29 July 2022
Mr. Emmanuel Faber
Chair
International Sustainability Standards Board

Re: Exposure Draft “IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information”
Dear Mr. Faber:
The Sustainability Reporting Committee (SRC) of the Securities Analysts Association of Japan(SAAJ) is pleased to comment on the Exposure Draft “IFRS S1 General Requirements for Disclosureof Sustainability-related Financial Information” (Draft S1; after it comes into effect, S1) and “IFRS
S2 Climate-related Disclosures” (Draft S2; after it comes into effect, S2) published by the International
Sustainability Standards Board (ISSB) on 31 March 2022. This is the comment letter on Draft S1.
The SAAJ is a not-for-profit organization for professionals in the areas of investment and finance,
offering education and certification programs in these fields. Its certified member analysts (holding
the CMA designation) number around 28,000.
The SRC is a standing committee of the SAAJ established in March 2021. It is composed of eight
members including equity and credit analysts, portfolio managers, public accountants, and academics.
The SAAJ sent questionnaire surveys regarding Draft S1 and Draft S2 to members of the SRC andCMAs; some 20 responded to the Draft S1 questionnaire survey. This comment letter is based on Draft
S1 questionnaire results and the discussions among members of the SRC. Please see the attachedquestionnaire results.

General Comments
We welcome that the ISSB has published its first exposure drafts on IFRS Sustainability DisclosureStandards. We have advocated the urgent need on the part of analysts and investors for high quality,
consistent, and comparable global sustainability disclosure standards. We appreciate the leadership ofthe IFRS Foundation and the ISSB in publishing the exposure drafts in such a short time in responding
to this urgent need.

―1―The disclosure framework for sustainability information is evolving. We hope that, in setting andamending IFRS Sustainability Disclosure Standards, the ISSB will be agile enough to capture thisevolution while taking into account the stability of standards.
We basically agree with each of the proposals in Draft S1 as they meet our needs.
However, there are some concerns that requiring overly high disclosure standards would result in
fewer entities being able to meet them, and would in turn prevent analysts and investors from obtaining
the disclosure information they need.
For example, while we, as users, agree that an entity should consider certain disclosure standards
such as the SASB Standards and the CDSB Framework application guidance when no applicable IFRS
Sustainability Disclosure Standards exist, we are concerned about forcing an entity to consider suchstandards that have not gone through the ISSB’s formal due process.
To address such concerns, we believe some improvements to Draft S1 are needed, and we discussthese suggested improvements in our comments on each question.
While we appreciate that the exposure drafts have been published in a short period of time thanks
to the efforts of the IFRS Foundation and the ISSB, from the perspective of global consensus building
we would like to mention that there was only one opportunity for consultation on the exposure drafts
and that the consultation period is only 120 days. We hope that, in its future standard development
process, the ISSB will consider the balance between the urgent need for sustainability-related
disclosure standards and the consensus building that will form the basis of the global baseline. This
would solidify the ISSB’s legitimacy as a standard setter.

Question 1—Overall approach
The Exposure Draft sets out overall requirements with the objective of disclosing sustainabilityrelated financial information that is useful to the primary users of the entity’s general purpose
financial reporting when they assess the entity’s enterprise value and decide whether to provide
resources to it.
Proposals in the Exposure Draft would require an entity to disclose material information about allof the significant sustainability-related risks and opportunities to which it is exposed. The
assessment of materiality shall be made in the context of the information necessary for users ofgeneral purpose financial reporting to assess enterprise value.

―2―(a) Does the Exposure Draft state clearly that an entity would be required to identify and disclosematerial information about all of the sustainability-related risks and opportunities to which theentity is exposed, even if such risks and opportunities are not addressed by a specific IFRS
Sustainability Disclosure Standard? Why or why not? If not, how could such a requirement bemade clearer?
(b) Do you agree that the proposed requirements set out in the Exposure Draft meet its proposed
objective (paragraph 1)? Why or why not?
(c) Is it clear how the proposed requirements in the Exposure Draft would be applied together
with other IFRS Sustainability Disclosure Standards, including the [draft] IFRS S2 Climaterelated Disclosures? Why or why not? If not, what aspects of the proposals are unclear?
(d) Do you agree that the requirements proposed in the Exposure Draft would provide a suitablebasis for auditors and regulators to determine whether an entity has complied with theproposals? If not, what approach do you suggest and why?
We agree with the overall approach and objectives of Draft S1. Some 65.0% of respondents to Q1of our questionnaire answered that the overall approach and objectives of Draft S1 were appropriate
and clear. The main reasons are as follows:
We highly appreciate that sustainability-related financial information is defined as part of an entity’s
general financial reporting and that the objective of disclosing sustainability-related financial
information is defined as being useful to users to assess the entity’s enterprise value. Since both IFRS
Sustainability Disclosure Standards and IFRS Accounting Standards share the target audience, i.e. theprimary users of an entity’s general purpose financial reporting, it would be possible for the entity toprovide combined financial and non-financial information useful for users to assess the entity’senterprise value.
We also appreciate the approach to identifying both significant sustainability-related risks andopportunities, and then disclosing information that is material to users’ assessment of the entity’senterprise value. It would make the sustainability-related information more valuable to users to requireassociated opportunities to be disclosed in addition to risks.
The approach to presenting general requirements in S1, which is positioned in the same way as theConceptual Framework for Financial Reporting, and proceeding with disclosure in accordance withthematic requirements in other Sustainability Disclosure Standards such as S2 is clear and beneficial
to both users and preparers of sustainability-related financial information.
However, we have some suggestions for improvement as follows:―3―

Although there is an explanation of ‘material’ in paragraphs 56-62 of Draft S1, the explanation of‘significant’ is only found in paragraph BC40 of the Basis for Conclusions on Draft S1. The
explanation of ‘significant’ should also be clearly stated in the text of S1.
Although a reporting entity is required to identify material information about all the significant
sustainability-related risks and opportunities, the identification methodology is not clear for topics
other than climate-related disclosures as set in Draft S2. Additional illustrative guidance should be
developed on the information identification process that could be used for other topics.

