Staff paper
Agenda reference: 3Sustainability Standards AdvisoryForum meeting
DateMarch 2024

ProjectIFRS Sustainability Disclosure Taxonomy

Topic

Update on IFRS Sustainability Disclosure Taxonomy

Contacts

Tim Kasim (tkasim@ifrs.org)
Aida Vatrenjak (avatrenjak@ifrs.org)

This paper has been prepared for discussion at a public meeting of the Sustainability Standards Advisory Forum(SSAF). This paper does not represent the view s of the International Sustainability Standards Board (ISSB) or
any individual ISSB member. Any comments in the paper do not purport to set out w hat would be an acceptable
or unacceptable application of IFRS® Sustainability Disclosure Standards. The ISSB’s technical decisions aremade in public and are reported in the ISSB Update.

2Purpose of this session
Purpose• Provide update on the IFRS Sustainability Disclosure Taxonomy*• Provide update on planned activities to support digital financial reporting* For brevity, we refer to the IFRS Sustainability Disclosures Taxonomy as the‘ISSB Taxonomy’ or the ‘Taxonomy’ in this document.

3Update on ISSB Taxonomy

4Timeline
Review by the IFRS Taxonomy
Consultative GroupIFRS S1 &IFRS S2published
26 June2023

Staff Draft ofthe ISSB
Taxonomy
published inMay 2022

ISSB
meeting –Changesto theProposed
Taxonomy
Dec 2023

Publicconsultation
60 dayscommentperiod

Proposed
Taxonomy
published
27 July
2023
Review by the IFRS Taxonomy
Consultative Group

ISSB
meeting –Summaryof feedback
Nov 2023

Final
Taxonomy
published
April 2024

IFRS S1 &IFRS S2
effective
date
1 Jan 2024

Enables digitalconsumption –when the Standards andthe Taxonomy are applied

Sustainability
disclosures,
applying IFRS
S1 and IFRS
S2, for 2024
becoming
available in2025

5Background information• The ISSB issued IFRS S1 General Requirements for Disclosure of Sustainability-related
Financial Information and IFRS S2 Climate-related Disclosures in June 2023.

• The ISSB published the Proposed ISSB Taxonomy for digital reporting reflecting thedisclosure requirements in IFRS S1 and IFRS S2 for public consultation in July 2023. Theconsultation had 60 days comment period.
•The ISSB discussed stakeholder feedback, including feedback from the IFRS
Taxonomy Consultative Group (ITCG) on the Proposed Taxonomy at its November 2023
meeting.
• The ITCG discussed the preliminary analysis of stakeholder feedback at its October
2023 meeting.

•The ISSB discussed the main changes resulting from stakeholder feedback that will
be made in the prospective ISSB Taxonomy at its December 2023 meeting.
• The ITCG reviewed the prospective ISSB Taxonomy in January 2024 and discussed
its feedback at its February 2024 meeting.

6How the ISSB responded to feedback
Almost all respondents agreed the Proposed ISSB Taxonomy appropriatelyreflected the requirements in IFRS S1 and IFRS S2 and would appropriately support
preparers, investors and regulators in enabling the digital reporting of sustainabilityrelated financial disclosures.
Some stakeholders provided specific suggestions to help with successful global
implementation and consistent application of the ISSB Taxonomy. The main themes
include:a) the approach to tagging narrative information (Slides 7–9);b) the approach to reflecting the relationship between IFRS S1 and IFRS S2 (Slides10–13); andc) the approach to tagging metrics and targets (Slides 14–16).

7A. Narrative information – Proposal•Narrative information often requires more context to be understood and useful. In considering the appropriate
approach for tagging narrative information, the ISSB proposed creating a taxonomy structure that is designed to:Provide investors with blocks of narrative information that are useful for analysis (and which also support the use of
AI tools such as large language models);
Minimise the need for preparers to multiple tag the same information; andSupport global implementation and consistent application of the Taxonomy by limiting hierarchical structure
which could result in inconsistency in tagging practice among preparers or jurisdictions.

•The ISSB proposed a principle for creating taxonomy elements for narrative information at the lowest level of detail
expected to be both separately understandable to investors and readily identifiable for tagging.
The ISSB proposed this principle to strike the right balance between creating taxonomy elements that would result in
information tagged being either too broad (information processing will be difficult) or too narrow (information context
will be lost). Applying this principle, the ISSB proposed approximately 100 elements to tag blocks of narrative
information.
The ISSB proposed creating taxonomy elements reflecting a single level of disclosure requirements to the extent
possible, limiting hierarchical structure in its Taxonomy. For example, when an element is created to reflect arequirement in the sub-paragraph in the Standards, the ISSB generally did not propose creating elements reflecting arequirement in a level lower (or higher level) than sub-paragraphs

