issb-2023-a-ifrs-s1-general-requirements-for-disclosure-of-sustainability-relate

An entity shall reassess the scope of all affected sustainability-related risks and opportunities throughout its value chain upon the occurrence of:

• A significant event
• A significant change in circumstances

Examples include changes in the entity's value chain, business model, activities, corporate structure, or exposure to sustainability-related risks and opportunities.

An entity is required to disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's prospects. Materiality is judged based on whether omitting, misstating, or obscuring that information could reasonably influence the decisions of primary users.

The objective of IFRS S1 is to establish general requirements for the disclosure of sustainability-related financial information, ensuring that such disclosures are relevant, reliable, and comparable across entities.

In the context of IFRS S1, 'materiality' refers to the principle that information is material if omitting, misstating, or obscuring it could reasonably be expected to influence decisions that primary users make on the basis of the sustainability-related financial information.

The general requirements for the timing of reporting under IFRS S1 include:

1. Regular intervals for reporting sustainability-related financial information.
2. Alignment with the reporting cycle of the entity's financial statements.
3. Consideration of significant events that may impact sustainability disclosures.

'Judgements' in the IFRS S1 framework are significant as they involve the decisions made by management in applying the standards, which can affect the reported sustainability-related financial information. These judgements must be disclosed to provide transparency and context to users.

The main purpose of IFRS S1 is to provide a framework for the disclosure of sustainability-related financial information, ensuring that all relevant information is presented in a consistent and comparable manner.

The paragraphs in bold type state the main principles of the IFRS S1 Standard.

The IFRS S1 Standard should be read in the context of its objective and the Basis for Conclusions, ensuring that the principles and definitions are understood within that framework.

Definitions of terms used in IFRS S1 can be found in Appendix A and in other IFRS Sustainability Disclosure Standards.

The objective 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 related to providing resources to the entity.

It is useful because an entity's ability to generate cash flows over the short, medium, and long term is linked to its interactions with stakeholders, society, the economy, and the natural environment throughout its value chain.

It requires disclosure of all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital over the short, medium, or long term.

The scope includes preparing and reporting sustainability-related financial disclosures in accordance with IFRS Sustainability Disclosure Standards, excluding risks and opportunities that could not reasonably be expected to affect an entity's prospects.

It prescribes how an entity prepares and reports its sustainability-related financial disclosures, setting out general requirements for the content and presentation to ensure the information is useful to primary users.

Yes, entities may apply IFRS Sustainability Disclosure Standards irrespective of whether their financial statements are prepared in accordance with IFRS Accounting Standards or other generally accepted accounting principles (GAAP).

The fundamental qualitative characteristics of useful sustainability-related financial information are relevance and faithful representation. Enhancing characteristics include comparability, verifiability, timeliness, and understandability.

Fair presentation requires a complete set of sustainability-related financial disclosures to fairly present all sustainability-related risks and opportunities that could reasonably affect an entity's prospects, ensuring that the information is relevant and faithfully represented.

Materiality is defined as an entity-specific aspect of relevance based on the nature or magnitude, or both, of the items to which the information relates, in the context of the entity's sustainability-related financial disclosures.

For fair presentation, an entity must disclose information that is comparable, verifiable, timely, and understandable, and provide additional information if compliance with the IFRS Sustainability Disclosure Standards is insufficient for users to understand the effects of sustainability-related risks and opportunities.

Applying IFRS Sustainability Disclosure Standards is presumed to result in sustainability-related financial disclosures that achieve fair presentation.

Material information is defined as information that, if omitted, misstated, or obscured, could reasonably be expected to influence decisions made by primary users of general purpose financial reports, including financial statements and sustainability-related disclosures.

An entity shall disclose material information about sustainability-related risks and opportunities that could reasonably be expected to affect the entity's prospects.

An entity's sustainability-related financial disclosures shall be for the same reporting entity as the related financial statements.

An entity must provide information that enables users to understand:

1. Connections between various sustainability-related risks and opportunities affecting the entity's prospects.
2. Connections within its sustainability-related financial disclosures, such as governance, strategy, risk management, and metrics and targets.
3. Connections across its sustainability-related disclosures and other general purpose financial reports, including related financial statements.

