IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

Title: IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information

Category: Part B—Accompanying Guidance for IFRS S1 and IFRS S2

Source: IFRS Foundation (https://www.ifrs.org)

Navigator: https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/sustainability-pdf-collection/

Model: https://www.ifrs.org/content/ifrs/home/issued-standards/ifrs-sustainability-standards-navigator/sustainability-pdf-collection/jcr:content/root/responsivegrid_1242322373/standarddocument.model.json

PDF: https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards-issb/english/2023/issued/part-b/issb-2023-b-ifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information-accompanying-guidance-part-b.pdf?bypass=on

Year: 2023

Type: Accompanying Guidance

Accompanying Guidance on

General Requirements for Disclosure of

Sustainability-related Financial Information

June 2023

IFRS S1

IFRS

® Sustainability Disclosure Standard

International Sustainability Standards Board

Accompanying Guidance on

IFRS S1

General Requirements for Disclosure of

Sustainability-related Financial

Information

This Accompanying Guidance accompanies IFRS S1 General Requirements for Disclosure of

Sustainability-related Financial Information (published June 2023; see separate booklet) and is

issued by the International Sustainability Standards Board (ISSB).

Disclaimer: To the extent permitted by applicable law, the ISSB and the IFRS Foundation

(Foundation) expressly disclaim all liability howsoever arising from this publication or

any translation thereof whether in contract, tort or otherwise to any person in respect of

any claims or losses of any nature including direct, indirect, incidental or consequential

loss, punitive damages, penalties or costs.

Information contained in this publication does not constitute advice and should not be

substituted for the services of an appropriately qualified professional.

Reproduction and use rights are strictly limited to personal non-commercial use, such as

corporate disclosure.

Any other use, such as – but not limited to – reporting software, investment analysis,

data services and product development is not permitted without written consent. Please

contact the Foundation for further details at sustainability_licensing@ifrs.org.

The Foundation has trade marks registered around the world (Marks) including ‘IAS®’,

‘IASB®’, the IASB® logo, ‘IFRIC®’, ‘IFRS®’, the IFRS® logo, ‘IFRS for SMEs®’, the IFRS for SMEs®

logo,

‘International

Accounting

Standards®’,

‘International

Financial

Reporting

Standards®’, the ‘Hexagon Device’, ‘NIIF®’, ‘SIC®’ and SASB®’. Further details of the

Foundation’s Marks are available from the Foundation on request.

The Foundation is a not-for-profit corporation under the General Corporation Law of the

State of Delaware, USA and operates in England and Wales as an overseas company

(Company number: FC023235) with its principal office in the Columbus Building, 7

Westferry Circus, Canary Wharf, London, E14 4HD.

CONTENTS

from paragraph

ILLUSTRATIVE GUIDANCE

IG1

Primary users

IG1

Meeting primary users’ information needs

IG2

Use of publicly available information

IG7

Applying sources of guidance

IG8

SASB Standards

IG11

CDSB Framework Application Guidance

IG25

ILLUSTRATIVE EXAMPLES

IE1

SASB Standards

IE2

Example 1—An entity with a single line of business

IE3

Example 2—A large conglomerate with diverse activities

IE9

IFRS S1 ACCOMPANYING GUIDANCE

IFRS S1 General Requirements for Disclosure of

Sustainability-related Financial Information

Illustrative Guidance

This guidance accompanies, but is not part of, IFRS S1. It illustrates aspects of IFRS S1 but is not

intended to provide interpretative guidance.

Primary users

The objective of IFRS S1 is to require an entity to disclose information about

its sustainability-related risks and opportunities that is useful to primary users

of general purpose financial reports in making decisions relating to providing

resources to the entity.1

Meeting primary users’ information needs

Assessing whether information could reasonably be expected to influence

decisions made by the primary users of a specific reporting entity’s general

purpose financial reports requires that entity to consider the characteristics of

those users while also considering the entity’s own circumstances. General

purpose financial reports include—but are not restricted to—an entity’s

general purpose financial statements and sustainability-related financial

disclosures.

