ISSB releases inaugural global sustainability disclosure standards

27 Jun

Monday 26th June 2023 - the International Sustainability Standards Board (ISSB) issued its inaugural global sustainability disclosure standards:

IFRS S1 General Requirements for Disclosure of Sustainability-Related Financial Information; and
IFRS S2 Climate-related Disclosures.

The long-awaited standards are designed to provide a common language and comparable framework for disclosing climate-related issues. Ultimately this is aimed at improving trust and confidence in company disclosures about sustainability to inform investment decisions.

To ensure consistency and limit the additional reporting burden, under ISSB, companies will report sustainability-related information at the same time as their financial statements. Both S1 and S2 will also fully integrate the TCFD framework and recommendations.

As a global framework, the ISSB standards are intended to be used in conjunction with other accounting requirements and local regulations. Alignment with other standards (e.g., the EU’s Corporate Sustainability Reporting Directive, or CSRD) has been an important factor in the development of the ISSB standards, and the IFRS continues to work with jurisdictions to minimise duplication with other approaches and drive global alignment.

IFRS have also produced a standards navigator and guidance to help users understand and apply the standards.

FRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1.

Global regulators are expected to incorporate the ISSB in their frameworks. The FCA’s press release noted that: “The UK Government also recently signalled support for the ISSB and announced that it would be establishing a mechanism for formal UK endorsement and adoption of the standards. Once available for use in the UK, our intention is to update our climate-related disclosure rules to reference the ISSB standards.”

The standards will come into effect in January 2024.