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This week marks the issuance of the inaugural IFRS Sustainability Disclosure Standards, designed to provide a global baseline of sustainability-related disclosures for the capital markets.  

Better information leads to better economic decisions. IFRS S1 requires companies to communicate the sustainability-risks and opportunities they face over the short, medium, and long term. The requirements are designed to ensure that companies provide investors information relevant to decision-making. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. Both Standards are based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Issuing these Standards is just the starting point. The ISSB is consulting on future priorities to help determine what comes next. We welcome your feedback before the consultation closes on 1 September 2023.

Here are 10 things you need to know about the ISSB’s new standards:

  1. Global disclosure standards

    ISSB Standards allow companies and investors to standardise on a single, global baseline of sustainability disclosures for the capital markets, with any additional jurisdictional requirements being built on top of this global baseline. 

  2. International support

    The ISSB’s work has received strong support from investors, companies, policy makers, market regulators and others from around the world, including the International Organization of Securities Commissions (IOSCO), the Financial Stability Board, the G20 and the G7 Leaders. 

  3. Disclosure of decision-useful, material information

    Focusing exclusively on capital markets means that ISSB Standards only require information that is material, proportionate and decision-useful to investors.  Moreover, by beginning with climate, companies can phase-in their sustainability disclosures. 

  4. Building on and consolidating existing initiatives

    IFRS S1 and IFRS S2 are built on and consolidate the TCFD recommendations, SASB Standards, CDSB Framework, Integrated Reporting Framework and World Economic Forum metrics to streamline sustainability disclosures.  Consolidation will help companies to benefit from their investments they’ve already made in sustainability disclosures while reducing the ‘alphabet soup’ of sustainability disclosures.

  5. Reducing duplicative reporting

    The baseline approach provides a way to achieve global comparability for financial markets, and allow jurisdictions to further develop additional requirements if needed to meet public policy or broader stakeholder needs. This approach helps to reduce duplicative reporting for companies subject to multiple jurisdictional requirements. 

  6. Helping companies communicate worldwide cost-effectively

    ISSB Standards have been designed to provide reliable information to investors; helping companies to communicate how they identify and manage the sustainability-related risks and opportunities they face over the short, medium and longer term.

  7. Connections with financial statements

    The information required by the ISSB Standards is designed to be provided alongside financial statements as part of the same reporting package.  ISSB Standards have been developed to work with any accounting requirements, but they are built on the concepts underpinning IFRS Accounting Standards, already required for use by more than 140 jurisdictions. 

  8. Developed through rigorous consultation

    ISSB Standards have been developed using the same inclusive, transparent due process used to develop IFRS Accounting Standards – with more than 1,400 responses to the ISSB’s proposals. All ISSB papers, feedback and technical decision-making are available to view online. 

  9. Interoperability with broader sustainability reporting

    The ISSB’s partnership with the Global Reporting Initiative enables the ISSB to build its requirements to be interoperable with GRI standards, helping to reduce the disclosure burden for companies using both ISSB and GRI Standards for reporting. 

  10. A partnership for capacity building

    The ISSB’s responsibilities do not stop at standard setting. At COP27, the ISSB announced plans for a capacity building partnership programme, helping to establish the necessary resources for high quality, consistent reporting across developed and emerging economies. 

Together, these inaugural standards and the ISSB’s capacity building programme will help build trust, confidence and much-needed global comparability to the sustainability disclosure landscape. 

Followable tags

Applying IFRS Sustainability standards
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2 Climate-related Disclosures