New sustainability standards board

• Which organisations are contributing directly to the ISSB and IFRS^® Sustainability Disclosure Standards?
• What will be the ISSB’s first priorities and deliverables?
• When will companies first apply IFRS Sustainability Disclosure Standards?
• What can companies do now to prepare for the potentially rapid implementation?

The new International Sustainability Standards Board (ISSB) will aim to develop sustainability disclosure standards that are focused on enterprise value.

The IFRS Foundation is aiming to put sustainability reporting on the same footing as financial reporting by establishing a sister body to the International Accounting Standards Board (the IASB^® Board). The goal is to drive globally consistent, comparable and reliable sustainability reporting using a building blocks approach. This approach will allow national and regional jurisdictions to build on that global baseline to set supplemental standards that serve their specific jurisdictional needs.

Companies need to monitor their jurisdictions’ response to standards issued by the ISSB and prepare for their potentially rapid implementation, given the urgency with which the Foundation is being asked to act.

The ISSB will benefit from the consolidation of global bodies (CDSB, IIRC and SASB) – as well as the support of IOSCO, TCFD and WEF¹. Together they share the aim of enterprise value-focused sustainability disclosures.

Under the governance of the Foundation, the ISSB will work closely with the IASB Board, reflecting the importance of connectivity with financial reporting.

Many companies (and jurisdictions) are already using the work of these bodies. For example, companies that have already adopted the TCFD recommendations on climate-related financial disclosures will be well positioned to use its disclosures as a bridge to the adoption of the new standards.

In preparation for the new board, the Foundation formed a Technical Readiness Working Group (TRWG) to create prototypes to give the new board a running start in developing its first two exposure drafts. These prototypes have been released and cover:

• climate-related disclosures, building on the TCFD recommendations and SASB industry-based standards; and
• general sustainability disclosure requirements.

The ISSB will consider these prototypes in its work programme.  The climate-related disclosure standard is expected to be the first of a proposed suite of sustainability disclosure standards issued by the ISSB, including standards on broader sustainability topics. 

It will be for individual jurisdictions to decide whether they adopt these new standards.

We can expect a rapid route to adoption in some jurisdictions – e.g. the UK has already said that it expects the ISSB to be a core part of its sustainability reporting requirements.

However, a path to adoption is less clear in other jurisdictions – e.g. in the EU and the US. The Foundation’s aim here is to provide the global baseline of investor-focused sustainability disclosure standards on which jurisdictions can build.