New Sustainability and Climate Standards from the ISSB

In June, the International Sustainability Standards Board (ISSB) introduced its inaugural set of standards focusing on the general obligations for reporting sustainability-oriented financial data and climate-centric disclosures.

What are These New Standards?

The first standard, IFRS S1, provides disclosure requirements for businesses to communicate with investors the sustainability-associated risks and opportunities they may encounter in the short, medium, and long term.

The second standard, IFRS S2, outlines climate-related disclosures intended to work in conjunction with IFRS S1.

What is the ISSB?

In 2021, the ISSB was created by the International Financial Reporting Standards (IFRS) Foundation Trustees as a direct response to the growing investor demand for a globally recognized environmental, social, and governance (ESG) disclosure standard.

By establishing a set of standards, the ISSB aims to improve transparency and comparability in sustainability reporting, helping investors and stakeholders make more informed decisions. The ISSB's standards cover areas such as climate change, resource usage, social impact, and corporate governance.

Now, the ISSB is fueling the ongoing transformation of sustainability disclosure – including the addition of IFRS S1 and S2, instilling a sense of clarity, comparability, and consistency that was previously lacking.

What is the Future of These Standards?

With IFRS S1 and S2 officially released, the ISSB is shifting its focus toward promoting their adoption, with widespread application anticipated by 2024 and reports emerging in 2025.

The obligatory status of the standards is not yet confirmed. However, Japan and the UK lead the charge in commitment, signaling their readiness to adopt these standards. Whether or not IFRS S1 and S2 become obligatory in your jurisdiction depends mainly on their adoption into local law or their inclusion as a requirement for stock exchange listings.

In anticipation of these impending changes, the ISSB will establish a Transition Implementation Group to equip early adopters with the necessary tools for effective implementation.

How Should You Prepare Your Business?

“With the introduction of IFRS S1 and S2, businesses are facing increased pressure to enhance their sustainability-oriented financial data and climate-centric disclosures,” said Mike York, Senior Manager at Clearview Group. “It can be challenging to understand the intricacies of these standards, align your practices, and effectively communicate your sustainability efforts to stakeholders.”

With ESG Advisory, your business can benefit from in-depth knowledge and extensive experience in sustainability consulting:

• Comprehensive Assessment: Provide a thorough assessment of your current sustainability practices, identifying gaps and areas for improvement.
• Strategy Development: Develop a tailored sustainability strategy that aligns with the new standards and addresses your business objectives.
• Reporting and Disclosure Optimization: Optimize your reporting and disclosure practices.
• Stakeholder Engagement: Identify and engage key stakeholders to develop engagement strategies and foster meaningful dialogues.

Don't let the new ISSB sustainability and climate standards overwhelm you. Get started on your ESG journey.