FSA Credential Level I cheat sheet

IFRS S1 sets general requirements for sustainability-related financial disclosures; IFRS S2 sets climate-specific requirements. Both are issued by the ISSB and use the same architecture: objective, scope, conceptual foundations, core content, and application guidance.

Core content has four pillars: governance, strategy, risk management, and metrics and targets. IFRS S1 requires disclosure on all four for sustainability risks and opportunities; IFRS S2 applies the same four pillars to climate.

Materiality is defined as information that could reasonably be expected to influence primary users' decisions about providing resources to the entity. Primary users are existing and potential investors, lenders, and other creditors.

The conceptual foundations require a fair presentation of sustainability-related financial information, which must be comparable, verifiable, timely, and understandable, and must be connected to the financial statements.

IFRS S1 permits relief: an entity may report only on climate (IFRS S2) in the first year, and may use the GHG Protocol Corporate Standard for greenhouse gas measurement. Proportionality and transition reliefs exist for scope 3, scenario analysis, and current financial effects.

Reporting entity is the same as the financial statements reporting entity. The reporting period is the same as the financial statements, and comparative information is required.

IFRS S2 requires disclosure of scope 1, 2, and 3 GHG emissions, with scope 3 required unless the entity uses the transition relief; the GHG Protocol is the prescribed measurement basis, and financed emissions apply to financial institutions.

IFRS S2 requires disclosure of climate resilience assessment, including scenario analysis, and of the entity's transition plan, if it has one. Targets must be disclosed with the metric, base period, and whether they are absolute or intensity-based.

SASB Standards are industry-specific, covering 77 industries across 11 sectors. Each standard identifies disclosure topics and associated accounting metrics that are likely material for that industry.

SASB topics are selected based on evidence of financial materiality, defined as information likely to affect a company's financial condition or operating performance and thus of interest to investors.

SASB Standards are organized by sector: Consumer Goods, Extractives and Minerals Processing, Financials, Food and Beverage, Health Care, Infrastructure, Renewable Resources and Alternative Energy, Resource Transformation, Services, Technology and Communications, and Transportation.

Each SASB standard has a codified reference, e.g., FB-NB-110a.1, where the first letters denote the sector, the second the industry, and the number the topic and metric.

SASB metrics include quantitative accounting metrics, activity metrics, and discussion-and-analysis type disclosures. Activity metrics provide context for normalizing performance, e.g., revenue, production volume, or number of employees.

The SASB Standards are now maintained by the ISSB and are referenced by IFRS S1 as a source of industry-specific guidance when an entity applies the industry-based guidance.

SASB Standards do not prescribe a reporting framework or format; they specify what to disclose, not where or how to present it. Entities typically report SASB metrics in a sustainability report or an ESG data appendix.

SASB Standards are designed to be cost-effective and decision-useful; metrics are intended to be comparable within an industry and are not intended to be applied across industries.

Integrated reporting is governed by the International Framework, issued by the International Integrated Reporting Council (IIRC), now part of the IFRS Foundation. It focuses on how an organization creates, preserves, or erodes value over time.

The Framework uses six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. Value creation is described in terms of increases, decreases, or transformations of these capitals.

The Framework has guiding principles: strategic focus and future orientation, connectivity of information, stakeholder relationships, materiality, conciseness, reliability and completeness, and consistency and comparability.

The content elements are: organizational overview and external environment, governance, business model, risks and opportunities, strategy and resource allocation, performance, outlook, and basis of preparation and presentation.

Connectivity of information is the principle that the report should show the combination, interrelationships, and dependencies among the factors that affect the organization's ability to create value over time, including across the capitals and across time horizons.

The business model is described as the system of inputs, business activities, outputs, and outcomes that aims to create value over the short, medium, and long term.

Materiality in integrated reporting is determined by the effect on value creation, not solely by financial materiality to investors; it considers the organization's ability to create value and the interests of key stakeholders.

Integrated reporting is principles-based, not a prescribed format. It is intended to be a concise communication, and it is distinct from a combined or annual report, though it may be part of one.

The TCFD recommendations, issued in 2017, have four pillars: governance, strategy, risk management, and metrics and targets. The 11 recommended disclosures are distributed across these pillars.

Governance disclosures: describe the board's oversight of climate-related risks and opportunities, and describe management's role in assessing and managing them.

Strategy disclosures: describe the climate-related risks and opportunities identified over the short, medium, and long term; describe the impact on the organization's businesses, strategy, and financial planning; and describe the resilience of the strategy under different climate-related scenarios, including a 2°C or lower scenario.