Data and assumptions used in preparing sustainability-related financial disclosures must be consistent with those used in preparing related financial statements, considering the requirements of IFRS Accounting Standards or other applicable GAAP.

The objective is to enable users of general purpose financial reports to understand the governance processes, controls, and procedures an entity uses to monitor, manage, and oversee sustainability-related risks and opportunities.

An entity must disclose information about the governance body or individual responsible for oversight, including:

• Identification of the body or individual.
• How responsibilities for sustainability-related risks and opportunities are reflected in terms of reference, mandates, role descriptions, and related policies applicable to that body or individual.

A body or individual should evaluate:

1. Current Skills: Assess existing skills and competencies within the organization.
2. Development Plans: Identify plans for developing necessary skills and competencies.
3. Training Programs: Implement training programs to enhance knowledge on sustainability-related risks and opportunities.

The body or individual should establish a regular reporting schedule to ensure they are informed about sustainability-related risks and opportunities. This could include:

• Monthly Updates: Regular updates on emerging risks.
• Quarterly Reviews: Comprehensive reviews of sustainability strategies and outcomes.
• Annual Assessments: In-depth assessments of long-term sustainability risks and opportunities.

Management's role includes:

1. Delegation: Assigning oversight to specific management-level positions or committees.
2. Integration: Ensuring that controls and procedures for sustainability oversight are integrated with other internal functions.
3. Monitoring: Utilizing controls to monitor and manage sustainability-related risks effectively.

An entity should disclose:

• Identified Risks: Specific sustainability-related risks and opportunities that may impact the entity.
• Business Model Effects: Current and anticipated effects on the business model and value chain.
• Strategic Implications: How these risks and opportunities influence the entity's strategy and decision-making processes.

An entity should disclose the effects of sustainability-related risks and opportunities on its financial position, financial performance, and cash flows for the reporting period, as well as their anticipated effects over the short, medium, and long term. This includes how these risks and opportunities have been factored into the entity's financial planning.

An entity should explain how it defines 'short term', 'medium term', and 'long term', and how these definitions are linked to the planning horizons used for strategic decision-making. These time horizons can vary based on industry-specific characteristics and typical planning practices.

An entity must disclose the current and anticipated effects of sustainability-related risks and opportunities on its business model and value chain, including a description of where these risks and opportunities are concentrated, such as geographical areas, facilities, and types of assets.

An entity must disclose:

1. How it has responded to and plans to respond to sustainability-related risks and opportunities in its strategy and decision-making.
2. Progress against plans disclosed in previous reporting periods, including both quantitative and qualitative information.
3. Trade-offs considered between sustainability-related risks and opportunities, such as environmental impacts versus employment opportunities.

An entity must disclose:

1. Current financial effects of sustainability-related risks and opportunities on its financial position, performance, and cash flows for the reporting period.
2. Anticipated effects of sustainability-related risks and opportunities on its financial position, performance, and cash flows over the short, medium, and long term, including how these factors are integrated into financial planning.

An entity must provide:

1. Information on how sustainability-related risks and opportunities have affected its financial position, performance, and cash flows for the reporting period.
2. Identification of sustainability-related risks and opportunities with a significant risk of material adjustment to asset and liability carrying amounts in the next annual reporting period.
3. Expectations on how its financial position will change over the short, medium, and long term based on its strategy to manage sustainability-related risks and opportunities.

An entity should disclose plans for:

1. Capital expenditure
2. Major acquisitions and divestments
3. Joint ventures
4. Business transformation
5. Innovation
6. New business areas
7. Asset retirements This includes plans that the entity is not contractually committed to.

An entity should:

1. Use all reasonable and supportable information available at the reporting date without undue cost or effort.
2. Use an approach that aligns with the skills, capabilities, and resources available for preparing those disclosures.

An entity is not required to provide quantitative information if:

1. The effects are not separately identifiable.
2. The level of measurement uncertainty is so high that the resulting information would not be useful.
3. The entity lacks the skills, capabilities, or resources to provide that information.