Question 2—Objective (paragraphs 1–7)
The Exposure Draft sets out proposed requirements for entities to disclose sustainability-related
financial information that provides a sufficient basis for the primary users of the information toassess the implications of sustainability-related risks and opportunities on an entity’s enterprisevalue.
Enterprise value reflects expectations of the amount, timing and uncertainty of future cash flows
over the short, medium and long term and the value of those cash flows in the light of the entity’srisk profile, and its access to finance and cost of capital. Information that is essential for assessing
the enterprise value of an entity includes information in an entity’s financial statements andsustainability-related financial information.
Sustainability-related financial information is broader than information reported in the financial
statements that influences the assessment of enterprise value by the primary users. An entity isrequired to disclose material information about all of the significant sustainability-related risks andopportunities to which it is exposed. Sustainability-related financial information should, therefore,
include information about the entity’s governance of and strategy for addressing sustainabilityrelated risks and opportunities and about decisions made by the entity that could result in future
inflows and outflows that have not yet met the criteria for recognition in the related financial
statements. Sustainability-related financial information also depicts the reputation, performance andprospects of the entity as a consequence of actions it has undertaken, such as its relationships with,and impacts and dependencies on, people, the planet and the economy, or about the entity’s
development of knowledge-based assets.
The Exposure Draft focuses on information about significant sustainability-related risks andopportunities that can reasonably be expected to have an effect on an entity’s enterprise value.

―4―(a) Is the proposed objective of disclosing sustainability-related financial information clear? Whyor why not?
(b) Is the definition of ‘sustainability-related financial information’ clear (see Appendix A)? Whyor why not? If not, do you have any suggestions for improving the definition to make it clearer?
Please refer to our comments on Question 1.

Question 3—Scope (paragraphs 8–10)
Proposals in the Exposure Draft would apply to the preparation and disclosure of sustainabilityrelated financial information in accordance with IFRS Sustainability Disclosure Standards.
Sustainability-related risks and opportunities that cannot reasonably be expected to affect users’
assessments of the entity’s enterprise value are outside the scope of sustainability-related financial
disclosures.
The Exposure Draft proposals were developed to be applied by entities preparing their general
purpose financial statements with any jurisdiction’s GAAP (so with IFRS Accounting Standards orother GAAP).
Do you agree that the proposals in the Exposure Draft could be used by entities that prepare theirgeneral purpose financial statements in accordance with any jurisdiction’s GAAP (rather than only
those prepared in accordance with IFRS Accounting Standards)? If not, why not?
We agree with the proposal that S1 could be used by entities that prepare their general purpose
financial statements in accordance with any jurisdiction’s GAAP rather than only those prepared inaccordance with IFRS Accounting Standards. Some 90.0% of respondents to Q2 of our questionnaire
agreed with this proposal.
Sustainability-related financial information required for users to assess an entity’s enterprise value
should have common characteristics regardless of the accounting standards with which the related
financial statements comply. We believe that Draft S1 could provide a common disclosure framework
as a global baseline. It would be beneficial to users if IFRS Sustainability Disclosure Standards areused in a wider range of countries and regions through making the standards applicable regardless of
the accounting standards adopted.
However, some have commented that, if an entity’s financial statements are prepared underaccounting standards other than IFRS Accounting Standards, that fact should be disclosed because thedifferent accounting standards used may undermine the connectivity between financial statements andsustainability-related financial information.
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Question 4—Core content (paragraphs 11–35)
The Exposure Draft includes proposals that entities disclose information that enables primary users
to assess enterprise value. The information required would represent core aspects of the way inwhich an entity operates.
This approach reflects stakeholder feedback on key requirements for success in the Trustees’ 2020
consultation on sustainability reporting, and builds upon the well-established work of the TCFD.
Governance
The Exposure Draft proposes that the objective of sustainability-related financial disclosures on
governance would be:
to enable the primary users of general purpose financial reporting to understand thegovernance processes, controls and procedures used to monitor and manage significant
sustainability-related risks and opportunities.
Strategy
The Exposure Draft proposes that the objective of sustainability-related financial disclosures on
strategy would be:
to enable users of general purpose financial reporting to understand an entity’s strategy foraddressing significant sustainability-related risks and opportunities.
Risk management
The Exposure Draft proposes that the objective of sustainability-related financial disclosures onrisk management would be:
to enable the users of general purpose financial reporting to understand the process, orprocesses, by which sustainability-related risks and opportunities are identified, assessed
and managed. These disclosures shall also enable users to assess whether those processes
are integrated into the entity’s overall risk management processes and to evaluate theentity’s overall risk profile and risk management processes.
Metrics and targets
The Exposure Draft proposes that the objective of sustainability-related financial disclosures on
metrics and targets would be:―6―

to enable users of general purpose financial reporting to understand how an entity measures,monitors and manages its significant sustainability-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.
(a) Are the disclosure objectives for governance, strategy, risk management and metrics andtargets clear and appropriately defined? Why or why not?
(b) Are the disclosure requirements for governance, strategy, risk management and metrics andtargets appropriate to their stated disclosure objective? Why or why not?
We believe that the four core contents proposed in Draft S1: (i) Governance, (ii) Strategy, (iii) Risk
management, and (iv) Metrics and targets, are clear and appropriate. Some 80.0% of respondents to
Q3 of our questionnaire answered that these four core contents are clear and appropriate.
The concept of the four core contents utilizes the framework of TCFD Recommendations which
provide widely recognized concepts of (i) Governance, (ii) Strategy, (iii) Risk management, and (iv)
Metrics and targets. This framework based on these four core contents is easy to understand for bothpreparers and users, and is the basis for enterprise value assessment, not limited to analysis ofsustainability information. Therefore, we believe that this framework could be applied to allsustainability-related financial disclosures, including climate-related disclosures, which would beappropriate for a global baseline. The inclusion of opportunities in addition to risks in the disclosure
requirements would make the disclosures more valuable to users.
However, we had the following suggestions for improvement.
The four core contents ((i) Governance, (ii) Strategy, (iii) Risk management, and (iv) Metrics andtargets) and the six areas of content in the IFRS Practice Statement Exposure Draft Management
Commentary (a. Business model, b. Strategy, c. Resources and relationships, d. Risks, e. External
environment, f. Entity’s financial performance and financial position) have similar keywords such asin (ii) Strategy and b. Strategy, (iii) Risk management and d. Risks. The relationship between themshould be clarified to avoid confusion.

