Release of the first two IFRS Sustainability Disclosure Standards

The International Sustainability Standards Board (ISSB), established by the IFRS Foundation in November 2021, has published its first two Sustainability Disclosure Standards [1] – IFRS S1 on General Requirements and IFRS S2 on Climate. These Standards lay out a global baseline for sustainability disclosures with the aim of addressing the needs of investors and other stakeholders for high-quality and comparable sustainability information that is decision-useful.

The reporting structure of IFRS S1 and IFRS S2 is aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). They therefore cover the following four reporting areas: (1) Governance, (2) Strategy, (3) Management of impacts, risks, and opportunities, (4) Metrics and Targets.

Expected adoption at global scale

The response to adoption of these two Standards has varied globally; some jurisdictions have already announced their intentions to be early adopters, notably among the emerging and developing markets (e.g. Mexico, Nigeria, and Zimbabwe), while others are yet to decide. 

In March 2023, the UK Government set out its plans on adopting the ISSB Standards as part of its revised Green Finance Strategy, and it is now in the process of setting up an appropriate endorsement mechanism. An endorsement decision is now expected to take place within 12 months.

In Europe, the ISSB, the European Commission (EC) and the European Financial Reporting Advisory Group (EFRAG) – the EC’s technical advisor – have worked together to ensure, to the greatest extent possible, the interoperability of IFRS 1 and IFRS S2 with the European Sustainability Reporting Standards (ESRS).

Next steps

  • The ISSB intends to work with jurisdictions and companies to support adoption of the Standards.
  • The ISSB will work on other sustainability-related topics, beyond climate, and has launched for that purpose a public consultation (open for comment until 1 September 2023) on its agenda priorities, seeking notably feedback from stakeholders on the following research projects: (i) biodiversity, ecosystems and ecosystem services, (ii) human capital and (iii) human rights.

[1] IFRS - IFRS Sustainability Standards Navigator

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