The entity must:

1. Explain why it has not provided quantitative information.
2. Provide qualitative information about the financial effects, including identifying line items, totals, and subtotals within the related financial statements that are likely to be affected by the sustainability-related risk or opportunity.

An entity must disclose information that includes a qualitative and, if applicable, quantitative assessment of the resilience of its strategy and business model in relation to sustainability-related risks, including details on how the assessment was carried out and its time horizon.

The objective is to enable users to understand an entity's processes to identify, assess, prioritize, and monitor sustainability-related risks and opportunities, and to assess the entity's overall risk profile and risk management process.

An entity should disclose information about the processes and related policies used to identify, assess, prioritize, and monitor sustainability-related risks, including:

1. Inputs and parameters used (e.g., data sources, scope of operations).
2. Use of scenario analysis for risk identification.
3. Assessment of the nature, likelihood, and magnitude of risks.
4. Prioritization of sustainability-related risks relative to other types of risk.

An entity should disclose the processes it uses to:

1. Identify sustainability-related risks and opportunities.
2. Assess sustainability-related risks and opportunities.
3. Prioritize sustainability-related risks and opportunities.
4. Monitor sustainability-related risks and opportunities.

Additionally, the entity should explain how these processes are integrated into its overall risk management process.

The objective is to enable users of general purpose financial reports to understand an entity's performance in relation to its sustainability-related risks and opportunities, including:

• Progress towards any targets the entity has set.
• Any targets the entity is required to meet by law or regulation.

An entity must disclose:

1. Metrics required by an applicable IFRS Sustainability Disclosure Standard.
2. Metrics the entity uses to measure and monitor:
   • The sustainability-related risk or opportunity.
   • Its performance in relation to that risk or opportunity, including progress towards any targets set and any legal or regulatory targets.

In the absence of an applicable IFRS Sustainability Disclosure Standard, the entity shall apply paragraphs 57-58 to identify applicable metrics for the sustainability-related risk or opportunity.

If an entity discloses a metric from a non-IFRS source, it must identify:

• The source of the metric.
• The specific metric taken from that source.

If an entity develops its own metric, it must disclose:

1. How the metric is defined.
2. Whether it is derived by adjusting a metric from another source, and if so:
   • Which source it is derived from.
   • How the entity's metric differs from the specified metric in that source.

An entity must disclose:

1. Type of Metric: Whether it is an absolute measure, relative measure, or qualitative measure (e.g., RAG-status).
2. Validation: Whether the metric is validated by a third party and the identity of that party.
3. Calculation Method: The method used to calculate the metric, including inputs, limitations, and significant assumptions.

For each target, an entity must disclose:

1. Metric Used: The metric used to set and monitor the target.
2. Specific Target: The quantitative or qualitative target set or required.
3. Target Period: The period over which the target applies.
4. Base Period: The base period from which progress is measured.
5. Milestones: Any milestones and interim targets.
6. Performance Analysis: Performance against each target and analysis of trends.
7. Revisions: Any revisions to the target and explanations for those revisions.

The definition and calculation of metrics must be consistent over time. If a metric is redefined or replaced, the entity must apply the relevant standards for such changes.

An entity should apply IFRS Sustainability Disclosure Standards and also consider the applicability of disclosure topics in the SASB Standards, noting that some topics may not be applicable to the entity's circumstances.

An entity may refer to:

1. CDSB Framework Application Guidance for Water-related and Biodiversity-related Disclosures.
2. The most recent pronouncements of other standard-setting bodies designed for general purpose financial reports.
3. Sustainability-related risks and opportunities identified by entities in the same industry or geographical region.

An entity shall apply the IFRS Sustainability Disclosure Standard that specifically applies to the sustainability-related risk or opportunity in question.

In the absence of a specific IFRS Standard, an entity shall apply judgement to identify information that:

1. Is relevant to the decision-making of users of general purpose financial reports.
2. Faithfully represents the sustainability-related risk or opportunity.

An entity should refer to the metrics associated with the disclosure topics included in the SASB Standards. However, the entity might conclude that these metrics are not applicable to its circumstances.