Question 5—Reporting entity (paragraphs 37–41)
The Exposure Draft proposes that sustainability-related financial information would be required to
be provided for the same reporting entity as the related general purpose financial statements.

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The Exposure Draft proposals would require an entity to disclose material information about all of
the significant sustainability-related risks and opportunities to which it is exposed. Such risks andopportunities relate to activities, interactions and relationships and use of resources along its value
chain such as:•

its employment practices and those of its suppliers, wastage related to the packaging of the
products it sells, or events that could disrupt its supply chain;•

the assets it controls (such as a production facility that relies on scarce water resources);•

investments it controls, including investments in associates and joint ventures (such as
financing a greenhouse gas-emitting activity through a joint venture); and•sources of finance.

The Exposure Draft also proposes that an entity disclose the financial statements to whichsustainability-related financial disclosures relate.
(a) Do you agree that the sustainability-related financial information should be required to beprovided for the same reporting entity as the related financial statements? If not, why?
(b) Is the requirement to disclose information about sustainability-related risks and opportunities
related to activities, interactions and relationships, and to the use of resources along its value
chain, clear and capable of consistent application? Why or why not? If not, what further
requirements or guidance would be necessary and why?
(c) Do you agree with the proposed requirement for identifying the related financial statements?
Why or why not?
We agree with the proposal in Draft S1 that sustainability-related financial information would be
required to be provided for the same reporting entity as the related general purpose financial statements.
Some 75.0% of respondents to Q4 of our questionnaire agreed with this proposal.
For consistency with financial statements, the scope of reporting entities for sustainability-related
financial information and general purpose financial statements should be the same. However, thedisclosure of value chain information should be improved as follows:
The definition of value chain in Draft S1 (Appendix A: Defined terms) includes the activities of thereporting entity itself, which is different from the normally recognized concept of value chain. Itshould be clarified that the definition of value chain includes the activities of the reporting entity itself,
so that preparers and users do not misunderstand it as the normally recognized concept.

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We understand that there is a concern that it is difficult for an entity to obtain information on its
value chains with a high degree of accuracy, because it includes information on entities that are notitself or its subsidiaries. In particular, information on the value chain of entities such as associates andjoint ventures would be more difficult to obtain. However, if material, this information is necessary
for users. Therefore, we propose the ISSB clarify that estimates can also be used and that additional
illustrative guidance be developed in order to facilitate the disclosure of material information on value
chains.

Question 6—Connected information (paragraphs 42–44)
The Exposure Draft proposes that an entity be required to provide users of general purpose financial
reporting with information that enables them to assess the connections between (a) various
sustainability-related risks and opportunities; (b) the governance, strategy and risk management
related to those risks and opportunities, along with metrics and targets; and (c) sustainability-relatedrisks and opportunities and other information in general purpose financial reporting, including thefinancial statements.
(a) Is the requirement clear on the need for connectivity between various sustainability-relatedrisks and opportunities? Why or why not?
(b) Do you agree with the proposed requirements to identify and explain the connections between
sustainability-related risks and opportunities and information in general purpose financial
reporting, including the financial statements? Why or why not? If not, what do you propose
and why?
We agree with the proposal in Draft S1 regarding connected information. Some 60.0% of
respondents to Q5 of our questionnaire agreed with this proposal.
Connectivity is important in understanding sustainability-related financial information. Informationon (1) the connectivity among various sustainability-related risks and opportunities, and (2) theconnectivity between this information and the information in the financial statements is essential for
analyzing and assessing an entity. Users will benefit from this connected information because it will
make it easier for users to identify an entity’s sustainability-related financial information that isconnected to its financial statements.
In this regard, the connectivity examples in paragraph 44 of Draft S1 and paragraph BC57 are usefulfor both preparers and users to better understand what connectivity is. On the other hand, there is noclear requirement in Draft S1 regarding the connectivity between sustainability-related financial
information and financial statements. We believe this should be clearly stipulated as a requirement in―9―

S1. As paragraph 22 (b) of Draft S2 stipulates a requirement that encourages an entity to consider theconnectivity between the two, we propose that a similar requirement be clearly stipulated in S1.
In addition, there were some other suggestions: some commented that not only connectivity
examples of risks but also those between risks and profit opportunities should be stated in S1; andothers commented that S1 should include examples of how connectivity can change over the short,medium, and long term.