Existing and potential investors, lenders and other creditors are the primary

users to whom general purpose financial reports are directed. General purpose

financial reports are prepared for users with a reasonable knowledge of

business and economic activities and who review and analyse the information

diligently. However, even well-informed and diligent users may need to seek

the aid of an adviser to understand sustainability-related financial

information.

General purpose financial reports do not, and cannot, provide all the

information that primary users need. Therefore, the entity aims to meet the

common information needs of its primary users. It does not aim to address

specialised information needs—information needs that are unique to

particular users.

To meet the common information needs of its primary users, an entity first

separately identifies the information needs of one of the three types of

primary users—for example, investors (existing and potential). The entity then

repeats the assessment for the two remaining types—lenders (existing and

potential) and other creditors (existing and potential). The combined

information needs identified by these assessments form the set of common

information needs that the entity aims to meet.

IG1

IG2

IG3

IG4

IG5

Throughout IFRS S1, the terms ‘primary users’ and ‘users’ are used interchangeably, with the

same meaning and refer to existing and potential investors, lenders and other creditors.

IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

RELATED FINANCIAL INFORMATION—JUNE 2023

In other words, the assessment of common information needs does not

require an entity to identify the information needs that are shared by all

users. Some identified information needs will be common to all types of users,

but others may be specific to only one or two types. If an entity were to focus

only on information needs that are common to all types of primary users, it

might exclude information that meets the needs of only one type.

Use of publicly available information

Primary users do not source information exclusively from general purpose

financial reports. For example, such users might also consider information

about the industry an entity operates in; information about the entity’s

competitors and the state of the economy; and information in the entity’s

press releases as well as other documents the entity has published. However,

the fact that information is publicly available does not relieve an entity of its

responsibility to disclose material information about the sustainability-related

risks and opportunities that could reasonably be expected to affect the entity’s

cash flows, its access to finance or cost of capital over the short, medium or

long term. These risks and opportunities are collectively referred to as

‘sustainability-related risks and opportunities that could reasonably be

expected to affect the entity’s prospects’.

Applying sources of guidance

This guidance suggests possible ways to apply some of the requirements in

IFRS S1. It does not specify additional requirements.

IFRS S1 requires an entity to refer to and consider the applicability of specified

sources of guidance. It also specifies sources of guidance an entity is

permitted, but not required, to refer to in preparing its sustainability-related

financial disclosures (see paragraphs 54–59 and Appendix C of IFRS S1). These

sources can inform the identification of:

(a)

sustainability-related risks and opportunities that could reasonably be

expected to affect the entity’s prospects; and

(b)

information about those sustainability-related risks and opportunities

that is relevant to the decision-making of users of general purpose

financial reports and faithfully represents those sustainability-related

risks and opportunities.

Paragraphs IG11–IG27 illustrate how entities can apply sources of guidance in

meeting the requirements in IFRS S1. Paragraphs IG11–IG24 focus on the SASB

Standards and paragraphs IG25–IG27 focus on the CDSB Framework

Application Guidance for Water-related Disclosures and the CDSB Framework

Application Guidance for Biodiversity-related Disclosures (collectively referred

to as ‘CDSB Framework Application Guidance’).

IG6

IG7

IG8

IG9

IG10

IFRS S1 ACCOMPANYING GUIDANCE

SASB Standards

As set out in IFRS S1, an entity is required to refer to and consider the

applicability of the disclosure topics in the SASB Standards in identifying

sustainability-related risks and opportunities that could reasonably be

expected to affect the entity’s prospects.