An entity may consider:

1. CDSB Framework Application Guidance.
2. The most recent pronouncements of other standard-setting bodies.
3. Information and metrics disclosed by entities in the same industry or geographical region, as long as they do not conflict with IFRS Sustainability Disclosure Standards.

An entity must identify:

1. The specific standards, pronouncements, industry practices, and other sources of guidance applied in preparing its sustainability-related financial disclosures, including any relevant disclosure topics in the SASB Standards.
2. The industry(s) specified in the IFRS Sustainability Disclosure Standards, SASB Standards, or other guidance sources that have been applied in preparing its disclosures, including applicable metrics.

An entity is required to provide disclosures as part of its general purpose financial reports. This may include locations such as management commentary or similar reports, which are often required in many jurisdictions.

Yes, an entity may disclose sustainability-related financial information in the same location as information required by regulators, but it must ensure that the sustainability-related disclosures are clearly identifiable and not obscured by the additional information.

If an entity includes information by cross-reference to another report, it must apply the requirements specified in paragraphs B45-B47 of the IFRS Sustainability Disclosure Standards.

An entity shall report its sustainability-related financial disclosures at the same time as its related financial statements, covering the same reporting period.

The entity shall disclose:

1. The period covered by the sustainability-related financial disclosures.
2. The reason for using a longer or shorter period.
3. That the amounts disclosed are not entirely comparable.

The entity shall update disclosures that relate to those conditions in light of the new information before the sustainability-related financial disclosures are authorised for issue.

An entity shall disclose comparative information for the preceding period for all amounts disclosed in the reporting period, and for narrative information if it is useful for understanding the current disclosures.

An entity must make an explicit and unreserved statement of compliance, ensuring that all requirements of IFRS Sustainability Disclosure Standards are met without exception.

An entity can be relieved from disclosing information if law or regulation prohibits the disclosure, or if the information is commercially sensitive as described in the Standard.

An entity must disclose judgements that have the most significant effect on the information included in its sustainability-related financial disclosures, excluding those involving estimations of amounts.

Examples include:

1. Identifying sustainability-related risks and opportunities that could affect the entity's prospects.
2. Determining which sources of guidance to apply.
3. Identifying material information to include in the disclosures.

An entity must disclose information to help users understand the most significant uncertainties affecting the amounts reported. This includes identifying amounts with high measurement uncertainty and providing details about:

1. Sources of measurement uncertainty - such as dependence on future events, measurement techniques, or data quality from the value chain.
2. Assumptions, approximations, and judgements made in measuring the amount.

Measurement uncertainty arises when amounts cannot be measured directly and must be estimated. This uncertainty can involve assumptions about future events with uncertain outcomes. However, reasonable estimates can still provide useful information if they are accurately described and explained, even if there is a high level of uncertainty.

The complexity of judgements in sustainability-related financial disclosures increases with:

1. The number of variables involved.
2. The assumptions made during the estimation process.
3. The subjectivity and complexity of the judgements required, which in turn increases the uncertainty affecting the reported amounts.

The type and extent of information an entity might need to disclose vary based on:

• The nature of the reported amount.
• The sources of uncertainty.
• Factors contributing to the uncertainty.
• Other relevant circumstances.

Examples include details about the sources of measurement uncertainty and the assumptions made in the estimation process.

The key components include:

1. Nature of the assumption or other source of measurement uncertainty.
2. Sensitivity of the disclosed amount to the methods, assumptions, and estimates underlying its calculation, including reasons for the sensitivity.
3. Expected resolution of an uncertainty and the range of reasonably possible outcomes for the disclosed amount.
4. Explanation of changes made to past assumptions concerning the disclosed amount if the uncertainty remains unresolved.

An entity shall correct material prior period errors by:

1. Restating the comparative amounts for the prior period(s) disclosed unless it is impracticable to do so.
2. Ensuring that the errors are identified as omissions or misstatements that arose from a failure to use or misuse of reliable information available at the time of the disclosures.

Corrections of errors are distinguished from changes in estimates by:

• Errors: These are omissions or misstatements in prior period disclosures that arise from not using or misusing reliable information.
• Estimates: These are approximations that may need to be revised as additional information becomes known, not necessarily due to an error in the prior disclosures.

