27th July 2022, Manama, Kingdom of Bahrain | Aligned with
its role as an advocate of the Islamic financial services industry (IFSI), the
General Council for Islamic Banks and Financial Institutions (CIBAFI), the
global umbrella of Islamic financial institutions, announced that it has
submitted its comments today to the International Sustainability Standards
Board (ISSB). The submission included comments on the Exposure Drafts (EDs) on “IFRS
S1 General Requirements for Disclosure of Sustainability-related Financial
Information” and “IFRS S2 Climate-related Disclosures”.
The EDs have been issued on 31st
March 2022 and were open for public consultation until 29th July
In its comments, CIBAFI thanked the ISSB
for giving the opportunity to the IFSI to comment on the EDs and provided
collective feedback of its member banks from over 30 jurisdictions. CIBAFI’s comments
comprised the following key points.
IFRS S1 General Requirements for Disclosure
of Sustainability-related Financial Information
First, CIBAFI noted that the requirements outlined
in the ED could be difficult to meet in full for smaller institutions that
might possess limited resources for the identification, assessment, and
reporting of sustainability-related financial information. It was thus
recommended that additional guidance is provided to ease smaller institutions’
application of the standard.
Second, the ED outlines requirements for entities
to disclose information on their governance of sustainability-related risks and
opportunities. CIBAFI noted that some disclosure elements could be missing for
a complete picture of the governance process of an entity. In particular,
greater disclosure was recommended on the structure of reporting by management
to the body responsible for the oversight and, where that body is not itself
the board, how both the management and the body itself communicate with the
board on sustainability issues.
Third, the ED proposes that the reporting entity
of sustainability-related financial information should be the same as for the
main financial statements, implying consolidated reporting for a group. CIBAFI
and its members see that, while consolidation will be a familiar process for financial
statements, there is some possibility that this may be less straightforward for
sustainability-related disclosures, given that many of the risks and
opportunities may have been considered and managed on a local basis.
IFRS S2 Climate-related Disclosures
First, similar to the comments provided on the
ED IFRS, CIBAFI and its members recommend the provision of additional guidance
to ease smaller institutions’ application of these standards where their lack
of resources could impede their ability to identify, measure, and report on
Second, CIBAFI members noted that they may have
limited familiarity with preparing detailed climate-related disclosures and
have not generally had to do so at the level of the industry-based requirements
derived from the Sustainability Accounting Standards Board. CIBAFI considers
that this should be taken into account when determining the effective date for
Full comments submitted to the ISSB are
available on CIBAFI’s website: http://www.cibafi.org.
In addition to Advocacy of Islamic finance
Values and related Policies & Regulations, CIBAFI continues to support the IFSI
through various activities and initiatives. These include providing industry
stakeholders with a platform to discuss emerging issues, representing the
industry at major global financial events, and sharing knowledge through
specialized publications and comprehensive training programmes.