Question 7—Fair presentation (paragraphs 45–55)
The Exposure Draft proposes that a complete set of sustainability-related financial disclosureswould be required to present fairly the sustainability-related risks and opportunities to which anentity is exposed. Fair presentation would require the faithful representation of sustainability-relatedrisks and opportunities in accordance with the proposed principles set out in the Exposure Draft.
Applying IFRS Sustainability Disclosure Standards, with additional disclosure when necessary, is
presumed to result in sustainability-related financial disclosures that achieve a fair presentation.
To identify significant sustainability-related risks and opportunities, an entity would apply IFRS
Sustainability Disclosure Standards. In addition to IFRS Sustainability Disclosure Standards toidentify sustainability-related risks and opportunities, the entity shall consider the disclosure topics
in the industry-based SASB Standards, the ISSB’s non-mandatory guidance (such as the CDSB
Framework application guidance for water- and biodiversity-related disclosures), the most recent
pronouncements of other standard-setting bodies whose requirements are designed to meet theneeds of users of general purpose financial reporting, and sustainability-related risks andopportunities identified by entities that operate in the same industries or geographies.
To identify disclosures, including metrics, that are likely to be helpful in assessing how
sustainability-related risks and opportunities to which it is exposed could affect its enterprise value,
an entity would apply the relevant IFRS Sustainability Disclosure Standards. In the absence of an
IFRS Sustainability Disclosure Standard that applies specifically to a sustainability-related risk andopportunity, an entity shall use its judgement in identifying disclosures that (a) are relevant to thedecision-making needs of users of general purpose financial reporting; (b) faithfully represent theentity’s risks and opportunities in relation to the specific sustainability-related risk or opportunity;and (c) are neutral. In making that judgement, entities would consider the same sources identified
in the preceding paragraph, to the extent that they do not conflict with an IFRS Sustainability
Disclosure Standard.

―10―(a) Is the proposal to present fairly the sustainability-related risks and opportunities to which theentity is exposed, including the aggregation of information, clear? Why or why not?
(b) Do you agree with the sources of guidance to identify sustainability-related risks andopportunities and related disclosures? If not, what sources should the entity be required toconsider and why? Please explain how any alternative sources are consistent with the proposed
objective of disclosing sustainability-related financial information in the Exposure Draft.
We agree with the proposal regarding the fair presentation of Draft S1 with some reservations. Only
55.0% of respondents to Q6 of our questionnaire, slightly more than a majority, agreed with this
proposal.
The reason why only 55.0% of respondents agreed was that quite a few were concerned that forcing
preparers to consider specific disclosure standards, such as the SASB Standards and the CDSB
Framework application guidance, that have not gone through the ISSB’s formal due process would
effectively mean the ISSB is violating its own standard-setting due process.
On the other hand, those who agree with the proposal emphasized that the SASB Standards and the
CDSB Framework application guidance are widely recognized. Many commented that if preparers
take them into account in identifying significant sustainability-related risks and opportunities todisclose sustainability-related financial information on topics for which no applicable IFRS
Sustainability Disclosure Standards exist, comparability is expected to be improved, which will
enhance the value of information for users.
Therefore, with respect to certain disclosure standards, such as the SASB Standards and the CDSB
Framework application guidance, we suggest that the wording be changed from “an entity shallconsider” to “an entity is encouraged to consider.”Question 8—Materiality (paragraphs 56–62)
The Exposure Draft defines material information in alignment with the definition in IASB’s
Conceptual Framework for General Purpose Financial Reporting and IAS 1. Information ‘is material

if omitting, misstating or obscuring that information could reasonably be expected to influence
decisions that the primary users of general purpose financial reporting make on the basis of thatreporting, which provides information about a specific reporting entity’.

―11―However, the materiality judgements will vary because the nature of sustainability-related financial
information is different to information included in financial statements. Whether information ismaterial also needs to be assessed in relation to enterprise value.
Material sustainability-related financial information disclosed by an entity may change from one
reporting period to another as circumstances and assumptions change, and as expectations from theprimary users of reporting change. Therefore, an entity would be required to use judgement to
identify what is material, and materiality judgements are reassessed at each reporting date. The
Exposure Draft proposes that even if a specific IFRS Sustainability Disclosure Standard contained
specific disclosure requirements, an entity would need not to provide that disclosure if the resulting
information was not material. Equally, when the specific requirements would be insufficient to meetusers’ information needs, an entity would be required to consider whether to disclose additional
information. This approach is consistent with the requirements of IAS 1.
The Exposure Draft also proposes that an entity need not disclose information otherwise requiredby the Exposure Draft if local laws or regulations prohibit the entity from disclosing that
information. In such a case, an entity shall identify the type of information not disclosed and explain
the source of the restriction.
(a) Is the definition and application of materiality clear in the context of sustainability-related
financial information? Why or why not?
(b) Do you consider that the proposed definition and application of materiality will capture thebreadth of sustainability-related risks and opportunities relevant to the enterprise value of a
specific entity, including over time? Why or why not?
(c) Is the Exposure Draft and related Illustrative Guidance useful for identifying material
sustainability-related financial information? Why or why not? If not, what additional guidanceis needed and why?
(d) Do you agree with the proposal to relieve an entity from disclosing information otherwise
required by the Exposure Draft if local laws or regulations prohibit the entity from disclosingthat information? Why or why not? If not, why?
We agree with the proposal in Draft S1 regarding materiality. Some 80.0% of respondents to Q7 of
our questionnaire agreed with this proposal.
We appreciate that the definition of materiality is consistent with IASB’s Conceptual Framework
for General Purpose Financial Reporting and IAS 1, focusing on the primary users of general purpose
financial reporting.

―12―However, materiality judgement may be applied differently to sustainability-related financial
information and to information related to financial statements. In particular, the materiality ofsustainability-related financial information may change over time due to its long time horizon.
Additional illustrative guidance on materiality assessment should be developed taking the time horizon
into account so that more useful disclosure information can be prepared.