A business model is an entity's system of transforming inputs through its activities into outputs and outcomes that aims to fulfill the entity's strategic purposes and create value for the entity, thereby generating cash flows over the short, medium, and long term.

Material information is information that, if omitted, misstated, or obscured, could reasonably be expected to influence decisions made by primary users of general purpose financial reports, which include financial statements and sustainability-related financial disclosures.

The primary users of general purpose financial reports are existing and potential investors, lenders, and other creditors.

General purpose financial reports provide financial information about a reporting entity that is useful to primary users in making decisions related to providing resources to the entity, including decisions about buying, selling, or holding equity and debt instruments, providing or selling loans and other forms of credit, or exercising rights to influence the entity's management actions.

A requirement is described as impracticable when an entity cannot apply it after making every reasonable effort to do so.

IFRS Sustainability Disclosure Standards are standards issued by the International Sustainability Standards Board that guide entities in sustainability-related financial disclosures.

A disclosure topic is a specific sustainability-related risk or opportunity based on the activities conducted by entities within a particular industry, as set out in an IFRS Sustainability Disclosure Standard or a SASB Standard.

Scenario analysis is a process for identifying and assessing a potential range of outcomes of future events under conditions of uncertainty.

Sustainability-related financial disclosures provide information about a reporting entity's sustainability-related risks and opportunities that could affect its cash flows, access to finance, or cost of capital over various time frames. This includes details about governance, strategy, risk management, and related metrics and targets.

The value chain encompasses the full range of interactions, resources, and relationships that a reporting entity uses and depends on to create its products or services. This includes operations, supply chain, marketing, distribution channels, and the regulatory environments in which the entity operates.

IFRS S1 requires an entity to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital over the short, medium, or long term.

Sustainability-related risks and opportunities arise from the interactions between the entity and its stakeholders, society, the economy, and the natural environment throughout the entity's value chain. These interactions can be direct or indirect and result from the entity's business model and the external environment in which it operates.

An entity's business model can create sustainability-related risks and opportunities by affecting and being affected by resources such as natural resources. For example, degradation of a resource can disrupt operations and negatively impact financial performance, while preservation can have positive effects.

The ability to attract and retain a specialized workforce is crucial for an entity's future success and is influenced by the entity's employment practices, such as investment in employee training and wellbeing. This relationship illustrates how the value created for others can impact the entity's own success and goals.

An entity can depend on and affect various forms of resources and relationships, including:

• Natural resources
• Manufactured resources
• Intellectual resources
• Human resources
• Social resources
• Financial resources

These can be internal (like workforce and know-how) or external (like materials and services from suppliers).

An entity's dependencies and impacts extend throughout its value chain, which includes:

• Supply and distribution channels
• Effects of consumption and disposal of products
• Sources of finance and investments, including in associates and joint ventures

This means that sustainability-related risks and opportunities faced by business partners can also expose the entity to related consequences.

An entity must use all reasonable and supportable information available at the reporting date without undue cost or effort to:

1. Identify sustainability-related risks and opportunities that could reasonably affect its prospects.
2. Determine the scope of its value chain in relation to those risks and opportunities.

Reasonable and supportable information should include:

• Factors specific to the entity
• General conditions in the external environment
• Information about past events
• Current conditions
• Forecasts of future conditions

This information helps in identifying sustainability-related risks and opportunities that could affect the entity's prospects.

Possible data sources include:

• The entity's risk management processes
• Industry and peer group experience
• External ratings, reports, and statistics

Information used in preparing financial statements, operating the business model, setting strategy, and managing risks and opportunities is considered available without undue cost or effort.

The assessment of what constitutes undue cost or effort depends on the entity's specific circumstances and requires a balanced consideration of:

• The costs and efforts for the entity
• The benefits of the resulting information for primary users

This assessment can change over time as circumstances change.

Primary users make decisions about:

1. Buying, selling, or holding equity and debt instruments.
2. Providing or selling loans and other forms of credit.
3. Exercising rights to vote on or influence the entity's management actions affecting its economic resources.

Primary users' expectations about returns depend on:

• The amount, timing, and uncertainty of future net cash inflows to the entity.
• The assessment of stewardship of the entity's economic resources by its management and governing body.

