9 August 2023
Mr. Emmanuel Faber
Chair
International Sustainability Standards Board

Re: Exposure Draft “Methodology for Enhancing the International
Applicability of the SASB® Standards and SASB Standards Taxonomy
Updates”
Dear Mr. Faber:
The Sustainability Reporting Committee (SRC) of the Securities Analysts Association of Japan(SAAJ) is pleased to comment on the Exposure Draft “Methodology for Enhancing the International
Applicability of the SASB® Standards and SASB Standards Taxonomy Updates” (hereinafter referred
to as the “ED”) published by the International Sustainability Standards Board (ISSB) on 11 May 2023.
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 nine
members including equity and credit analysts, portfolio managers, public accountants, and academics.
The SAAJ sent a questionnaire survey on the ED to members of the SRC and CMAs, of which some
26 responded. This comment letter is based on the ED questionnaire results and the discussions among
members of the SRC. Please see the attached questionnaire results.

General Comments
We welcome that the ISSB has published its first IFRS Sustainability Disclosure Standards — IFRSS1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2Climate-related Disclosures1. We have been advocating the urgent need on the part of analysts andIn this comment letter and its attachment, IFRS S1 General Requirements for Disclosure of
Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures published on
26 June 2023 are referred to as “S1” and “S2” respectively, and the exposure drafts of S1 and S2
published on 31 March 2022 are referred to as “Draft S1” and “Draft S2” respectively.
1―1―

investors for high quality, consistent, and comparable global sustainability disclosure standards. We
appreciate the leadership of the IFRS Foundation and the ISSB in publishing the standards in such ashort time, responding to this urgent need.
S1 requires an entity to refer to and consider the applicability of disclosure topics in the SASB
Standards in addition to the IFRS Sustainability Disclosure Standards in identifying sustainabilityrelated risks and opportunities. We therefore recognize that amendments to enhance the international
applicability of the SASB Standards will need to be implemented by 1 January 2024, when S1 becomes
effective. Thus, we understand that the proposals in the ED are a targeted and narrow-scope project toamend US-specific metrics in the SASB Standards to internationally applicable metrics within thelimited timeframe.
Based on this premise, we basically agree with each of the proposals in the ED.
On the other hand, the ED also asks for any specific comments or suggestions for the ISSB toconsider further enhancements to the SASB Standards. In this regard, we reiterate the three issues
related to the SASB Standards that we advocated in our comment letter on Draft S2 2.
Below are our comments on each question.

Question 1—Methodology objective
This Exposure Draft describes the proposed methodology to amend non-climate-related SASB
Standards metrics to enhance their international applicability when they contain a jurisdictionspecific reference.
(a) Are the scope of the intended enhancements and the objective of the proposed methodology
stated clearly in paragraph 8? If not, why not?
(b) Are the constraints of the objective as listed in paragraph 8 (preserving structure and intent,
decision-usefulness and cost-effectiveness) appropriate? Why or why not?
(c) Should any other objective(s) or constraint(s) be included in the proposed methodology? If so,
what alternative or additional objective(s) or constraint(s) would you suggest? How would
these add value to the proposed methodology?
We agree with the proposed methodology objective and overall methodology. Some 76.9% of
respondents to Q1 of our questionnaire agreed with these proposals.

2

SAAJ submitted its comment letters on Draft S1 and Draft S2 on 29 July 2022 as follows:
Draft S1 https://www.saa.or.jp/standards/sustainability/pdf/ikensho_220729s1en.pdf
Draft S2 https://www.saa.or.jp/standards/sustainability/pdf/ikensho_220729s2en.pdf―2―Paragraph 55 of S1 requires an entity to refer to and consider the applicability of the disclosure
topics in the SASB Standards in addition to the IFRS Sustainability Disclosure Standards in
identifying sustainability-related risks and opportunities. We understand that the proposals in the ED
are a targeted and narrow-scope project to enhance the international applicability of the SASB
Standards within the limited timeframe of 1 January 2024, when S1 becomes effective.
Based on this premise, we believe that the proposed objectives and methodology to amend USspecific metrics, which have been one of the issues, to internationally applicable metrics without
substantially changing the structure or original intent of the content of the standards are appropriate.
On the other hand, as we argued in “Question 11 - Industry-specific requirements” in our comment
letter on Draft S2, there are still issues to be addressed in the SASB Standards other than amending
the US-specific metrics to internationally applicable metrics. We comment on this in Question 5.