8A. Narrative information – Feedback
Generally, stakeholders supported the aim of a Taxonomy designed to tag all information usefully while minimising the needfor multiple tagging of the same information, because it will support the global implementation and consistent application of
the Taxonomy.
Some respondents thought the proposals struck the right balance between providing useful information for investors and limiting
burden on preparers. Some stakeholders supported the ISSB’s intention to review emerging reporting practice and subsequently
refine and enhance the Taxonomy, if necessary (for example, more granular elements could be introduced subsequently).
Common themes of stakeholder feedback :• Some stakeholders (including a few respondents and some ITCG members) emphasised the importance of consideringinteroperability with other taxonomies (including the forthcoming ESRS XBRL Taxonomy) in determining appropriate
level of granularity useful for investors to compare information with other sustainability-related standards; and• Some data aggregators and regulators thought providing elements reflecting different levels of requirements in the Standard(other than sub-paragraph) could provide more data for investors which could be grouped and analysed in differentways.

9A. Narrative information – Response
The staff recommends the ISSB confirms the principle for creating elements for narrative information at the lowest
level of detail expected to be both separately understandable to investors and readily identifiable for tagging.
In response to stakeholder feedback, the staff recommends the ISSB makes targeted amendments to the modellingof some of the proposed taxonomy elements to refine and enhance their modelling (based on stakeholder feedback) andminimise the gap in how similar requirements in IFRS S2 and ESRS E1 are modelled in the ISSB Taxonomy and theforthcoming ESRS XBRL Taxonomy.
•Specifically, by adding elements reflecting more granular aspects of requirements when they are expected tohelp facilitate interoperability (see Slides 39-41 of AP7 of the ISSB December 2023 meeting for more information
about these additional elements).

•Information tagged using these elements could help investors make appropriate comparison with similar type ofinformation provided using other sustainability-related standards.

While considering changes to the Taxonomy that aim to help with interoperability with other sustainability-related
standards, the staff noted that:•Adding too many elements may make it more difficult for preparers to use the Taxonomy and for investors to obtaindata at a level that is most useful for analysis.

•Adding elements reflecting lower-levels of requirements in the Standard may result in adding hierarchicalstructure.

10B. Reflection of relationship between IFRS S1 andIFRS S2 – Background•‘Corresponding requirements’ for the purposes of this discussion are IFRS S1 disclosure requirements that are also
in IFRS S2 because they are relevant to climate-related risks and opportunities. Those requirements relate to the corecontent of governance, strategy, risk management and metrics and targets.

•The ISSB proposed a single set of elements in the proposed Taxonomy to reflect corresponding requirements in IFRS
S1 and IFRS S2. This proposal:••

Reflects that those requirements might result in, or be addressed by, common items of information; and•Avoids the complexity of tagging the same information twice.

Information reflecting corresponding requirements may be provided by each risk and opportunity. A dimensionalmodel* is proposed to:•Allow investors to extract information separately for each risk and opportunity; and•Help investors understand entity-specific elements used to identify sustainability-related risks and opportunities.

* A ‘dimensional model’ maps the reported information to a conceptual table, providing
structure for entity-specific elements. This table reflects the logical structure of the data
and does not specify or restrict the format of any disclosure.

11B. Reflection of relationship between IFRS S1 andIFRS S2 – Feedback
Almost all respondents supported the proposals designed to tag all information once, with additional details provided byrisks and opportunities identified by an entity, where applicable.
However, some stakeholders (including some investors) were concerned about:
1.

Comparability between risks and opportunities identified by each entity; and2.

Not being able to easily identify information related to climate separately from other information

Some stakeholders suggested the Taxonomy should facilitate identification of information related to climate separatelyfrom other information.
Stakeholders said that identifying entity-specific risks and opportunities as climate-related may help with comparability
between entities and it may help with interoperability between various reporting frameworks because it may allow easiercomparison of information grouped as climate-related.

12B. Reflection of relationship between IFRS S1 andIFRS S2 – Response (1)The staff recommends the ISSB confirms the proposals to:• Create a single set of elements to reflect the corresponding requirements; and• Use a dimensional model to reflect potential disaggregation of information by each risk and/oropportunity (for example an entity may provide information about its sustainability-related risks
and opportunities by each risk and/or opportunity or on an integrated basis).
In response to stakeholder feedback, the staff recommends the ISSB introduces a mechanism thatwould enable investors to identify the topic(s) of a sustainability-related risk or opportunity when suchinformation is provided and tagged.
• Specifically, the staff recommends adding an extensible enumeration* reflecting the topic(s) of asustainability-related risk or opportunity and adding ‘Climate’ into the list of defined topic(s).
* Extensible enumeration would allow an entity to choose specified answers
from a list (and create entity-specific answers when appropriate)13

B. Reflection of relationship between IFRS S1 andIFRS S2 – Response (2)The ISSB may add more topics in the Taxonomy in future, to reflect future Standards or ‘commonpractice’ (disclosures that are commonly reported by entities in practice when applying IFRSStandards but are not explicitly referred to in the Standards).
The staff also considered a suggestion to add a list of defined topic(s), other than Climate. The staff
noted that:• The ISSB Standards do not specify a list of topics of sustainability-related risks and opportunitiesthat is required to be disclosed by an entity; and• Adding any generic list of topics could result in conflict with future ISSB Standards (that is, thetopics of future ISSB Standards).