Question 9—Frequency of reporting (paragraphs 66–71)
The Exposure Draft proposes that an entity be required to report its sustainability-related financial
disclosures at the same time as its related financial statements, and the sustainability-related
financial disclosures shall be for the same reporting period as the financial statements.
Do you agree with the proposal that the sustainability-related financial disclosures would be
required to be provided at the same time as the financial statements to which they relate? Why or
why not?
We agree with the proposal in Draft S1 regarding frequency of reporting. Only 50.0% of respondents
to Q8 of our questionnaire agreed with this proposal.
However, there was no objection to the proposal that the sustainability-related financial disclosures
shall be for the same reporting period as the financial statements. Given the importance of theconnectivity between financial statements and sustainability-related financial information, we fully
agree with this proposal.
The relatively low agreement was due to the following concerns about the proposal that an entity
be required to report its sustainability-related financial disclosures at the same time as its related
financial statements:
If an entity is required to report hard-to-obtain sustainability-related financial information at thesame time as the related financial statements, the entity might be forced to opt for delaying to report
the financial statements instead. Furthermore, we are concerned that, due to serious time constraints,
an entity might be reluctant to disclose the sustainability-related financial information with its own indepth analysis, which would be very useful to users to assess the entity’s enterprise value.
In addition, we observe local laws or regulations in some jurisdictions require different reporting
timing for sustainability-related financial disclosures and related financial statements, which may
make an entity unable to report them at the same time.
However, given the importance of the connectivity between related financial statements andsustainability-related financial information, we agree the two reports should, in principle, be disclosed―13―

at the same time. Promotion of digitalization would be an important tool in achieving the simultaneous
disclosure of the two reports.
On the other hand, we recommend the ISSB to consider the case where the simultaneous disclosureof both is practically impossible due to local laws or regulations. In this case, an entity should bepermitted not to report the sustainability-related financial information and related financial statements
at the same time, while it is required to disclose the reason why it cannot to do so and the background.

Question 10—Location of information (paragraphs 72–78)
The Exposure Draft proposes that an entity be required to disclose information required by the IFRS
Sustainability Disclosure Standards as part of its general purpose financial reporting—i.e. as partof the same package of reporting that is targeted at investors and other providers of financial capital.
However, the Exposure Draft deliberately avoids requiring the information to be provided in aparticular location within the general purpose financial reporting so as not to limit an entity’s ability
to communicate information in an effective and coherent manner, and to prevent conflicts withspecific jurisdictional regulatory requirements on general purpose financial reporting.
The proposal permits an entity to disclose information required by an IFRS Sustainability
Disclosure Standard in the same location as information disclosed to meet other requirements, suchas information required by regulators. However, the entity would be required to ensure that thesustainability-related financial disclosures are clearly identifiable and not obscured by that
additional information.
Information required by an IFRS Sustainability Disclosure Standard could also be included bycross-reference, provided that the information is available to users of general purpose financial
reporting on the same terms and at the same time as the information to which it is cross-referenced.
For example, information required by an IFRS Sustainability Disclosure Standard could be
disclosed in the related financial statements.
The Exposure Draft also proposes that when IFRS Sustainability Disclosure Standards require a
disclosure of common items of information, an entity shall avoid unnecessary duplication.
(a) Do you agree with the proposals about the location of sustainability-related financial
disclosures? Why or why not?

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(b) Are you aware of any jurisdiction-specific requirements that would make it difficult for anentity to provide the information required by the Exposure Draft despite the proposals on
location?
(c) Do you agree with the proposal that information required by IFRS Sustainability DisclosureStandards can be included by cross-reference provided that the information is available to usersof general purpose financial reporting on the same terms and at the same time as theinformation to which it is cross- referenced? Why or why not?
(d) Is it clear that entities are not required to make separate disclosures on each aspect ofgovernance, strategy and risk management for individual sustainability-related risks andopportunities, but are encouraged to make integrated disclosures, especially where the relevant
sustainability issues are managed through the same approach and/or in an integrated way? Whyor why not?
We agree with the proposal in Draft S1 regarding location of information. Some 85.0% of
respondents to Q9 of our questionnaire agreed with this proposal.
Disclosure of sustainability-related financial information as part of a package of general-purpose
financial reporting will clarify its relationship to related financial statements, contributing to users’
better understanding.
However, the terms for cross-references should be clarified. Paragraph 75 stipulates “Information
required by an IFRS Sustainability Disclosure Standard can be included by cross-reference, provided
that the information is available to users of general purpose financial reporting on the same terms andat the same time as the information to which it is cross-referenced”. It is not clear what “the sameterms” means in the context above. We believe the ISSB should explain what it means in detail.
We also believe that S1 should identify the core report and include the minimum disclosure
requirements in the core report. Otherwise, we are concerned that cross-references could be usedwithout any principles, making it impossible for users to understand significant sustainability-relatedrisks and opportunities in the core report.
In addition, the explanation of cross-references in both S1 and the IFRS Practice Statement
Exposure Draft Management Commentary should also be aligned.

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Question 11—Comparative information, sources of estimation and outcome
uncertainty, and errors (paragraphs 63–65, 79–83 and 84–90)
The Exposure Draft sets out proposed requirements for comparative information, sources of
estimation and outcome uncertainty, and errors. These proposals are based on corresponding
concepts for financial statements contained in IAS 1 and IAS 8. However, rather than requiring achange in estimate to be reported as part of the current period disclosures, the Exposure Draft
proposes that comparative information which reflects updated estimates be disclosed, except when
this would be impracticable—i.e. the comparatives would be restated to reflect the better estimate.
The Exposure Draft also includes a proposed requirement that financial data and assumptions withinsustainability-related financial disclosures be consistent with corresponding financial data andassumptions used in the entity’s financial statements, to the extent possible.
(a) Have these general features been adapted appropriately into the proposals? If not, what should
be changed?
(b) Do you agree that if an entity has a better measure of a metric reported in the prior year that itshould disclose the revised metric in its comparatives?
(c) Do you agree with the proposal that financial data and assumptions within sustainabilityrelated financial disclosures be consistent with corresponding financial data and assumptions
used in the entity’s financial statements to the extent possible? Are you aware of any
circumstances for which this requirement will not be able to be applied?
We agree with the proposal in Draft S1 regarding comparative information, sources of estimationand outcome uncertainty, and errors. Some 75.0% of respondents to Q10 of our questionnaire agreed
with this proposal.
When an entity has material updated estimates and/or prior period errors in metrics and others, we
believe updated comparative information should be restated, even if the treatment for estimates anderrors under S1 differs from that under IFRS Accounting Standards. Restating comparative
information would improve both confirmatory and predictive value for users.
We are concerned that it might obscure connectivity between the sustainability-related financial
disclosures and financial statements if underlying assumptions and data are inconsistent with eachother.
However, when comparative information is restated, it should be required to include a descriptionof the restatement as well as the content and reason/background for clarification.

