ISSB launches global sustainability disclosure standards
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ISSB launches global sustainability disclosure standards 26 June 2023UK Reporter: Lucy Carter
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The International Sustainability Standards Board (ISSB) has issued two sustainability disclosure standards, IFRS S1 and IFRS S2.
IFRS S1 provides disclosure requirements for companies to inform investors of short-, medium- and long-term sustainability-related risks and opportunities. IFRS S2 supplements this with specifically climate-related disclosures.
The standards aim to create a global baseline and improve trust and confidence in companies’ sustainability disclosures, creating a common language for the disclosure of how climate-related risks and opportunities will impact a company’s prospects.
Companies aligning themselves with these standards must provide both sustainability-related information alongside financial statements in their reporting packages. The standards are compatible with IFRS accounting standards and can be used alongside any accounting requirements.
The ISSB developed the standards in line with market feedback, calls from the G20, the Financial Stability Board, the International Organisation of Securities Commissions and industry leaders.
Following the issue of IFRS S1 and S2, a transition implementation group will be created to support companies’ adoption of the standards, the ISSB says. It adds that it will work with jurisdictions that wish to implement incremental disclosures on top of the baseline and the Global Reporting Initiative to ensure compatibility with other reporting standards.
Emmanuel Faber, ISSB chair, says: “The ISSB Standards have been designed to help companies tell their sustainability story in a robust, comparable and verifiable manner. We have consulted closely with the market to ensure the standards are proportionate and will result in disclosures that are relevant for investment decision-making. Today’s publication is just the starting point as we consult on our future priorities, beyond climate.”
Andrew Ninian, director of stewardship, risk and tax at the Investment Association, comments: Our members invest in companies around the world, so the creation of a global baseline of sustainability reporting standards is an important step to achieve consistent reporting by all companies. Investors are increasingly incorporating a wide range of material sustainability issues into their assessments of long-term value from investee companies and need this information to make the best investment and stewardship decisions.
“We encourage all companies to start using these standards as a basis for their reporting so that investors have consistent sustainability reporting from their investee companies.”
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