The SASB Standards are organised by industry. Each SASB Standard contains:

(a)

industry descriptions—which are intended to help entities identify

applicable industry guidance by describing the business models,

activities and other common features that characterise participation in

the industry;

(b)

disclosure topics—which describe specific sustainability-related risks

or opportunities associated with the activities conducted by entities

within a particular industry;

(c)

metrics—which accompany disclosure topics and are designed to,

either individually or as part of a set, provide useful information

regarding an entity’s performance for a specific disclosure topic;

(d)

technical protocols—which provide guidance on definitions, scope,

implementation and presentation of associated metrics; and

(e)

activity metrics—which quantify the scale of specific activities or

operations by an entity and are intended for use in conjunction with

metrics referred to in paragraph IG12(c) to normalise data and

facilitate comparison.

The disclosure topics and associated metrics in the SASB Standards are not

exhaustive. IFRS S1 requires an entity to present fairly all sustainability-

related risks and opportunities that could reasonably be expected to affect the

entity’s prospects.

Identifying applicable SASB Standards

Each SASB Standard includes an industry name and description. The industry

names and descriptions are intended to enable an entity to identify the SASB

Standard(s) that is likely to be applicable to its business model and associated

activities. Industry names may not precisely align with the industry an entity

considers itself to be a part of because industries can be classified and defined

according to varying conventions. Moreover, there may be activities that are

not specifically addressed by a SASB Standard for a particular industry,

although it is likely that those activities, or at least similar activities, are

addressed in other SASB Standards.

In order to consider applicable SASB Standards, it is important for an entity to

understand the activities that a particular SASB Standard covers. Each SASB

Standard summarises the business it covers in an ‘Industry Description’

section.

IG11

IG12

IG13

IG14

IG15

IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

RELATED FINANCIAL INFORMATION—JUNE 2023

Some entities might find that their business models and activities are closely

aligned with the industry description of a single SASB Standard. If so, an

entity might need only to refer to the single applicable SASB Standard (see

paragraphs IE3–IE8). Other entities might need to refer to and consider the

applicability of more than one SASB Standard to help them identify

sustainability-related risks and opportunities associated with their activities

(see paragraphs IE9–IE15). Such entities might include those with hybrid or

complex business models whose activities span a wider array of activities than

reflected in any one SASB Standard.

Disclosure topics

After identifying the SASB Standard(s) most closely aligned with the entity’s

activities, an entity next considers the applicability of the disclosure topics

contained in the identified SASB Standard(s) to the entity’s activities. The

disclosure

topics

describe

specific

sustainability-related

risks

and

opportunities associated with the activities conducted by entities within a

particular industry. These disclosure topics are intended to enable entities to

consistently identify sustainability-related risks and opportunities based on

their business model and activities.

For example, an entity that conducts meat, poultry and dairy operations

would refer to and consider the applicability of the disclosure topics in the

Meat, Poultry & Dairy SASB Standard. In considering the applicability of the

SASB Standard for this industry, an entity might conclude that the disclosure

topics in that SASB Standard are applicable in the entity’s circumstances,

including disclosure topics such as:

(a)

food safety; and

(b)

workforce health & safety.

Therefore, the entity could use the disclosure topics in this SASB Standard—

including, but not limited to the disclosure topics listed in paragraph IG18—to

inform its identification of sustainability-related risks and opportunities, in

accordance with paragraph 55 of IFRS S1. Specifically, applying those

disclosure topics, the entity could explain that a failure to maintain the

quality and safety of its product might result in costly recalls, harm the

reputation of its brand, lead to fines, reduce its revenues and increase

regulatory scrutiny, including the imposition of trade restrictions. The entity

could also use the disclosure topics to disclose information required by

paragraph 33 of IFRS S1 about how it manages the identified risks, for

example, information about the robust workforce safety practices to avoid

reputational

impairment,

costly

turnover,

low

worker

morale

and

productivity, risks associated with potential liability for injuries, associated

healthcare and workers’ compensation costs.

An entity could repeat this approach for each of the applicable disclosure

topics. The SASB Standards inform the identification of sustainability-related

risks and opportunities of a typical entity within a given industry.

Consequently, in some cases the SASB Standards might:

IG16

IG17

IG18

IG19

IG20

IFRS S1 ACCOMPANYING GUIDANCE

(a)

include disclosure topics that would not result in useful information

for users of general purpose financial reports for every entity within a

given industry; and

(b)

not include every disclosure topic that would result in useful

information.

