SOCPA Shares Its Comments on the IFRS S2 Climate-Related Disclosures Exposure Draft
The International Sustainability Standards Board (ISSB) has published the second draft of the IFRS Sustainability Disclosure Standard report entitled "IFRS S2 Climate-related Disclosures". After consultation with interested stakeholders, the Accounting Standards Board at the Saudi Organization for Charted and Professional Accountants (SOCPA) prepared a comprehensive comment on what is contained in the exposure draft.
In its response, SOCPA pointed out the importance of including in the standard a definition of all the important terms it contained that have not been previously defined either in the IFRS S1 draft or in the International Financial Reporting Standards.
SOCPA also conveyed to ISSB the stakeholders' point of view in the Kingdom regarding the lack of a clear scope of climate-related risks and opportunities and their opinion on referring the standard's applicators to other publications of other climate-interested councils, as this represents a significant challenge in applying the required disclosures and leads to the difficulty of separating climate-related risks and opportunities from those related to other sustainability topics, and may potentially result in challenges with application and assurance.
In addition, it is crucial to consider that, unlike financial reporting, the reporting on specialized topics related to sustainability and the disclosures required by the exposure draft requires high technical expertise that may not be available to many mid-sized and smaller entities operating in emerging economies. The standard needs to include scalability application requirements that consider the availability of technical expertise and sources of relevant information in the environment in which the entity operates so that the benefits of the disclosure exceed the costs of its preparation.
Finally, SOCPA has stressed the need for illustrative examples of the standard paragraphs to help consistently apply its requirements.
You can read the ISSB's Exposure Draft here,
and SOCPA's comments here.