The International Sustainability Standards Board (ISSB) sits under the Trustees of the International Finance Reporting Standards, and was established in response to growing market demand for a streamlined approach to corporate sustainability. The ISSB has developed an investor-specific sustainability disclosure standards, known as the IFRS Sustainability Disclosure Standards. When implemented by reporting entities, the Standards provide a global baseline to support the transition towards quantitative reporting, thereby improving investors ‘ability to assess entities’ future value and efficiently allocate capital. In developing the Standards, the ISSB has four objectives:
- The development of standards that will introduce a global baseline for sustainability disclosures.
- Meeting the information needs of investors.
- Supporting companies to provide comprehensive sustainability information to global markets, to foster investment.
- Ensuring the interoperability between the Standards, and jurisdiction-specific disclosures, or those aimed at broader stakeholder groups.
In June 2023, the ISSB released its first two standards: IFRS S1 & IFRS S2:
IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S1 outlines disclosures for companies to communicate short, medium and long-term sustainability-related risks and opportunities.
IFRS S2: Climate-related Disclosures
IFRS S2 incorporates recommendations made by the Taskforce on Climate-related Financial Disclosures to support IFRS S1 in requiring companies to disclosure cross-industry, and industry-specific climate-related financial risks and opportunities.
The ISSB’s focus now shifts to implementing IFRS S1 and S2, to consolidate the currently fragmented landscape of sustainability disclosures. Feedback received during this implementation period will be reviewed, and inform future iterations of the Standards as well as the development of new ones.
The ISSB standards will be incorporated in Australia’s mandatory climate disclosure framework, through sustainability standards developed by the Australian Accounting Standards Board.