In some cases, an entity might conclude that a disclosure topic would not

result in useful information because of the entity’s business model. That

might be the case, for example, if the entity does not engage in activities that

are covered by that disclosure topic. Conversely, an entity might also need to

consider additional sources of guidance specified in paragraph 55(b) of IFRS S1

to identify sustainability-related risks or opportunities that could reasonably

be expected to affect the entity’s prospects.

Metrics

In the absence of an IFRS Sustainability Disclosure Standard that specifically

applies to a sustainability-related risk or opportunity, IFRS S1 requires an

entity to refer to and consider the applicability of the metrics associated with

the disclosure topics included in the SASB Standards. An entity might

conclude that metrics specified in the SASB Standards are not applicable in the

entity’s circumstances.

Hypothetically, a meat, poultry and dairy entity might refer to and consider

the applicability of the following metrics included in the Meat, Poultry & Dairy

SASB Standard:

(a)

food safety:

(i)

FB-MP-250a.1—Global Food Safety Initiative (GFSI) audit (1) non-

conformance rate and (2) associated corrective action rate for (a)

major and (b) minor non-conformances;

(ii)

FB-MP-250a.2—Percentage of supplier facilities certified to a

Global Food Safety Initiative (GFSI) food safety certification

program;

(iii)

FB-MP-250a.3—(1) Number of recalls issued and (2) total weight

of products recalled; and

(iv)

FB-MP-250a.4—Discussion of markets that ban imports of the

entity’s products; and

(b)

workforce health & safety:

(i)

FB-MP-320a.1—(1) Total recordable incident rate (TRIR) and

(2) fatality rate; and

(ii) FB-MP-320a.2—Description of efforts to assess, monitor, and mitigate acute and chronic respiratory health conditions.

IG21 IG22 IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

Each of these metrics is supported by technical protocols that provide detailed guidance on definitions, scope, implementation and presentation. For example, in applying the accompanying technical protocols, the hypothetical meat, poultry and dairy entity would disclose information related to workforce health and safety for all of its workers, regardless of their location and type of employment, such as full-time, part-time, direct, contract,

executive, labour, salary, hourly or seasonal. The entity might disclose this information to comply with the requirement in paragraph 32(a) of IFRS S1 to describe the effects of workforce health and safety-related risks on its business model and its value chain. Furthermore, the entity might disaggregate this information—for example, by location of operations—to disclose information in accordance with the requirement in paragraph 32(b) of IFRS S1 to describe where in the entity’s business model and value chain workforce health and safety-related risks are concentrated. The technical protocols may also serve as criteria against which the disclosed information can be verified.

The accompanying technical protocols would also guide the hypothetical entity in supplementing the metrics with appropriate context—for example, a discussion of notable recalls, including information related to the cause,

amount, remediation cost, nature (voluntary or involuntary), associated corrective actions and other significant outcomes related to the recall, such as legal proceedings or consumer illness. The entity might disclose this information to comply with the requirements in paragraph 35 of IFRS S1 to disclose quantitative and qualitative information about the current and anticipated financial effects of food safety-related risks on its financial position, performance and cash flows.

CDSB Framework Application Guidance As set out in IFRS S1, an entity may refer to and consider the applicability of the CDSB Framework Application Guidance in identifying sustainability-

related risks and opportunities that could reasonably be expected to affect the entity's prospects (see paragraph 55 of IFRS S1). In the absence of an IFRS Sustainability Disclosure Standard that specifically applies to a sustainability-

related risk or opportunity, an entity may refer to and consider the applicability of the CDSB Framework Application Guidance in identifying information that is relevant to the decision-making of users of general purpose financial reports and faithfully represents the sustainability-related risk or opportunity (see paragraphs 57–58 of IFRS S1).