Question 2—Overall methodology
This Exposure Draft explains the proposed methodology to amend the SASB Standards metrics toenhance their international applicability when they contain jurisdiction- specific references.
(a) Do you agree that the proposed methodology would enhance the international applicability of
the SASB Standards metrics? If not, what alternative approach do you suggest and why?
Please refer to our comments on Question 1.

Question 3—Revision approaches
This Exposure Draft explains five revision approaches to enhance the international applicability of
non-climate-related SASB Standards metrics. Every disclosure topic, metric and technical protocol
amended using the methodology will apply these five revision approaches, either individually or in
combination. The methodology begins with Revision Approach 1, which uses internationallyrecognised frameworks and guidance to define relevant terms of reference.
(a) Do you agree that replacing jurisdiction-specific references with internationally recognised
frameworks and guidance—if identified—should be the first course of action? If not, why not?
(b) If Revision Approach 1 is not feasible, do you agree that using the remaining four revision
approaches would enhance the international applicability of the SASB Standards? Why or why
not?
(c) Could the revised metrics resulting from any specific revision approaches or combination of
approaches pose problems for the preparers applying them? Why or why not?

―3―

(d) Do you agree with the criteria for determining which of the proposed revision approaches
applies in different circumstances? Why or why not? What changes to the criteria would you
recommend and why?
We largely agree, but partly disagree with, the proposed revision approaches. Some 73.1% of
respondents to Q2 of our questionnaire agreed with this proposal.
Of the proposed hierarchy of Revision Approaches 1–5, Revision Approaches 1–3 make sense
because they are in order of international comparability, which is one of the important factors for users.
On the other hand, as noted in paragraph A9 of the ED, even if the term 'generalised reference' inRevision Approach 2 is applied in the same way in each jurisdiction, its definition may differ between
jurisdictions and, as a result, a combination of Revision Approaches 2 and 3 may need to be applied.
Therefore, while the hierarchy of Revision Approaches 1–4 should be applied in principle, theseapproaches should be flexibly combined in actual revision arrangements. For example, Revision
Approaches 2 and 3 could be integrated as a single approach. When publishing the results ofamendments to the SASB Standards in accordance with these revision approaches, it should also be
published which revision approaches have been applied.
We do not agree with Revision Approach 5 that introduces new metrics. The proposed revisions area narrow-scope project to amend jurisdiction-specific references to internationally applicablereferences without substantially changing the structure or original intent of the content of the SASB
Standards. Revisions that add new metrics should therefore be avoided. Nevertheless, if new metrics
are to be introduced, the ISSB should ensure transparency in the process, for example by publishinganother exposure draft.

Question 4—SASB Standards Taxonomy Update objective
This Exposure Draft describes the proposed approach to updating the SASB Standards Taxonomy
to reflect amendments to the SASB Standards.
(a) Do you agree with the proposed methodology to update the SASB Standards Taxonomy to reflectchanges to the SASB Standards? Why or why not? If you do not agree, what alternative approach
would you recommend and why?

We have no comments on this question.

