the code that adapted? we are sharing in the chat 133
Slide 120: Module 4: Communicating with investors
MODULE 4 Communicating with investors – what, where and how 134
Slide 121: Communication
COMMUNICATION BASELINE LOCATION / TIMING EFFICIENCY CONFIDENCE 135
Slide 122: Where disclosure should appear
COMMUNICATION BASELINE LOCATION Where disclosure should appear EFFICIENCY CONFIDENCE 136
Slide 123: Holistic reporting package
Holistic reporting package 4 MULTI- STAKEHOLDER INVESTOR FOCUSED FOCUSED Financial accounting Sustainability-related financial reporting 137
Slide 124: Potential areas of focus for primary users
Additional slide for self-review Potential areas of focus for primary 4 users Generally, investors may want to understand: ▪ Effects of environmental degradation and social challenges on inputs of resources to the business, key relationships, and risks and opportunities ▪ Whether and how the company
Slide 125: What is material information?
What is material information? 4 ISSB indicates that information is material if omitting, misstating or obscuring it could reasonably be expected to influence investor decisions. ▪ Consider the characteristics of the investors and the company’s own circumstances. ▪ Different investors can have differ
Slide 126: Test of materiality
Additional slide for self-review Test of materiality 4 Making materiality judgements ▪ Is the information material in the context of the company’s sustainability-related financial disclosures taken as a whole? ▪ Have you considered both quantitative and qualitative factors? ▪ Have you considered the
Slide 127: Disclosing material information
Disclosing material information 4 When disclosing material sustainability-related financial information: ▪ Make it clearly identifiable [and do not obscure it] ▪ Use clear language ▪ Avoid scattering material information about a particular issue across disclosures ▪ Provide additional (non-material)
Slide 128: Zoom poll 11
ZOOM 11. Information should be disclosed in the annual POLL report when applying ISSB Standards if... (Select all that apply) a. Omitting that information could Select the reasonably be expected to influence appropriate answer investors’ decisions b. It could reasonably be expected to The zoom poll
Slide 129: Where to report for ISSB
Where to report for ISSB 4 ▪ Sustainability-related financial information is to be reported in the company’s general purpose financial reports. ▪ Different requirements may apply in different jurisdictions. ▪ No requirements on exact placement of information. ▪ Examples of corporate approaches in pr
Slide 130: Example: integrating information
Information throughout Example Integrated Report Integrating information Page references 144 Example Source: Ayala, Integrated Report, pg’s 48-49
Slide 131: Evolution towards digital reporting
Evolution towards digital reporting 4 The ISSB Taxonomy provides the common elements (or ‘tags’) needed to make sustainability- related financial disclosures computer-readable The ISSB Taxonomy reflects the requirements and accompanying materials of the ISSB Standards. It does not introduce any new
Slide 132: Mechanisms that support adoption
Mechanisms that support adoption 4 ▪ Use of well-known terminology and concepts ▪ Proportionate e.g. use reasonable and supportable information available without undue cost or effort, qualitative scenario analysis permitted, plus consideration of skills, capabilities and resources ▪ Reliefs in first
Slide 133: How to communicate efficiently and effectively
COMMUNICATION BASELINE LOCATION How to communicate efficiently and EFFICIENCY effectively CONFIDENCE 147
Slide 134: Effective communication
Effective Communication 4 This section sets out how a company might disclose its material sustainability-related financial information so that information is: ▪ Clear ▪ Distinguishable from other information ▪ Connected ▪ Comparable over time ▪ Succinct 148
Slide 135: Quality of information disclosed
Quality of information disclosed 4 To ensure quality of information, report prepares should remember: ▪ Provide comparative information ▪ Correct errors from previous years ▪ Minimize duplication ▪ Cross referencing to other reports meets conditions ▪ Information disclosed is: ▪ Material ▪ Connected
Slide 136: Cross-referencing
Cross-referencing 4 To keep general purpose financial reports succinct, companies can cross-refer to other reports they publish, provided that: ▪ Cross-referenced information is available on the same terms and at the same time ▪ The cross referencing enhances rather than obscures the ability of read
Slide 137: Example: cross-referencing
Example Cross-referencing Connectivity with TCFD disclosures Cross reference Note expands on to where targets capital expenditures, have been cash flows, businesses considered in the impacted and more financial statement Note explains considerations and assessment for decarbonization strategy Note s
Slide 138: Commercially sensitive information
Additional slide for self-review Commercially sensitive information 4 Companies are not required to disclose commercially sensitive information about a sustainability-related opportunity provided that: ▪ the information is not already publicly available ▪ disclosure of the information could reasonab
Slide 139: Consistent disclosures
Additional slide for self-review Consistent disclosures 4 Sustainability-related financial disclosures should be: ▪ Prepared for the same reporting company and reporting period as the financial statements ▪ Provided at the same time as the financial statements, as part of the general-purpose financi