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Some commented that some companies may not disclose the information because it is impracticable.
Such a case should be addressed.

Question 12—Statement of compliance (paragraphs 91-92)
The Exposure Draft proposes that for an entity to claim compliance with IFRS Sustainability
Disclosure Standards, it would be required to comply with the proposals in the Exposure Draft andall of the requirements of applicable IFRS Sustainability Disclosure Standards. Furthermore, theentity would be required to include an explicit and unqualified statement that it has complied withall of these requirements.
The Exposure Draft proposes a relief for an entity. It would not be required to disclose information
otherwise required by an IFRS Sustainability Disclosure Standard if local laws or regulations
prohibit the entity from disclosing that information. An entity using that relief is not prevented from
asserting compliance with IFRS Sustainability Disclosure Standards.
Do you agree with this proposal? Why or why not? If not, what would you suggest and why?
We agree with the proposal regarding the statement of compliance of Draft S1 with somereservations. Only 55.0% of respondents to Q11 of our questionnaire, slightly more than a majority,
agreed with this proposal.
The relatively low percentage of agreement was because, while all agreed that a statement ofcompliance was necessary, many felt that the proposal of an explicit and unqualified statement that it
has complied with all of these requirements was too stringent.
Therefore, we propose to apply the principle of comply or explain to all requirements in thestandards, similar to the approach proposed in the IFRS Practice Statement Exposure Draft
Management Commentary, and to make a statement of compliance if all of the requirements inapplicable IFRS Sustainability Disclosure Standards are met, and if not, to be required to explain why
not. This would facilitate international adoption as a global baseline, and would also facilitate audit
and assurance if the extent of an entity’s statement of compliance (whether it is fully or partiallycompliant) is disclosed.
In addition, when applying the relief when prohibited by local laws or regulations, the requirement
to disclose an explanation as to the reason/background why the information cannot be disclosed should
be added.

―17―

Question 13—Effective date (Appendix B)
The Exposure Draft proposes allowing entities to apply the Standard before the effective date to be
set by the ISSB. It also proposes relief from the requirement to present comparative information in
the first year the requirements would be applied to facilitate timely application of the Standard.
(a) When the ISSB sets the effective date, how long does this need to be after a final Standard isissued? Please explain the reason for your answer, including specific information about the
preparation that will be required by entities applying the proposals, those using thesustainability-related financial disclosures and others.
(b) Do you agree with the ISSB providing the proposed relief from disclosing comparatives in thefirst year of application? If not, why not?
We agree with the proposal in Draft S1 regarding effective date. Some 95.0% of respondents to Q12of our questionnaire agreed with this proposal.
While it is desirable for users to have comparative information, a higher priority should be given to
begin disclosures as soon as possible, even if it is just a year earlier. The effective date of Draft S1
should not be delayed in order to collect and organize comparative information.

Question 14—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 acomprehensive global baseline for the assessment of enterprise value. Other stakeholders are alsointerested in the effects of sustainability-related risks and opportunities. Those needs may be met
by requirements set by others, including regulators and jurisdictions. The ISSB intends that suchrequirements 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?
In our questionnaire survey, we received the following comments:


The lack of a clear definition of the global baseline appears to be causing confusion. Unlike
IFRS Accounting Standards, IFRS Sustainability Disclosure Standards, as a global baseline,
will allow each country and region to add its own requirements. The application of the ‘global―18―

baseline’ concept should be clarified, such as what kind of additional requirements could be
accepted for the statement of compliance.


In Draft S2, the industry-based requirements based on the SASB Standards have a highgranularity, and although revised from the SASB Standards, some of the proposed metrics do
not appear internationally applicable. We are concerned that there would be somecountries/jurisdictions where it is difficult to apply Draft S2. If so, it would be difficult for all
the requirements of IFRS Sustainability Disclosure Standards to be accepted internationally asa global baseline. We address our detailed comment to this issue in Question 11 ─ Industrybased requirements, in our comment letter on Draft S2.

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 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 DisclosureStandards, an IFRS Sustainability Disclosures Taxonomy is being developed by the IFRSFoundation. The Exposure Draft and [draft] IFRS S2 Climate-related Disclosures Standards are thesources 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)?
In our questionnaire survey, we received the following comments:


Digitization should be strongly promoted not only in sustainability-related financial reporting
but also in all financial reports, as it expands the scope of comparability, benefitting users.



As for digital reporting, cross-reference and audit/assurance are likely to be critical. The ISSB
should work with related standard-setters such as the International Accounting Standards
Board (IASB) and the International Auditing and Assurance Standards Board (IAASB).

―19―

Question 16—Costs, benefits and likely effects
The ISSB is committed to ensuring that implementing the Exposure Draft proposals appropriatelybalances 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 ofthese proposals?

(b) Do you have any comments on the costs of ongoing application of the proposals that the ISSB
should consider?
In our questionnaire survey, we received the following comments:
The SASB has been developing its standards with cost-effectiveness at the forefront. Following
this approach, the ISSB should confirm if there are any dubious requirements with regard tocost-effectiveness through a transparent process not only in the development of Draft S1 andDraft S2, but also in their post-implementation review.