―4―

Question 5—Future SASB Standards refinements
This Exposure Draft focuses specifically on the first phase of narrow-scope work to amend the
SASB Standards metrics in accordance with the proposed methodology to enhance theirinternational applicability when they contain jurisdiction-specific references. In subsequent phases,
the ISSB will consider further enhancements to the SASB Standards to improve their decisionusefulness, balance their cost-effectiveness for preparers and ensure their international relevance.
(a) What other methods, considerations or specific amendments would be useful to guide the
ISSB’s future work of refining the SASB Standards to support the application of IFRS S1?
Why would they be useful?
(b) Do you have any specific comments or suggestions for the ISSB to consider in planning futureenhancements to the SASB Standards?
In our comments on "Question 11 - Industry-based requirements" of Draft S2, we raised three issues
with the industry-based disclosure requirements, which is based on the SASB Standards (see Appendix
on page 7). Of these issues, the ED does not address: 1. explanation of the process and rules forselecting disclosure topics and metrics; and 3. industry classifications using SICS instead of GICS.
In Q3 of our questionnaire, some 96.2% of respondents agreed that we should continue to propose
to the ISSB to explain the process and rules for selecting disclosure topics and metrics and to achievea global consensus on industry classifications.
As the ISSB plans further enhancements to the SASB Standards in the future, we expect thatindustry-based disclosures with thematic standards, such as S2 to be revised and S3 to be developed,
will move from illustrative guidance, such as S2 published on 26 June 2023, to mandatory disclosure
requirements.
In this regard, we would like to propose that the ISSB resolve the three issues related to industrybased disclosures, while we believe that it is not easy for the ISSB to do so in the form of refinementsof the SASB Standards. The ISSB should complete the proposed narrow-scope project to enhance theinternational applicability of the SASB Standards and then start a new project to develop the ISSBspecific industry-based disclosure requirements. This new project would enable the ISSB to address
the issues more substantively and thereby move towards the development of industry-based disclosure
requirements from a truly global perspective.
Based on this perspective, we would like to reiterate three issues related to industry-based
disclosures as follows:1.

In the industry-based disclosure requirements of the ISSB Standards (including S2 to berevised. The same applies below), the process and rules for selecting disclosure topics and―5―metrics should be explained so that users and preparers can understand the relevance of eachdisclosure topic and metric. That is, the specific evidence that was used as references indeveloping the standards and where each disclosure topic affects sales, expenses,
assets/liabilities and others should be described.
2.

In the industry-based disclosure requirements of the ISSB Standards, the relevance of eachdisclosure topic and metric not only for US companies but also for non-US companies shouldbe verified.

3.

The industry classifications in the industry-based disclosure requirements of the ISSB
Standards should be developed based on GICS, which is widely and globally used, instead of
SICS.

In addition, there were the following suggestions:(1) From an efficiency perspective, it is not desirable for the ISSB to develop standards to address
the above issues 1–3, using the same process as the SASB Standards. Therefore, the ISSB
should only develop global baselines for matters that are easy to agree on, such as disclosure
topics, and leave some metrics to each jurisdiction.
(2) A periodic review system should be established to maintain the relevance of disclosure topics
and other relevant issues.

Sincerely yours,

George Iguchi
Chair
Sustainability Reporting Committee―6―Appendix: SAAJ's comments on Draft S2 submitted on 29 July 2022
The following are extracts from our comments on “Question 11—Industry-based requirements” ofDraft S2:
Industry-based requirements have the benefit of increasing comparability for users, while they arealso useful for preparers in identifying significant climate-related risks and opportunities.
Having said that, we recognize the following issues regarding Appendix B Industry-based
disclosure requirements, which is based on the SASB Standards:
1.

Appendix B has been developed by extracting disclosure topics and metrics related to thedimension of Environment from the SASB Standards. The SASB Standards include research
papers for respective industry standards, which describe the specific evidence that was used as
references in developing the standards and where each disclosure topic affects sales, expenses,
assets/liabilities and others. However, Draft S2 does not explain the process and rules forselecting such disclosure topics and metrics. We are concerned that both users and preparers
may not understand the importance of each disclosure topic and metric.

2.

Although revised from the SASB Standards, several proposed metrics appear not to beinternationally applicable. In addition, each metric needs to be developed separately forinternationally applicable metrics and those that should be left to each jurisdiction, in
accordance with the approach set forth in paragraph BC132.

3.

We understand that SICS used in industry classifications are well suited for setting
sustainability-related standards, but they are not as widely and globally used as GICS are. As
a result, entities are often at a loss to determine which industry classifications to apply to theirbusiness segments, which may cause a risk that appropriate disclosures will not be undertaken.
Users may also not be able to efficiently use the industry-based disclosure requirements
because the proposed industry classifications differ from the ones they normally use for theircurrent portfolio management.