Risk management disclosures: describe the processes for identifying and assessing climate-related risks, the processes for managing them, and how these processes are integrated into the organization's overall risk management.

Metrics and targets disclosures: disclose the metrics used to assess climate-related risks and opportunities, disclose scope 1, 2, and 3 GHG emissions and the related risks, and describe the targets used to manage them and performance against targets.

Climate-related risks are categorized as physical risks (acute and chronic) and transition risks (policy and legal, technology, market, and reputation). Opportunities are categorized as resource efficiency, energy source, products and services, markets, and resilience.

The TCFD recommends scenario analysis as a tool for assessing strategic resilience; the choice of scenarios, assumptions, and time horizons should be disclosed.

The TCFD was disbanded in 2023 and its monitoring was transferred to the IFRS Foundation; the ISSB's IFRS S2 is built on the TCFD recommendations, so TCFD-aligned disclosure is largely consistent with IFRS S2.

The Climate Disclosure Standards Board (CDSB) issued the CDSB Framework for reporting environmental and climate change information, last updated in 2019, with the aim of integrating natural capital information into mainstream financial reports.

The CDSB Framework's principles are: relevance and materiality, faithful representation, comparability and consistency, clarity and conciseness, and verifiability and assurance.

The CDSB Framework requires disclosure of the reporting boundary and the basis of preparation, including the organizational boundary, the reporting period, and the methodology used.

The CDSB Framework's content elements include: governance and management, environmental and climate-related strategy, risks and opportunities, sources of impact, performance and comparative analysis, and outlook.

CDSB guidance emphasizes connecting environmental information to financial performance, including the effect on cash flows, assets, liabilities, and access to capital.

The CDSB was consolidated into the IFRS Foundation in 2022, and its guidance informed the development of the ISSB Standards; CDSB materials are no longer maintained as a standalone framework.

Climate-related disclosure under CDSB requires disclosure of GHG emissions, the methodology used, and the assumptions and estimation uncertainties, including the use of proxies and estimates.

A key CDSB principle is that environmental information should be prepared on a basis consistent with the financial statements, including the same reporting entity and period, to enable connected reporting.

IFRS S1 sets general requirements for sustainability-related financial disclosures; IFRS S2 sets climate-specific requirements. Both are issued by the ISSB and use the same architecture: objective, scope, conceptual foundations, core content, and application guidance.

Core content has four pillars: governance, strategy, risk management, and metrics and targets. IFRS S1 requires disclosure on all four for sustainability risks and opportunities; IFRS S2 applies the same four pillars to climate.

Materiality is defined as information that could reasonably be expected to influence primary users' decisions about providing resources to the entity. Primary users are existing and potential investors, lenders, and other creditors.

The conceptual foundations require a fair presentation of sustainability-related financial information, which must be comparable, verifiable, timely, and understandable, and must be connected to the financial statements.

IFRS S1 permits relief: an entity may report only on climate (IFRS S2) in the first year, and may use the GHG Protocol Corporate Standard for greenhouse gas measurement. Proportionality and transition reliefs exist for scope 3, scenario analysis, and current financial effects.

Reporting entity is the same as the financial statements reporting entity. The reporting period is the same as the financial statements, and comparative information is required.

IFRS S2 requires disclosure of scope 1, 2, and 3 GHG emissions, with scope 3 required unless the entity uses the transition relief; the GHG Protocol is the prescribed measurement basis, and financed emissions apply to financial institutions.

IFRS S2 requires disclosure of climate resilience assessment, including scenario analysis, and of the entity's transition plan, if it has one. Targets must be disclosed with the metric, base period, and whether they are absolute or intensity-based.

SASB Standards are industry-specific, covering 77 industries across 11 sectors. Each standard identifies disclosure topics and associated accounting metrics that are likely material for that industry.

SASB topics are selected based on evidence of financial materiality, defined as information likely to affect a company's financial condition or operating performance and thus of interest to investors.

SASB Standards are organized by sector: Consumer Goods, Extractives and Minerals Processing, Financials, Food and Beverage, Health Care, Infrastructure, Renewable Resources and Alternative Energy, Resource Transformation, Services, Technology and Communications, and Transportation.

Each SASB standard has a codified reference, e.g., FB-NB-110a.1, where the first letters denote the sector, the second the industry, and the number the topic and metric.