Materiality judgements are specific to an entity and this Standard does not specify thresholds for materiality. It requires entities to identify material information based on the specific sustainability-related risks or opportunities relevant to them.

To identify material information, an entity should:

1. Start with the requirements of the IFRS Sustainability Disclosure Standard applicable to the specific sustainability-related risk or opportunity.
2. If no specific standard applies, refer to the sources of guidance specified in paragraphs 57-58 for relevant information and metrics.

The intended primary users are those with reasonable knowledge of business and economic activities who review and analyze information diligently. They may sometimes need assistance from advisers to understand sustainability-related financial information.

An entity should consider both quantitative and qualitative factors, including:

• The magnitude of the effect of a sustainability-related risk or opportunity.
• The nature of the effect on the entity's sustainability-related financial disclosures.

An entity should consider:

1. The potential effects of the events on the amount, timing, and uncertainty of future cash flows (the possible outcome).
2. The range of possible outcomes and the likelihood of those outcomes within that range.

Information about low-probability and high-impact outcomes may be considered material if:

• The potential effects are significant.
• The event is likely to occur.
• It can be material either individually or in combination with other similar outcomes, such as multiple sources of risk causing supply chain disruption.

Information about a possible future event is usually less likely to be judged material if:

• The event is expected to affect cash flows only many years in the future.
• Similar effects are expected to occur sooner with other events.

An entity need not disclose information required by an IFRS Sustainability Disclosure Standard if:

• The information is not material, even if the standard lists specific requirements or describes them as minimum requirements.

An entity must disclose additional information to enable users to understand the effects of sustainability-related risks and opportunities on its cash flows, access to finance, and cost of capital over the short, medium, and long term.

An entity shall clearly identify its sustainability-related financial disclosures and distinguish them from other information, ensuring that material information is not obscured or misrepresented.

Examples include:

1. Material information not clearly distinguished from immaterial information.
2. Vague or unclear language used for material information.
3. Scattering of material information throughout disclosures.
4. Inappropriate aggregation of dissimilar information.
5. Inappropriate disaggregation of similar information.
6. Hiding material information behind immaterial information, reducing understandability.

An entity must reassess its materiality judgements at each reporting date to account for changed circumstances and assumptions, as some previously disclosed information may no longer be material, while new information may become material.

An entity must consider all facts and circumstances to decide how to aggregate and disaggregate information, ensuring that material information is not obscured by immaterial information and that dissimilar items are not inappropriately aggregated.

An entity shall not aggregate information if doing so would obscure material information. Information should be aggregated if items have shared characteristics and disaggregated if they do not, especially regarding sustainability-related risks and opportunities.

An entity can omit commercially sensitive information if: 1. The information is not publicly available. 2. Disclosure could seriously prejudice the economic benefits the entity would realize. 3. It is impossible to disclose the information in a way that meets disclosure objectives without causing serious prejudice.

If an entity omits material information due to legal or regulatory restrictions, it must identify the type of information not disclosed and explain the source of the restriction.

Law or regulation may require an entity to disclose sustainability-related information in its financial reports. In such cases, the entity can include information to meet these requirements, even if it is not material, but must ensure that this does not obscure material information.

An entity must disclose the fact that it has used the exemption and reassess, at each reporting date, whether the information qualifies for the exemption.

An entity is prohibited from using the exemption in relation to a sustainability-related risk or as a basis for broad non-disclosure of sustainability-related financial information.

Paragraph 20 requires that sustainability-related financial disclosures shall be for the same reporting entity as the related financial statements, enabling users to understand the effects of sustainability-related risks and opportunities on cash flows, access to finance, and cost of capital over different time horizons.

Connected information enables users of general purpose financial reports to understand connections between the items to which the information relates and between disclosures provided by the entity in its general purpose financial reports.

If an entity pursued a sustainability-related opportunity that resulted in increased revenue, connected information will depict the relationship between the entity's strategy and its financial performance.

The key distinctions include:

1. Governance, Strategy, and Risk Management: Disclosures must differentiate between these three areas.
2. Narrative vs. Quantitative Information: There should be a clear distinction between narrative information and quantitative information, which includes related metrics and targets as well as information in the financial statements.

