Understanding ISSB’s Global Sustainability Standards

6 August 2024

In 2021, in response to rising demand for sustainability disclosures that better address investor needs, the International Financial Reporting Standards (IFRS) Foundation created a new working group: the International Sustainability Standards Board (ISSB). In June 2023, this dedicated board launched its first two IFRS Sustainability Disclosure Standards, setting the foundation for a globally recognised framework that drives transparency and comparability in sustainability reporting.

Creating a global consensus

At their core, IFRS S1 and S2 represent a comprehensive disclosure framework, created in conjunction with regional and global regulating authorities. These voluntary standards are underpinned by the internationally recognised IFRS Foundation Accounting Standards – disclosure expectations already adopted across 140 jurisdictions.

The standards create better alignment between sustainability and finance departments, build on the work of – among others – the Climate Disclosure Standards Board (CDSB), Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), and the World Economic Forum (WEF) and provide business and investors a global consensus for sustainability disclosure.

Effective from January 2024 and, while voluntary, they inform regulations across countries globally. To remain ahead of the disclosure curve and to keep a competitive edge, companies should ensure they understand how these standards impact their sustainability reporting.

What does this mean for companies in 2024?

The ISSB knows that change doesn’t happen overnight; that’s why they have set five reliefs that will enable a gradual transition to disclosure against IFRS S1 and S2.

In 2024, organisations are exempt from:

Reporting on sustainability risks
Disclosing Scope 3 emissions
Publishing alongside financial statements
Applying the Greenhouse Gas (GHG) Protocol if they already use another measurement approach

However, that doesn’t mean that companies should wait until next year to take action.

What can companies do right now?

Given the Standards’ foundations, companies can prepare for IFRS S1 and S2 by aligning with CDP, TCFD, and SASB. They can also conduct a gap analysis against incoming and existing disclosures to help identify sustainability risks.

Ideally, organisations will now start to align future reporting timelines and launch dates for both financial and sustainability-related information. This way, they can adapt to the inevitable regulator expectations and reduce the need for reactive measures down the road.