The CDSB Framework Application Guidance can support entities in identifying water- and biodiversity-related risks and opportunities. For example, the CDSB Framework Application Guidance on Biodiversity-related Disclosures identifies potential physical biodiversity-related risks such as reduction in soil fertility,

reduction in pollination for crop production and reduced availability of fish stocks. Similarly, the CDSB Framework Application Guidance on Water-related Disclosures identifies potential water-related opportunities such as improved water efficiency, development of new products and services, and conservation and restoration of ecosystems through engagement and collaboration with stakeholders. In applying the requirement in paragraph 21 of IFRS S1 on IG23 IG24 IG25 IG26 IFRS S1 ACCOMPANYING GUIDANCE© IFRS Foundation 9

connected information, the CDSB Framework Application Guidance explains how water- and biodiversity-related risks might be connected to other sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s prospects; for example, water-related risks, such as more frequent flooding, are often inherently linked to climate-related risks.

An entity might have identified water- or biodiversity-related risks and opportunities in accordance with the SASB Standards, the CDSB Framework Application Guidance or other sources of guidance in accordance with paragraph 55 of IFRS S1. In the absence of a specifically applicable IFRS Sustainability Disclosure Standard, the entity may consider the applicability of the CDSB Framework Application Guidance in identifying information to be provided, including metrics, about the water- or biodiversity-related risks or opportunities that could reasonably be expected to affect an entity’s prospects.

An entity might consider the CDSB Framework Application Guidance in applying the core content requirements in paragraphs 25–53 of IFRS S1, for example:(a) Governance—in providing disclosures on governance relating to water-

related risks and opportunities, the CDSB Framework Application Guidance on Water-related Disclosures suggests an entity might provide information about how water policies, strategy and information are delegated to management. In relation to collaboration with stakeholders to achieve effective water management, the guidance also suggests an entity might provide information about whether there are specific bodies, individuals or mechanisms located in areas that are affected by significant water loss whose function is to ensure compliance with water-related regulation and engagement with stakeholders.

(b) Strategy—in providing disclosures on strategy relating to biodiversity-

related risks and opportunities, the CDSB Framework Application Guidance on Biodiversity-related Disclosures suggests an entity might provide, for example, information about the geographic-specificity of biodiversity-related risks and opportunities and how those risks and opportunities may vary over the short, medium and long term. The guidance also suggests the type of quantitative and qualitative information an entity might consider providing in accordance with paragraphs 34–40 of IFRS S1, for example, the operational expenses,

cost savings and revenue associated with biodiversity management,

such as information about remediation costs or provisions in the case of accidents such as polluting spills, costs of staff training and revenue from biodiversity-efficient products and services.

(c) Metrics and targets—the CDSB Framework Application Guidance on Biodiversity-related Disclosures provides examples of common biodiversity metrics such as concentrations of key pollutants in wastewater, the volume of timber and non-timber forest products harvested and areas of forest, grassland or wetland converted due to urbanisation. Due to changes in biodiversity over time, the guidance suggests an entity provides information about the time frames it has IG27 IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

set for targets. The guidance also discusses targets tailored to specific locations due to geographical variation in biodiversity priorities, as well as differing legal and regulatory requirements.

Illustrative Examples These examples accompany, but are not part of, IFRS S1. They illustrate aspects of IFRS S1 but are not intended to provide interpretative guidance.

These examples portray hypothetical situations illustrating how an entity might apply some of the requirements in IFRS S1 on the basis of the limited facts presented. The analysis in each example is not intended to represent the only manner in which the requirements could be applied, nor are the examples intended to apply only to the specific industries illustrated.

Although some aspects of the examples may be present in actual fact patterns,

an entity should evaluate all of the relevant facts and circumstances of a particular fact pattern when applying IFRS S1.

