ISSB issues IFRS Sustainability Disclosure Standards

On 26 June 2023, the International Sustainability Standards Board (ISSB) issued the first two IFRS Sustainability Disclosure Standards:

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

What is the background?

The ISSB was created on 3 November 2021 to deliver “a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions”.

IFRS S1 and IFRS S2 were produced following consultation on two exposure drafts published in March 2022:

• ED/2022/S1 IFRS S1, “General Requirements for Disclosure of Sustainability-related Financial Information”; and
• ED/2022/S2 IFRS S2, “Climate-related Disclosures”.

(Read about ESMA’s response to the drafts in our Insight Article here.)

What do the standards include?

As their respective names suggest, IFRS S1 sets out general requirements for disclosure of sustainability-related financial information and IFRS 2 provides required climate-related disclosures.

Both standards include transitional provisions and are for annual reporting periods beginning on or after 1 January 2024

Both are also accompanied by guidance which suggests ways in which a company may apply the disclosure requirements – in the case of IFRS S2, this includes industry-based guidance on implementation.

What’s next?

Individual jurisdictions will now decide whether they will require companies to comply with the standards.

The UK Government has stated that it will consult on a framework to adopt and endorse the ISSB's standards in the UK