An entity should integrate its disclosures on governance for sustainability-related risks and opportunities instead of providing separate disclosures for each. This integration helps in providing a cohesive understanding of how governance relates to sustainability risks and opportunities.

To provide connected information, an entity must:

1. Explain Connections: Clearly and concisely explain the connections between disclosures.
2. Avoid Duplication: Avoid unnecessary duplication of common items of information.
3. Disclose Differences: Disclose significant differences between the data and assumptions used in sustainability-related financial disclosures and those used in related financial statements.

Examples of connected information include:

1. Strategy Effects: Explaining how a strategy affects financial statements and planning.
2. Resource Use: Linking the use of natural resources or supply chain changes to sustainability-related risks and opportunities.
3. Financial Impacts: Describing how sustainability-related risks and opportunities impact financial position, performance, and cash flows over time.

An entity should explain the combined effects of its sustainability-related risks and opportunities and its strategy on its financial position, performance, and cash flows over the short, medium, and long term. For instance, it may need to discuss how decreasing demand for products due to consumer preferences for lower-carbon alternatives could lead to strategic responses like closing a factory and its implications for the workforce.

An entity should describe the alternatives it evaluated, including the trade-offs between the risks and opportunities considered in its strategy.

The cross-referenced information must be available on the same terms and at the same time as the sustainability-related disclosures, and it should not make the complete set of disclosures less understandable.

The authors take the same responsibility for the information included by cross-reference as they do for the information included directly in the reports.

Interim disclosures aim to provide updates on the latest complete set of annual disclosures, focusing on new information, events, and circumstances without duplicating previously reported information.

An entity is required to disclose comparative information for all amounts disclosed in the reporting period, as specified in paragraph 70 of the IFRS standards.

The entity shall:

1. Disclose a revised comparative amount that reflects the new information.
2. Disclose the difference between the amount disclosed in the preceding period and the revised comparative amount.
3. Explain the reasons for revising the comparative amount.

An entity need not disclose a revised comparative amount if:

1. It is impracticable to do so.
2. The metric is forward-looking, unless revising it does not involve the use of hindsight.

The entity must:

1. Disclose a revised comparative amount, unless it is impracticable to do so.
2. Explain the changes made to the metric.
3. Explain the reasons for those changes, including why the new metric provides more useful information.

The entity shall disclose a comparative amount for that new metric unless it is impracticable to do so.

An entity must disclose that it is impracticable to revise the comparative amount for the preceding period.

Material prior period errors include:

1. Mathematical mistakes
2. Mistakes in applying the definitions for metrics or targets
3. Oversights or misinterpretations of facts
4. Fraud

The entity shall disclose: (a) the nature of the prior period error; (b) the correction for each prior period disclosed, to the extent practicable; (c) if correction is impracticable, the circumstances that led to the error and how it has been corrected.

The entity shall restate the comparative information to correct the error from the earliest date practicable.

In the absence of a specific IFRS Sustainability Disclosure Standard, an entity must apply judgement to identify information that is relevant to the decision-making of users of general purpose financial reports and faithfully represents that sustainability-related risk or opportunity.

An entity may refer to the following sources of guidance:

1. Global Reporting Initiative Standards
2. European Sustainability Reporting Standards

These sources should assist the entity in meeting the objectives of the IFRS Sustainability Disclosure Standards without conflicting with them.

An entity must ensure that it does not obscure material information required by IFRS Sustainability Disclosure Standards. If the entity applies the sources of guidance without adhering to the requirements of IFRS Sustainability Disclosure Standards, it cannot make an explicit and unreserved statement of compliance with those standards.

The fundamental qualitative characteristics are relevance and faithful representation. Relevance means the information can influence decisions, while faithful representation means it accurately reflects what it purports to represent.

The enhancing characteristics are comparability, verifiability, timeliness, and understandability. These characteristics help ensure that the information is more useful to users.

Relevant sustainability-related financial information can make a difference in decisions made by primary users if it has predictive value, confirmatory value, or both. It can influence decisions even if some users are already aware of it from other sources.