SASB Standards Examples 1 and 2 illustrate how an entity might apply the requirements related to sources of guidance. Those requirements include:(a) to refer to and consider the applicability of the disclosure topics in the SASB Standards (see paragraph 55(a) of IFRS S1);

(b) to refer to and consider the applicability of the metrics associated with the disclosure topics included in the

SASB

Standards (see paragraph 58(a) of IFRS S1);

(c) to identify the specific standards, pronouncements, industry practice and other sources of guidance that the entity has applied in preparing its sustainability-related financial disclosures, including, if applicable,

identifying the disclosure topics in the SASB Standards (see paragraph 59(a) of IFRS S1);

(d) to identify the industry(s) specified in the IFRS Sustainability Disclosure Standards, the SASB Standards or other sources of guidance relating to a particular industry(s) that the entity has applied in preparing its sustainability-related financial disclosures, including in identifying applicable metrics (see paragraph 59(b) of IFRS S1); and (e) to identify the source and metric taken if an entity discloses a metric from a source other than IFRS Sustainability Disclosure Standards (see paragraph 49 of IFRS S1).

Example 1—An entity with a single line of business Entity Y is a regional passenger airline company. In identifying sustainability-

related risks and opportunities that could reasonably be expected to affect its prospects, Entity Y is required to apply IFRS Sustainability Disclosure Standards in accordance with paragraph 54 of IFRS S1. In addition to applying IFRS Sustainability Disclosure Standards, Entity Y is required to refer to and consider the applicability of the disclosure topics in the SASB Standards.

Entity Y concludes that its business model and activities most closely align with the Airlines SASB Standard.

IE1 IE2 IE3 IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

Entity Y applies IFRS S2 Climate-related Disclosures and identifies climate-related risks or opportunities that could reasonably be expected to affect its prospects.

In addition, Entity Y refers to and considers the applicability of the disclosure topics in the Airlines SASB Standard in accordance with paragraph 55(a) of IFRS S1. Entity Y concludes that all four disclosure topics in the Airlines SASB Standard are applicable to its activities and uses those disclosure topics to inform its identification of sustainability-related risks and opportunities that could reasonably be expected to affect its prospects.

In disclosing information about its sustainability-related risks and opportunities, Entity Y applies IFRS Sustainability Disclosure Standards that specifically apply to its identified sustainability-related risks and opportunities. For example, Entity Y applies IFRS S2 to disclose information about its greenhouse gas emissions. In the absence of an IFRS Sustainability Disclosure Standard that specifically applies to the sustainability-related risks and opportunities which Entity Y has identified, Entity Y refers to and considers the applicability of the metrics associated with the applicable disclosure topics in the Airlines SASB Standard. Entity Y concludes that applying these metrics will provide information that is relevant to the decision-making of users of general purpose financial reports and faithfully represents the sustainability-related risks and opportunities that it has identified. For example, the metrics associated with the ‘Accident & Safety Management’ disclosure topic include:(a) TR-AL-540a.1—Description of implementation and outcomes of a Safety Management System;

(b) TR-AL-540a.2—Number of aviation accidents; and (c) TR-AL-540a.3—Number of governmental enforcement actions of aviation safety regulations.

In identifying information to provide, Entity Y considers the applicability of the technical protocols accompanying the metrics. For example, while disclosing a description of the implementation and outcomes of a Safety Management System, Entity Y might describe any actions or measures it has implemented to mitigate any safety risks and hazardous situations that it has identified. These actions or measures include, for example, particular changes in controls, operations, management, processes, products, business partners,

training or technology.

Entity Y is required to apply the requirements relating to ‘core content’ in IFRS S1. Entity Y considers the disclosure topics, metrics and associated technical protocols in the Airlines SASB Standard when providing information required by IFRS S1, including information relating to strategy and metrics and targets.

Entity Y discloses that it applied the disclosure topics and metrics in the Airlines SASB Standard in preparing its sustainability-related financial disclosures, in accordance with paragraphs 49 and 59 of IFRS S1.

Example 2—A large conglomerate with diverse activities Entity A is a large conglomerate with diverse activities. Entity A produces electrical and industrial equipment for use in a range of industries. In addition to IFRS Sustainability Disclosure Standards, Entity A is required to refer to and consider the applicability of the disclosure topics in the SASB Standards in identifying its sustainability-related risks and opportunities.