Slide 140: Aggregation / disaggregation
Additional slide for self-review Aggregation / disaggregation 4 ▪ Aggregate information to minimise scattering and increase understandability ▪ Do not let aggregation reduce understandability or obscure material information ▪ Disaggregate information to, for example: ▪ Show the breakdown of sustaina
Slide 141: Zoom poll 12
ZOOM 12. Information disclosed POLL in accordance with the ISSB Standards should be: (Select all that apply) Select the appropriate answer a. Decision-useful b. Material The zoom poll should appear on your c. Misleading screen momentarily. If it does not d. Comparable appear, feel free to answer in
Slide 142: Zoom poll 13
ZOOM 13. Information is decision POLL useful if it is… (Select all that apply) a. relevant and faithfully represent what it proports to represent Select the b. comparable appropriate answer c. verifiable d. timely The zoom poll should appear on your e. understandable screen momentarily. If it does n
Slide 143: Maximizing confidence in disclosed information
COMMUNICATION BASELINE LOCATION EFFICIENCY Maximizing confidence in disclosed CONFIDENCE information 157
Slide 144: Comparative information
Comparative information 4 ▪ Disclose comparative information for the preceding reporting period for all amounts disclosed; ▪ For estimates: revise comparatives according to new information and explain differences. ▪ Specific requirements apply to redefined, replacement and new metrics. ▪ If it enhan
Slide 145: Using reasonable estimates
Additional slide for self-review Using reasonable estimates 4 Companies can use reasonable estimates and assumptions when preparing sustainability- related financial information – it does not have to be perfectly precise in all respects. Judgement can be used. However: ▪ Estimates should be based on
Slide 146: Statement of compliance
Statement of compliance 4 ▪ Companies are required to make an explicit and unreserved statement of compliance when they have met all the requirements of IFRS Sustainability Disclosure Standards. ▪ Commercially sensitive information about a sustainability-related opportunity can be omitted if conditi
Slide 147: Things to remember
Things to remember 4 Ensure information is: Ensure that investors can Ensure that disclosures: understand connections ▪ Relevant ▪ Are for the same period and same between: ▪ Material reporting company as the related ▪ Represented ▪ Sustainability-related risks and financial statements? ▪ Faithfully
Slide 148: Module 4 Summary
Module 4 Summary 4 Be clear about your audience The format of the disclosure matters – make sure that when communicating to investors you’re providing the information investors need in the format they will use. Less is more This is not a competition for the most words on paper. Only provide informat
Slide 149: Communicate Activity
COMMUNICATE ACTIVITY 4 ▪ Presentation approach – identify whether your company should present information in an integrated format (in one report), an autonomous format (a stand-alone sustainability report) or a combination, and why. ▪ Navigation techniques - brainstorm techniques that can be used to
Slide 150: Techniques that make a report easy to navigate
What techniques do you find useful in a report to make it easy Visit www.menti.com and type the code that to navigate? we are sharing in the chat 164
Slide 151: Did we achieve our learning objectives?
Did we achieve our learning objectives? Visit www.menti.com What worked or did not and type the code that we are sharing in the work? chat 165
Slide 152: Your homework
166 Your Homework: Develop a draft disclosure plan for your company, using what you’ve learned in this training program 166
Slide 153: Continue your learning
CONTINUE YOUR LEARNING The IFRS knowledge hub is a free online resource for preparers designed to support them in understanding and getting ready for IFRS S1 and S2. It incorporates an easy to navigate and searchable repository of resources, e.g. e-learning, case studies, good practice guidance, web
Slide 154: Continue your learning
CONTINUE YOUR LEARNING Download your copy here 168
Slide 155: IFC Beyond the Balance Sheet
IFC Beyond the Balance Sheet One-stop-shop Toolkit & learning Public good one-stop shop providing tools and resources comprising public good for public good for guidance and a a digital toolkit, e-learning companies and regulators and stock framework to improve opportunities, company self- banks, pr
Slide 156: A logo of a tool Description automatically generated A graph with a world map
A logo of a tool Description automatically generated A graph with a world map and text A cover of a book A cover of a book A screen shot of a document Description automatically generated Description automatically generated Description automatically generated Description automatically generated 170
Slide 157: Please help us improve this training
PLEASE HELP US IMPROVE THIS TRAINING Your feedback will help us to improve this module before offering it to your market. We appreciate you taking the time to fill in this feedback survey. Click on the link in the chat. 171
Slide 158: Thank you to our official supporters
THANK YOU TO OUR OFFICIAL SUPPORTERS 172
Slide 159: Thank you! Contact details
Thank you! CONTACT DETAILS SSE: training@sseinitiative.org IFRS Foundation: capacitybuilding@ifrs.org 173 IFC: rgermanova@ifc.org