Predictive value refers to the capability of sustainability-related financial information to be used as an input for predicting future outcomes. It does not need to be a direct prediction or forecast to have predictive value.

Confirmatory value in sustainability-related financial information provides feedback that can confirm or change previous evaluations, helping users assess the reliability of past predictions and decisions.

Predictive value and confirmatory value are interrelated as information that predicts future outcomes, such as greenhouse gas emissions, can also confirm or adjust past predictions, aiding in the improvement of forecasting processes.

Materiality is defined as information that, if omitted, misstated, or obscured, could reasonably influence the decisions of primary users of general purpose financial reports, making it an entity-specific aspect of relevance.

Faithful representation requires that the information is complete, neutral, and accurate, ensuring that it faithfully depicts the substance of the phenomena it represents.

A complete depiction includes all material information necessary for primary users to fully understand the sustainability-related risk or opportunity being reported.

Neutrality means that the information is presented without bias, ensuring that it is not manipulated to influence users' perceptions favorably or unfavorably, while still being relevant and capable of impacting decisions.

Neutrality in sustainability-related financial information is important as it supports the exercise of prudence. This means that opportunities should not be overstated and risks should not be understated, ensuring a balanced view of aspirations and potential obstacles.

The accuracy of sustainability-related financial information requires that:

1. Factual information is free from material error.
2. Descriptions are precise.
3. Estimates, approximations, and forecasts are clearly identified.
4. No material errors occur in the selection and application of processes for developing estimates.
5. Assertions and inputs used in estimates are reasonable and based on quality information.
6. Judgements about the future reflect both the judgements and the information on which they are based.

Comparability enhances the usefulness of sustainability-related financial information by allowing users to identify and understand similarities and differences among items. It enables users to compare:

1. Information provided by the entity in previous periods.
2. Information provided by other entities, especially those in the same industry or with similar activities.

Consistency refers to using the same approaches or methods for providing disclosures about the same sustainability-related risks and opportunities over time, while comparability is the goal of making information comparable across different entities. Consistency helps achieve comparability but is not the same as it.

Verifiability means that knowledgeable and independent observers could reach a consensus that a particular depiction is a faithful representation. It ensures that information is complete, neutral, and accurate, and can be corroborated either through the information itself or the inputs used to derive it.

Verifiability can be enhanced by:

1. Including corroborative information that can be compared with other available information about the entity or its environment.
2. Providing details about the inputs and methods of calculation used for estimates.
3. Offering information reviewed and agreed upon by the entity's board or equivalent bodies.

Forward-looking information can be supportable if it faithfully represents fact-based strategies, plans, and risk analyses. Entities must describe the underlying assumptions and methods used to produce this information, along with factors that provide evidence that it reflects actual plans or decisions made by the entity.

Timeliness refers to having information available to decision-makers in time to influence their decisions. Generally, older information is less useful, but some information may remain timely for trend assessment long after a reporting period ends.

Sustainability-related financial disclosures need to:

1. Avoid generic information ('boilerplate') that is not specific to the entity.
2. Avoid unnecessary duplication of information in general purpose financial reports.
3. Use clear language and structured sentences and paragraphs.

Clarity can be enhanced by:

1. Distinguishing between developments in the reporting period and 'standing' information that remains unchanged.
2. Separately describing features of sustainability-related governance and risk management processes that have changed since the previous reporting period.

Disclosures are considered concise if they include only material information. Any immaterial information must be presented in a way that does not obscure material information, ensuring clarity and focus on what is important.

An entity should present complex sustainability-related risks and opportunities as clearly as possible. However, such information should not be excluded from general purpose financial reports, as excluding it would render those reports incomplete and potentially misleading.

For sustainability-related financial information to be coherent, it must be presented in a way that explains the context and connections between related items of information, ensuring completeness, clarity, and comparability.

The entity shall include the information necessary for users to assess those implications.

An entity must provide information in a way that allows users to relate sustainability-related risks and opportunities to information in the entity's financial statements.

The purpose of IFRS S1 is to provide a framework for organizations to disclose sustainability-related financial information, ensuring transparency and consistency in reporting sustainability risks and performance.