What’s the issue?

Sustainability reporting is rapidly evolving. The International Sustainability Standards Board (ISSB) aims to create a globally consistent baseline of reporting standards that jurisdictions can adopt and build on. Under the ISSB’s original proposal1, companies would need to disclose material information about a full range of sustainability-related matters, not just climate. 

The ISSB’s analysis of feedback indicated practical concerns in providing information about broader sustainability-related risks and opportunities. The breadth of information, processes, controls and data required could pose practical challenges for companies, particularly in their first year of application. 

Additionally, jurisdictional standard setters highlighted the need for phased adoption to alleviate the reporting readiness challenges, given the varying levels of maturity in sustainability reporting across jurisdictions. Some jurisdictions may also prefer to take a ‘climate-first’ approach.

By introducing the option to report only on climate-related matters in the first year, the ISSB aims to ease the transition for companies adopting the new standards. Not only does the relief address the urgent need for climate-related disclosures, but also concerns from preparers and jurisdictions on reporting readiness.

Tomokazu Sekiguchi, Vice-chair,
Global Corporate & Sustainability Reporting Topic Team

What was proposed?

Companies would apply the proposed standards2 together – IFRS S1 sets out the conceptual elements and the general principles and is designed to be applied together with IFRS S2, which builds on the climate-specific requirements. At its February meeting, the ISSB tentatively confirmed this requirement for compliance with IFRS® Sustainability Disclosure Standards. 

What’s the ISSB’s latest thinking?

In response to the practical concerns, the ISSB has agreed a relief that would allow companies to adopt a climate-first approach. This would give them the option to report only on climate-related risks and opportunities in their first year of application. 

Companies using this relief would have an additional year to report on the full range of sustainability-related risks and opportunities and still state compliance with IFRS Sustainability Disclosure Standards. The relief also includes allowing an additional year before the related comparative information is required. If companies have chosen to apply the relief, they would need to disclose this fact. 

This relief is among a suite of transition reliefs from the ISSB that aim to support companies. Other reliefs applicable only in the first year of application include those that exempt a company from: 

What’s the impact?

The climate-first relief is a pragmatic approach to address the challenges first-time adopters may face when disclosing information about the full range of sustainability matters. 

Taking the relief would give companies an additional year to implement robust processes, systems and controls for other sustainability-related information, and improve the quality of their disclosures in the longer term. However, it is crucial that companies start to get ready now, not only for climate-related disclosures but for the broader sustainability disclosures.

Our recent global Survey of Sustainability Reporting showed that 61 percent of the world’s largest 250 companies report on climate-related information, as required by the TCFD3 recommendations. For these companies and others, the climate-first relief would ease the transition to adopting IFRS Sustainability Disclosure Standards.

The relief aims to facilitate adoption in individual jurisdictions – i.e. by alleviating reporting readiness concerns and avoiding the need for their own phase-in reliefs. However, it will be for each jurisdiction to decide whether to adopt the relief. 

Actions for management

  • Engage in discussions on the adoption timeline and the transition reliefs that would apply in your jurisdiction(s).
  • Assess whether your existing systems, processes and controls are sufficient to report on climate-related information if adopting the transition relief.
  • Get ready to report on the full range of sustainability-related risks and opportunities, leveraging existing systems, processes and controls and identifying any gaps in the information required.

How did we get here?


Document version Reference
Proposed IFRS S1 ED/2022/S1 Published 31 March 2022
ISSB Board meeting: 15–16 November 2022; Frankfurt

AP3c: Timing of reporting

Meeting summary

The ISSB discussed timing of reporting sustainability-related financial information
ISSB Board meeting: 16 February 2023; Montreal

AP43B and AP4A: Effective date

Meeting summary

The ISSB agreed to provide a one-year transition relief in reporting sustainability-related financial information and agreed an effective date
ISSB Board meeting: 4 April 2023; virtual

AP3: IFRS S1 transition relief 

Meeting summary

The ISSB agreed to provide a transition relief allowing companies to report only on climate in the first year of application

1 Proposed IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.

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

3 Taskforce on Climate-related Financial Disclosures.

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