Because of the wide-ranging nature of its activities, Entity A begins its consideration of the applicability of the SASB Standards by considering the various sectors into which the SASB Standards are grouped. Entity A conducts activities in industries in the Health Care, Resource Transformation and Infrastructure sectors, and in some cases owns particular parts of its production process rather than relying on suppliers. It also has some activities in the Transportation and Consumer Goods sectors.

Entity A refers to and considers the applicability of the disclosure topics in the SASB Standards. Entity A concludes that eight SASB Standards are applicable to its business model and activities. Entity A considers the disclosure topics in the eight standards. Although Entity A observes that it engages in activities related to all of those disclosure topics, Entity A concludes that some of those disclosure topics are not applicable in the entity’s circumstances. For example,

Entity A concludes that the sustainability-related risk or opportunity characterised by a particular disclosure topic could not reasonably be expected to affect its prospects over the short, medium or long term because the disclosure topic relates to activities that are insignificant for the entity.

Entity A concludes that most of the disclosure topics in the SASB Standards it has considered are applicable to its significant activities. In some cases where it has less significant activities, it finds that only particular disclosure topics in those related industries are applicable. For example, Entity A concludes that most of the disclosure topics that it considered for its transportation and retail businesses are not applicable, due to the relatively small size of these businesses. However, Entity A concludes that incidents related to safety and labour practices in these businesses, although unlikely to have a large effect on its cash flows in the short term, could have a major effect on its reputation over the medium and long term. This reputational risk could affect the performance of its larger businesses, including its ability to attract and retain talent, over a medium- and long-term time horizon, which could be reasonably expected to affect its medium- and long-term cash flows, access to finance and cost of capital. Thus, Entity A considers these topics in identifying sustainability-related risks and opportunities that could reasonably be expected to affect its prospects.

IE9 IE10 IE11 IFRS S1 GENERAL REQUIREMENTS FOR DISCLOSURE OF SUSTAINABILITY-

In the absence of an IFRS Sustainability Disclosure Standard that specifically applies to the sustainability-related risks and opportunities that Entity A has identified, Entity A refers to and considers the applicability of the metrics associated with applicable disclosure topics. In identifying applicable metrics,

Entity A considers whether the metric will provide information that is relevant to the decision-making of users of general purpose financial reports and that faithfully represents the sustainability-related risks and opportunities that it has identified.

In preparing its sustainability-related financial disclosures, Entity A concludes that some information should be aggregated to avoid obscuring material information with immaterial information. For example, it concludes that information about its strategy for sourcing critical materials for devices produced by its various activities should be aggregated because the entity manages the supplier relationships for those critical materials centrally.

In contrast, for other types of information, Entity A concludes aggregation would result in obscuring material information. For example, it concludes that information about the number of recalls related to its equipment in the Health Care sector should not be aggregated with information about the number of recalls related to its equipment in the Consumer Goods sector because the technologies, production processes and markets for each sector differ. Therefore, there are also varied reasons for the occurrence of product recalls in these sectors.

Entity A discloses information about the SASB Standards it has applied in preparing its sustainability-related financial disclosures, in accordance with paragraphs 49 and 59 of IFRS S1, including identifying the specific SASB Standards, disclosure topics and metrics it applied. Entity A also provides information to enable users of general purpose financial reports to understand the judgements that it has made in the process of preparing its sustainability-

related financial disclosures and that have the most significant effect on the information included in those disclosures in accordance with paragraph 74 of IFRS S1.

16© IFRS Foundation Columbus Building 7 Westferry Circus Canary Wharf London E14 4HD, UK Tel+44 (0) 20 7246 6410 Email sustainability_licensing@ifrs.org ifrs.org International Financial Reporting Standards®, IFRS Foundation®,

IFRS®, IAS®, IFRIC®, SIC®, IASB®, ISSBTM, IFRS for SMEs®