Question 17—Other comments
Do you have any other comments on the proposals set out in the Exposure Draft?
In our questionnaire survey, we received the following comments:
Draft S1 consists of two parts: (1) content that forms the basis for the disclosures of an entity’ssustainability-related financial information (Objective, Scope, and Core content), and (2)general features that stipulate the fundamental qualitative characteristics of sustainabilityrelated financial disclosures. The former requires an entity to identify sustainability-related
financial information other than climate-related and disclose it if material, which could be verytime consuming in the absence of relevant disclosure standards. We are seriously concernedthat this may be a factor to delay the effective date of Draft S2, which addresses more urgent
needs. In order to avoid such a concern, we propose to divide the development process of Draft
S1 into two stages and encourage the ISSB to finalize the latter, general features first so as tofacilitate Draft S2 becoming effective as early as possible.

Ensuring the adequacy of sustainability-related financial information is critical for users. In
this regard, it will be necessary to introduce audit and assurance mechanisms for disclosed
information in the future. Therefore, when developing standards, the perspective of audit andassurance should be included with an awareness of the possibility of future introduction.

―20―



The legitimacy of IFRS Accounting Standards has been built on the IASB’s rigorouscompliance with its due process. We hope that the ISSB will also comply with its due process
and ensure transparency in setting IFRS Sustainability Disclosure Standards.

The disclosure framework for sustainability information is evolving. We hope that, indeveloping and amending IFRS Sustainability Disclosure Standards, the ISSB will be agile
enough to capture this evolution while taking into account the stability of standards.



While we appreciate that the exposure drafts have been published in a short time thanks to theefforts of the IFRS Foundation and the ISSB, from the perspective of global consensus building
we would like to mention that there was only one opportunity for consultation on the exposure
drafts and that the consultation period is only 120 days. On 3 November 2022, a prototype ofthe climate and general disclosure requirements developed by the Technical ReadinessWorking Group (TRWG) was published. If public consultation on the prototype had been held
and the results reflected in these exposure drafts, they would have been more inclusive, andcontributed more to global consensus building. We hope that, in its future standard
development process, the ISSB will consider the balance between the urgent need forsustainability-related disclosure standards and the consensus building that will form the basisof the global baseline. This would solidify the ISSB’s legitimacy as a standard setter.

Sincerely yours,

George Iguchi
Chair
Sustainability Reporting Committee―21―

Attachment: Questionnaire Results on Draft S1
The SAAJ sent questionnaire surveys regarding Draft S1 and Draft S2 to members of the SRC andCMAs; some 20 responded to the Draft S1 questionnaire survey.
Q1: Overall approach / Objective
Draft S1 sets out the overall approach as follows:(1) It sets out overall requirements with the objective of disclosing sustainability-related
financial information that is useful to the primary users of the entity’s general purpose
financial reporting when they assess the entity’s enterprise value and decide whether
to provide resources to it.
(2) An entity shall disclose material information about all of the significant sustainabilityrelated risks and opportunities to which it is exposed. The assessment of materiality
shall be made in the context of the information necessary for users of general purpose
financial reporting to assess enterprise value.
(3) Draft S1 shall be applied together with other IFRS Sustainability Disclosure Standards,
including Draft S2 (‘thematic disclosure requirements’ and ‘industry disclosure
requirements’).
(4) An entity shall identify and disclose material information about all of the sustainabilityrelated risks and opportunities to which the entity is exposed, even if such risks andopportunities are not addressed by a specific IFRS Sustainability Disclosure Standard.
Do you think that the proposed overall approach and objectives in Draft S1 are appropriate andclear?

Question 1 and 2 in Draft S1(a) Yes1365.0%(b) No315.0%(c) Neither “Yes” nor “No”

4

20.0%

20

100.0%Total
Q2: Scope

Draft S1 proposes that the IFRS Sustainability Disclosure Standards be used by entities that
prepare their general purpose financial statements in accordance with any jurisdiction’s GAAP,
rather than only those prepared in accordance with IFRS Accounting Standards.
Do you agree with this proposal?

Question 3 in Draft S1―1―

(a) Yes

18

90.0%

(b) No00.0%(c) Neither “Yes” nor “No”

2

10.0%

20

100.0%Total
Q3: Core content

Draft S1 proposes that entities disclose information that enables primary users to assess
enterprise value. Based on the TCFD recommendations, Draft S1 defines the four core contents,
namely (i) Governance, (ii) Strategy, (iii) Risk management, and (iv) Metrics and targets, andthen sets out disclosure objectives and requirements for each respectively. (Note: The four corecontents will be applied in the future development of IFRS Disclosure Standards for themes otherthan climate-related ones [biodiversity, human rights, etc.])
Do you think that these core contents are clear and appropriate?

Question 4 in Draft S1(a) Yes1680.0%(b) No15.0%(c) Neither “Yes” nor “No”

3

15.0%

20

100.0%

Total
Q4: Reporting entity

Regarding reporting entities, Draft S1 proposes as follows:(1) An entity shall provide its sustainability-related financial information for the same
reporting entity as the related financial statements.
(2) An entity shall disclose information about sustainability-related risks and opportunities
related to activities, interactions and relationships, and to the use of resources along its
value chain.
(3) An entity shall disclose its sustainability-related financial information for users to
identify its related financial statements.
Do you agree with these proposals?

Question 5 in Draft S1(a) Yes1575.0%(b) No15.0%(c) Neither “Yes” nor “No”

4

20.0%

20

100.0%

Total―2―

Q5: Connected information
Draft S1 proposes that an entity be required to provide users of general purpose financial
reporting with information that enables them to assess the connections between:(1) various sustainability-related risks and opportunities; and(2) sustainability-related risks and opportunities, and information in general purpose
financial reporting, including the financial statements.
Question 6 in Draft S1

Do you think that these proposals are clear and appropriate?
(a) Yes1260.0%(b) No525.0%(c) Neither “Yes” nor “No”

3

15.0%

20

100.0%Total
Q6: Fair presentation

Draft S1 proposes that a complete set of sustainability-related financial disclosures be required
to present fairly the sustainability-related risks and opportunities to which an entity is exposed.
To identify sustainability-related risks and opportunities, the entity shall apply related IFRS
Sustainability Disclosure Standards (IFRS S2 Climate-related Disclosures, etc.). In addition, if
related IFRS Sustainability Disclosure Standards do not exist, the entity shall consider thedisclosure topics in the SASB Standards, the CDSB Framework application guidance, the related
pronouncements of other standard-setting bodies, and other related resources.
Do you agree with these proposals?

