How should boundaries be explained for a new material topic discovered in Year 2?

• A. Describe which operations, geographies, and supply chain components are included in the boundary going forward.
• B. Describe only the core functions at headquarters.
• C. Describe all corporate activities regardless of relevance.
• D. Boundaries are fixed and cannot change after Year 2.

Answer: (A)

When a new material topic is discovered, the boundary should describe which parts of the organization and its value chain are included going forward because that shows where the topic’s impacts could arise and where data will be collected. Boundaries must reflect the operations, geographies, and supply-chain components that are relevant to the topic, so disclosures stay meaningful as the company grows or as the topic’s significance evolves. This forward-looking approach helps ensure that material information is captured where it matters and remains comparable over time, while still allowing updates if the topic or footprint changes. Limiting the description to headquarters-only misses relevant impacts, including everything regardless of relevance dilutes focus, and treating boundaries as fixed after Year 2 would prevent capturing new material relevance that emerges later.