Technical update

Sustainability

The International Sustainability Standards Board (ISSB) has issued an inaugural jurisdictional guide to help governments adopt or use ISSB standards. Its information is designed to boost transparency in implementation and offers practical help in drafting regulations and policies.

China has issued draft Chinese sustainability disclosure standards for enterprises, based on ISSB standards. Governments controlling almost 55% of global GDP are therefore now utilising or adopting ISSB standards, according to the ISSB.

The UK government has released its own timetable for adopting ISSB-based standards for sustainability reporting, with the release of draft standards promised for the first quarter of 2025. The proposals will need authorisation by the UK parliament, with the changes coming into effect no earlier than accounting periods beginning 1 January 2026.

The IFRS Foundation has agreed to work with the African Development Bank in advancing sustainability-related disclosure practices in Africa. The ISSB and the bank’s African Financial Alliance on Climate Change will provide capacity building and technical assistance.

The European Financial Reporting Action Group (Efrag) has completed implementation guidance for its first three European Sustainability Reporting Standards (ESRS). The guidance documents cover materiality assessment, the value chain and datapoints, and are designed to help ESRS reporters.

CDP (formerly the Carbon Disclosure Project) has launched a platform to streamline and assist climate and nature reporting, including a new questionnaire aligned with the ISSB’s climate standard IFRS S2, which is now ‘the foundational baseline for CDP’s climate disclosure’.

The Global Reporting Initiative (GRI) has released a new naming convention for its standards. Universal standards have single-digit numbers (GRI 1, 2, 3 etc). Sector standards have double-digit numbers (starting with GRI 11, Oil and Gas), continuing in ascending order based on release dates. And topic standards have three-digit codes (starting with GRI 101, Biodiversity 2024).

Financial instruments

The International Accounting Standards Board (IASB) has released amendments to the classification and measurement requirements in IFRS 9 and 7 on financial instruments to boost consistency and comprehension. The changes include clarifying the classification of financial assets with environmental, social and governance elements and similar features, and reporting the settlement of liabilities through electronic payment systems.

Taxonomy

The IASB has proposed changes to its IFRS accounting taxonomy, reflecting new presentation and disclosure requirements in IFRS 18. The proposals include amending line-item modelling for conveying category information (such as operating, investing and financing) for profit or loss statements, and dimensional modelling for tagging disclosures on management-defined performance measures, for example.

Ethics

The International Federation of Accountants (IFAC) has called for changes to the proposed International Ethics Standards for Sustainability Assurance, released by the International Ethics Standards Board for Accountants (IESBA). To improve comprehension and flexibility, IFAC wants less complexity, and more practicality ‘related to value chain considerations’. It also wants IESBA to remove barriers to financial statement auditors also providing sustainability assurance to the same client.

Withholding tax

The Council of the European Union has reached provisional agreement on a new EU directive for faster and safer relief of excess withholding taxes. Its goal is creating an EU digital tax residence certificate for cross-border investors, helping them use fast-track procedures to reclaim withholding taxes and preventing double taxation.

Market outages

The International Organization of Securities Commissions has released a report advising regulators, traders and trading venues on coping with future market outages, boosting market resilience and investor confidence. It draws lessons from recent market outages.

SMPs

The Public Interest Oversight Board (PIOB) has requested applications from small and medium-sized accounting practices to join IESBA’s board. The PIOB is also seeking applications to join its own board.