Question 7 in Draft S1(a) Yes1155.0%(b) No630.0%(c) Neither “Yes” nor “No”

3

15.0%

20

100.0%Total
Q7: Materiality

Draft S1 defines material information in alignment with the definition in IASB’s Conceptual
Framework for General Purpose Financial Reporting and IAS 1. Information ‘is material if
omitting, misstating or obscuring that information could reasonably be expected to influence
decisions that the primary users of general purpose financial reporting make on the basis of thatreporting, which provides information about a specific reporting entity’. To ensure that only
material information is disclosed, Draft S1 proposes as follows:―3―(1) Material sustainability-related financial information provides insights into factors that
could reasonably be expected to influence primary users’ assessments of an entity’senterprise value.
(2) The information can include information about sustainability-related risks andopportunities with low-probability and high-impact outcomes.
(3) No threshold for materiality is defined. An entity shall apply judgement to identify
material sustainability-related financial information and reassess it at each reporting
date to take account of changed circumstances and assumptions.
(4) An entity needs not provide specific disclosure if the information resulting from that
disclosure is not material.
Do you agree with these proposals?

Question 8 in Draft S1(a) Yes1680.0%(b) No00.0%(c) Neither “Yes” nor “No”

4

20.0%

20

100.0%Total
Q8: Frequency of reporting

Draft S1 proposes that an entity be required to report its sustainability-related financial
disclosures at the same time as its related financial statements, and the sustainability-related
financial disclosures shall be for the same reporting period as the financial statements.
Do you agree with these proposals?

Question 9 in Draft S1(a) Yes1050.0%(b) No840.0%(c) Neither “Yes” nor “No”

2

10.0%

20

100.0%Total
Q9: Location of information

Draft S1 proposes regarding the location of information required by the IFRS Sustainability
Disclosure Standards as follows:(1) An entity shall disclose information required by IFRS Sustainability DisclosureStandards as part of its general purpose financial reporting.
(2) An entity might disclose information required by an IFRS Sustainability DisclosureStandard in the same location as information disclosed to meet other requirements, suchas information required by regulators.

―4―(3) Information required by an IFRS Sustainability Disclosure Standard can be included
by cross-reference, provided that the information is available to users of general
purpose financial reporting on the same terms and at the same time as the information
to which it is cross-referenced.
Draft S1 also proposes that an entity avoid unnecessary duplication when IFRS Sustainability
Disclosure Standards require the disclosure of common items of information (e.g. disclosures on
governance).
Do you agree with these proposals?

Question 10 in Draft S1(a) Yes1785.0%(b) No00.0%(c) Neither “Yes” nor “No”

3

15.0%

20

100.0%

Total

Q10: Comparative information, sources of estimation and outcome uncertainty, and errors
Draft S1 proposes that an entity correct material prior period errors by restating thecomparative amounts for the prior period(s) disclosed unless it is impracticable to do so, rather
than requiring a change in estimate to be reported as part of the current period disclosures like
IFRS Accounting Standards.
Draft S1 also proposes that financial data and assumptions within sustainability-related
financial disclosures be consistent with corresponding financial data and assumptions used in theentity’s financial statements to the extent possible.
Do you agree with these proposals?

Question 11 in Draft S1(a) Yes1575.0%(b) No210.0%(c) Neither “Yes” nor “No”

3

15.0%

20

100.0%

Total
Q11: Statement of compliance

Draft S1 proposes that for an entity to claim compliance with IFRS Sustainability DisclosureStandards, it would be required to comply with all of the requirements of applicable IFRS
Sustainability Disclosure Standards and include an explicit and unqualified statement that it hascomplied with all of these requirements.
The Exposure Draft proposes a relief for an entity. It would not be required to disclose
information otherwise required by an IFRS Sustainability Disclosure Standard if local laws or―5―

regulations prohibit the entity from disclosing that information. An entity using that relief is notprevented from asserting compliance with IFRS Sustainability Disclosure Standards.
Do you agree with these proposals?

Question 12 in Draft S1(a) Yes1155.0%(b) No15.0%(c) Neither “Yes” nor “No”

8

40.0%

20

100.0%

Total
Q12: Effective date

Draft S1 proposes relief from the requirement to present comparative information in the firstyear the requirements would be applied to facilitate timely application of the Standard.
Do you agree with this proposal?

Question 13 in Draft S1(a) Yes1995.0%(b) No00.0%(c) Neither “Yes” nor “No”

1

5.0%

20

100.0%

Total
Q13: Global baseline

IFRS Sustainability Disclosure Standards are intended to provide a global baseline ofrequirements that can be applied in different jurisdictions, allowing regulators to supplement
them with requirements that meet the needs of a wider range of other stakeholders in theirjurisdictions, if necessary (with the EU in mind).
If there are any particular aspects of the proposals in Draft S1 that you believe would limit theability of IFRS Sustainability Disclosure Standards to be used in this manner, please give them.
Question 14 in Draft S1
Q14: Digital reporting
Draft S1 does not include any provisions for digital reporting, but if you have any comments
or suggestions relating to IFRS Sustainability Disclosures Taxonomy and digital reporting,please give them.

Question 15 in Draft S1

Q15: Costs, benefits and likely effects
The ISSB is committed to ensuring that implementing Draft S1 proposals appropriatelybalances costs and benefits.

―6―

If you have any comments on this, please give them. Question 16 in Draft S1
Q16: Other comments
If you have any other comments not included in Q1-Q15 above, please give them.
Question 17 in Draft S1―7―