ISSB Standards are now live!

Global IFRS Institute | Sustainability reporting | Ready for ESG reporting?

• Realising a global baseline
• Driving consistency
  
• Connecting sustainability and financial reporting
  
• Next steps – Read our detailed publication First Impressions
  

The publication of the first two IFRS^® Sustainability Disclosure Standards¹ is a key milestone in the International Sustainability Standards Board (ISSB)’s vision – to create a global baseline of investor-focused sustainability reporting that local jurisdictions can build on.

The standards are designed to meet the needs of all companies, not just the most sophisticated. They provide a clear idea of what companies need to report to meet the needs of global capital markets – providing investors with globally comparable information.

Adopting these standards will signify an important change in status, as they will increase the prominence and connectivity of sustainability reporting within the main financial filings. It is important to engage now to understand what this new global baseline will look like and to assess how your company needs to adapt.

The ISSB’s first two standards are designed to be applied together, supporting companies to identify and report information that investors need for informed decision making – in other words, information that is expected to affect the assessments that investors make about companies’ future cash flows.

To achieve this, the general standard provides a framework for companies to report on all relevant sustainability-related topics across the areas of governance, strategy, risk management, and metrics and targets.

This is supported by more detailed guidance on how to report on climate-related risks and opportunities in the climate standard. In the future, additional standards covering other topics are expected – but in the meantime companies will use guidance highlighted in the general standard to report on other topics.

Consistency in how companies report globally is important to support investor decisions, creating a more level playing field for companies seeking investment.

The ISSB has not started from scratch in developing these standards – they are based on existing frameworks and standards, including TCFD³ and SASB⁴. The ISSB is also committed to working with the Global Reporting Initiative (GRI) to ensure its new investor-focused standards are complementary to and compatible with the existing GRI standards – which have a different objective of meeting wider stakeholders’ information needs.

The ISSB has also been working closely with jurisdictional standard setters to maximise interoperability between its standards and incoming mandatory reporting frameworks – e.g. the European Commission and EFRAG⁵ in the EU, and the SEC⁶ in the US.

Going forward, connected financial and sustainability reporting will be a requirement, rather than a feature, of good-practice reporting. The ISSB refers to the information disclosed as ‘sustainability-related financial disclosures’ – demonstrating that disclosures need to be connected with information in the financial statements, not a disconnected exercise.

Finance and sustainability teams will need to work closely together to ensure the information disclosed is complementary and based on the same facts and circumstances. Although the sustainability-related information may differ in nature from information presented in the financial statements, it needs to be consistent to the extent possible. This is required regardless of whether financial statements are prepared under IFRS Accounting Standards or other generally accepted accounting principles.

Companies will need processes and controls in place so that they can provide sustainability-related information of the same quality, and at the same time, as their financial statements.

Now is the time to get ready to report using these new standards.

Our First Impressions publication provides detailed insight on the key impacts of the standards, using illustrative examples and includes how companies might apply them.

For more information, please visit our sustainability reporting page including our high-level overview, which discusses 10 key questions to help you with your preparations.