SBAI Response - IFRS Exposure Draft Amendments to GHG Disclosures

The Standards Board for Alternative Investments (SBAI) welcomes the opportunity to respond to the ISSB's Exposure Draft ED/2025/1 proposing targeted amendments to IFRS S2 Climate-related Disclosures.

From an institutional investor perspective, there are many reasons and requirements for why exposure to derivatives matter in the context of GHG-emission accounting, including:

• Understanding risks in relation to GHG-emissions (which is a stated objective of ISSB), irrespective of whether these risk exposures arise via cash or synthetic holdings of equities/bonds
• Understanding true net risk, i.e., incorporating the impact of derivative hedges and short positions
• Understanding the impact on issuer cost of capital, given that derivatives and short positions matter in a manner equivalent to long or short cash positions (see appendix 1)
• Preventing greenwashing, for example by ‘hiding’ heavy emitters by structuring exposure synthetically with derivatives to artificially lower reported emissions (and inaccurately assess potential risk)