―7―

Attachment: Questionnaire Results on the ED
The SAAJ sent a questionnaire survey on the ED to members of the SRC and CMAs, of which some
26 responded.
Q1: Methodology objective / Overall methodology
The IFRS Foundation is responsible for the stewardship of the SASB Standards, including themaintenance and enhancement of the standards.
S1, to be published in June 2023, will require an entity to refer to and consider the applicabilityof the disclosure topics in the SASB Standards in identifying and disclosing sustainability-relatedrisks and opportunities.
Since the SASB Standards require disclosure of some jurisdiction-specific references(particularly metrics based on US-specific laws and regulations), the ISSB has decided toconsider amendments to the SASB Standards to enhance the international applicability of thestandards.
The objective of the ED is to seek comments on the ISSB’s proposed methodology forenhancing the international applicability of non-climate-related metrics in the SASB Standards 1.
The objective of the methodology proposed in the ED is to enhance the international
applicability of the SASB Standards without substantially changing the structure or original intent
of the content. That is, the ED focuses specifically on the first phase of narrow-scope work, andis not intended to change the metrics or other information to reflect materiality, relevance, etc. ineach country or region.
The methodology is designed to ensure that the amendments preserve the decision-usefulnessof the standards for users of general purpose financial reports, and that the amendments do notincrease the costs of application for preparers.
Do you agree with the proposed methodology objective and overall methodology?
Question 1 and 2 in the ED(a) Yes2076.9%(b) No27.7%(c) Neither “Yes” nor “No”

4

15.4%

26

100.0%

Total

When S2 is published in June 2023, the ISSB plans to release an update to the corresponding SASB
Standards to align the climate-related industry-specific disclosures in the SASB Standards with thecontent in S2. Therefore, climate-related metrics are outside the scope of the ED for comment.
1―1―Q2: Revision approaches
The ED proposes that, in descending order of preference, amendments to the SASB Standards
metrics would be made by the following Revision Approaches 2:
1.

substituting available internationally applicable references for standards, definitions or
calculation methods to replace jurisdiction- specific references;2.

providing more generalised references for standards, definitions or calculation processes
to replace jurisdiction-specific references;3.

adopting generalised jurisdictional references to enable preparers to use applicablejurisdictional laws, regulations, methodologies or guidance to replace jurisdictionspecific references;4.

removing—in a limited number of cases—disclosure metrics that are ill-adapted forinternational application or have no identified international equivalents outside specificjurisdictions; and5.

removing and replacing jurisdiction-specific metrics when a relevant replacement can be
identified to preserve the disclosure topic’s integrity—aligning with the intent of theoriginal metric as much as possible based on research—to meet the needs of users ofgeneral purpose financial reports.

The above Revision Approaches 1–3 are also the order of international comparability, which
is an important factor for analysts and investors as users.
Do you agree with these proposed revision approaches? Question 3 in the ED(a) Yes1973.1%(b) No27.7%(c) Neither “Yes” nor “No”

5

19.2%

26

100.0%Total

The Basis for Conclusions of Draft S2 presents the above Revision Approaches 1–3 as enhancing
the international applicability of climate-related metrics (see paragraphs BC133 - BC142).

2―2―

Q3: Future SASB Standards refinements
The ED focuses specifically on the first phase of narrow-scope work to amend the SASB
Standards metrics in accordance with the proposed methodology to enhance their international
applicability when they contain jurisdiction-specific references. In subsequent phases, the ISSB
will consider further enhancements to the SASB Standards to improve their decision-usefulness,balance their cost-effectiveness for preparers and ensure their international relevance. That is,industry-based disclosures with thematic standards, including S2 to be published in June 2023
and S3 to be developed, are expected to move from illustrative guidance, such as S2, to mandatory
disclosure requirements in the future.
In our comment letter on Draft S2 submitted on 29 July 2022, we raised three issues with theindustry-based disclosure requirements, which is based on the SASB Standards (see page 7 ofour comment letter on the ED).
Of these issues, the ED does not address: 1. explanation of the process and rules for selecting
disclosure topics and metrics; and 3. industry classifications using SICS instead of GICS.
In “Question 5—Future SASB Standards refinements” of the ED, do you agree that we should
continue to propose to the ISSB to explain the process and rules for selecting disclosure topics
and metrics and to achieve a global consensus on industry classifications?
Question 5 in the ED(a) Yes25

96.2%(b) No00.0%(c) Neither “Yes” nor “No”

1

3.8%

26

100.0%

Total―3―