14

C. Metrics and targets – Background•Some metrics, such as the climate-related cross-industry metrics and industry-based metrics, are specified by IFRS
S2. Therefore, they are modelled separately for each concept. An entity is expected to tag these metrics, if disclosed,using the appropriate taxonomy elements provided in the Taxonomy.

•Some metrics, such as the non-climate-related industry-based metrics, are not specified by the ISSB Standards.
However, IFRS S1 requires an entity to refer and consider the SASB Standards for industry-based metrics not related toclimate. In the same way preparers would be encouraged to use the SASB Taxonomy to tag those metrics.

•Some metrics and all targets are developed by an entity (that is, not defined in the Standards). For the purpose of this
discussion, we refer to these metrics and targets as ‘entity-defined metrics and targets’.
••Entity-defined metrics and targets are not defined in the ISSB Standards and are therefore not explicitly modelled
as individual known concepts in the Taxonomy. Instead, in the proposed Taxonomy, preparers are expected tocreate entity-defined elements (extensions) to represent entity-defined aspects of disclosures, including for
metrics and targets.

The ISSB proposed modelling disclosure requirements related to entity-defined metrics and targets using a dimensional
approach to representing information about such metrics and targets, to help make it easier for preparers to use entitydefined elements and to help investors’ analysis of information about metrics or targets tagged using entity-definedelements.

15

C. Metrics and targets – Feedback

A few regulators said they were concerned preparers might not use extensions appropriately which would decrease thequality of digital reporting. Of these regulators, some said that the ISSB should limit the use of extensions and some said
the ISSB should encourage consistent use.

A few stakeholders suggested other ways of modelling information related to entity-defined metrics and targets toencourage consistent tagging, including• Adding elements that could be used to tag values of metrics and targets (rather than relying on entities creatingelements which are more difficult to use for analysis);• Using extensible enumerations for tagging information about the link between metrics and targets
Stakeholders also asked for guidance on tagging metrics, for example how to use the SASB Taxonomy alongside the ISSB
Taxonomy.

16C. Metrics and targets – Response
In response to stakeholder feedback, the staff recommends the ISSB adds the following line items to
explicitly model the values of entity-defined metrics and targets in the Taxonomy:•‘text’ type element for tagging textual values;•‘decimal’ type element for tagging numerical values (currency, length, volume, ratios, etc); and•‘percentage’ type element for tagging percentage values (to avoid ‘scaling’ issues due to incorrect
usage of decimal element for tagging percentages).

The staff also recommends the ISSB changes the data type of the element used for tagging the link
between metrics and targets to extensible enumeration.
Additionally, the staff recommends the ISSB adds some elements to some cross -industry metriccategories in IFRS S2 to facilitate comparability of similar types of information. Further it will also help
facilitate interoperability with the forthcoming ESRS XBRL Taxonomy.
•More specifically, by adding ‘monetary’ and ‘percentage’ examples or both to some cross-industry
metric categories in IFRS S2 (see Slides 42-43 of AP7 of the ISSB December 2023 meeting for moreinformation)

17

Supporting digital financialreporting18

Materials for supporting digital financial reporting
The IFRS Foundation has developed many resources and materials to aid
understanding and support the use of IFRS Taxonomy. These materials are available
in the General resources section of the IFRS Taxonomy website.
To support regulators in in implementing digital financial reporting, we plan to:• Publish an article that provides an introduction to digital financial reporting and theIFRS digital taxonomies – Digital financial reporting article• Update the existing regulator’s guide to using the IFRS Taxonomy (last updated in2015) – Updated regulator’s guide19

Overview of updated materials to support regulators
Target Audience

Regulators considering or in the early stage of adopting and implementing
digital financial reporting requirements using the IFRS digital taxonomies
Provide regulators with a first phase of guidance
to:1.

Objectives

2.
3.

Targetpublication dates

Build a general understanding of digital financial
reporting and the IFRS digital taxonomies
Encourage adoption of digital financial reporting
and use of the IFRS digital taxonomies
Provide guidance needed to implement the IFRS
digital taxonomies within electronic filing systemsin an optimal way

Digital financial
reporting article
Updatedregulator’sguideH1 2024 to coincide with publication of final ISSB taxonomy

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