SASB metrics include quantitative accounting metrics, activity metrics, and discussion-and-analysis type disclosures. Activity metrics provide context for normalizing performance, e.g., revenue, production volume, or number of employees.

The SASB Standards are now maintained by the ISSB and are referenced by IFRS S1 as a source of industry-specific guidance when an entity applies the industry-based guidance.

SASB Standards do not prescribe a reporting framework or format; they specify what to disclose, not where or how to present it. Entities typically report SASB metrics in a sustainability report or an ESG data appendix.

SASB Standards are designed to be cost-effective and decision-useful; metrics are intended to be comparable within an industry and are not intended to be applied across industries.

Integrated reporting is governed by the International Framework, issued by the International Integrated Reporting Council (IIRC), now part of the IFRS Foundation. It focuses on how an organization creates, preserves, or erodes value over time.

The Framework uses six capitals: financial, manufactured, intellectual, human, social and relationship, and natural. Value creation is described in terms of increases, decreases, or transformations of these capitals.

The Framework has guiding principles: strategic focus and future orientation, connectivity of information, stakeholder relationships, materiality, conciseness, reliability and completeness, and consistency and comparability.

The content elements are: organizational overview and external environment, governance, business model, risks and opportunities, strategy and resource allocation, performance, outlook, and basis of preparation and presentation.

Connectivity of information is the principle that the report should show the combination, interrelationships, and dependencies among the factors that affect the organization's ability to create value over time, including across the capitals and across time horizons.

The business model is described as the system of inputs, business activities, outputs, and outcomes that aims to create value over the short, medium, and long term.

Materiality in integrated reporting is determined by the effect on value creation, not solely by financial materiality to investors; it considers the organization's ability to create value and the interests of key stakeholders.

Integrated reporting is principles-based, not a prescribed format. It is intended to be a concise communication, and it is distinct from a combined or annual report, though it may be part of one.

The TCFD recommendations, issued in 2017, have four pillars: governance, strategy, risk management, and metrics and targets. The 11 recommended disclosures are distributed across these pillars.

Governance disclosures: describe the board's oversight of climate-related risks and opportunities, and describe management's role in assessing and managing them.

Strategy disclosures: describe the climate-related risks and opportunities identified over the short, medium, and long term; describe the impact on the organization's businesses, strategy, and financial planning; and describe the resilience of the strategy under different climate-related scenarios, including a 2°C or lower scenario.

Risk management disclosures: describe the processes for identifying and assessing climate-related risks, the processes for managing them, and how these processes are integrated into the organization's overall risk management.

Metrics and targets disclosures: disclose the metrics used to assess climate-related risks and opportunities, disclose scope 1, 2, and 3 GHG emissions and the related risks, and describe the targets used to manage them and performance against targets.

Climate-related risks are categorized as physical risks (acute and chronic) and transition risks (policy and legal, technology, market, and reputation). Opportunities are categorized as resource efficiency, energy source, products and services, markets, and resilience.

The TCFD recommends scenario analysis as a tool for assessing strategic resilience; the choice of scenarios, assumptions, and time horizons should be disclosed.

The TCFD was disbanded in 2023 and its monitoring was transferred to the IFRS Foundation; the ISSB's IFRS S2 is built on the TCFD recommendations, so TCFD-aligned disclosure is largely consistent with IFRS S2.

The Climate Disclosure Standards Board (CDSB) issued the CDSB Framework for reporting environmental and climate change information, last updated in 2019, with the aim of integrating natural capital information into mainstream financial reports.

The CDSB Framework's principles are: relevance and materiality, faithful representation, comparability and consistency, clarity and conciseness, and verifiability and assurance.

The CDSB Framework requires disclosure of the reporting boundary and the basis of preparation, including the organizational boundary, the reporting period, and the methodology used.

The CDSB Framework's content elements include: governance and management, environmental and climate-related strategy, risks and opportunities, sources of impact, performance and comparative analysis, and outlook.

CDSB guidance emphasizes connecting environmental information to financial performance, including the effect on cash flows, assets, liabilities, and access to capital.

The CDSB was consolidated into the IFRS Foundation in 2022, and its guidance informed the development of the ISSB Standards; CDSB materials are no longer maintained as a standalone framework.

Climate-related disclosure under CDSB requires disclosure of GHG emissions, the methodology used, and the assumptions and estimation uncertainties, including the use of proxies and estimates.

A key CDSB principle is that environmental information should be prepared on a basis consistent with the financial statements, including the same reporting entity and period, to enable connected reporting.