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Interoperability between sustainability reporting frameworks is a key issue for companies that might be required to report under both ISSBTM Standards and European Sustainability Reporting Standards (ESRSs). This is because – where disclosures are not aligned – companies may have to report similar information in different ways, creating duplication and an unnecessary burden.

We welcome the publication of this analysis and congratulate the ISSB and EFRAG on reaching this important milestone. Companies should take confidence that the ISSB and EFRAG have agreed on common areas of their climate-related disclosures and highlighted significant alignment. Having an agreed list of areas of difference to watch out for allows companies applying both to move forwards confidently with gathering data and preparing disclosures. There can be significant synergies. With this jointly approved analysis from the ISSB and EFRAG, it is now incumbent on all of us – not just the standard setters – to interpret the standards during implementation such that we realise the goal of maximum interoperability in practice.

Mark Vaessen, Chair,
Global Corporate & Sustainability Reporting Topic Team

What does the joint guidance provide?

The International Sustainability Standards Board (ISSB) and European Financial Reporting Advisory Group (EFRAG) have published a detailed, bottom-up analysis of the climate-related disclosure requirements in IFRS S2 Climate-related disclosures and corresponding requirements in ESRS 1 General Requirements, ESRS 2 General Disclosures and ESRS E1 Climate change.

The guidance provides:

  • high level commentary on interoperability of some general principles of reporting (including presentation and materiality);
  • a table showing corresponding climate-related disclosure requirements;
  • analysis notes for ESRS preparers on additional or different ISSB requirements; and
  • analysis notes for ISSB preparers on additional or different ESRS requirements.

Although it is an important and positive step that the document has been jointly approved by the ISSB and EFRAG, it is important to remember that it represents a point-in-time analysis of identified differences and does not include all areas of the standards. The list may change over time as practice evolves and as regulators and others provide interpretations of the ESRS and ISSB Standards.

Why is it important for companies?

It is a significant and positive step that the ISSB and EFRAG have agreed on guidance about interoperability of their climate-related disclosure requirements.

Companies now have a list of areas of climate-related disclosures to look out for when dual adopting, whether they start from the ISSB Standards and want to understand what the differences are to comply with ESRSs, or vice versa.

Areas to look out for
ESRS preparers applying ISSB

ISSB preparers applying ESRS

Transition plan assumptions Scenario analysis
Scenario analysis Greenhouse gas (GHG) emissions – disaggregation
Industry-based metrics Carbon credits
GHG emissions – disaggregation Quantitative information on anticipated financial effects
Climate-related opportunities Climate-related physical and transition risks
Capital deployment GHG emissions reduction targets
Carbon credits Organisational boundary for GHG emissions
Financed emissions A broad range of incremental disclosures.


Companies can have confidence that there is very significant alignment in climate-related disclosures as they progress with applying the standards.

What about materiality?

The joint guidance highlights that the definition of financial materiality is aligned under ISSB Standards and ESRSs and that “the two assessments are expected to provide an aligned outcome”. This offers significant synergies for companies aiming for dual compliance as ESRS preparers can leverage information from their materiality assessment when identifying material information under the ISSB Standards.

However, despite this positive step, companies should be aware that this does not mean companies applying the ISSB Standards can identify their sustainability-related risks and opportunities (as required by IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information) solely by following the process set out in ESRS 1 and described in further detail in EFRAG’s draft Materiality Assessment Implementation Guidance. Depending on the process and interpretations applied, companies may need to perform additional analysis or checks.

Actions for companies

  • Read the joint guidance and consider if the differences identified are relevant for your reporting.
  • Minimise the challenges of dual reporting by considering these differences and any available options to eliminate them when setting policy choices and deciding what to report.
  • Gain maximum synergies when designing a materiality assessment process following the ESRS requirements by also considering the ISSB requirements to identify sustainability-related risks and opportunities under ISSB Standards and related material information.
  • Monitor the guidance produced by the ISSB, EFRAG and the European Commission to understand how practice is developing and any emerging interpretations to be aware of.

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