ISSB issues initial two standards on sustainability


ARTICLE | July 13, 2023

Authored by RSM US LLP

The International Sustainability Standards Board (ISSB) recently issued its inaugural two standards on sustainability disclosures. IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, provides a set of disclosure requirements designed to enable entities to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2, Climate-related Disclosures, sets out specific climate-related disclosures about an entity’s climate-related risks (i.e., physical and transition risks) and opportunities and is designed to be used with IFRS S1. Both standards fully incorporate the widely recognized recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

The ISSB’s mandate is to develop and issue a comprehensive global baseline of sustainability reporting standards for consistent, comparable and high-quality sustainability reporting designed to meet investor needs. To help users of general purpose financial reports make decisions relating to allocating resources, IFRS S1 and IFRS S2 require reporting entities to disclose information about:

  • The governance processes, controls and procedures an entity uses to monitor, manage and oversee sustainability and climate-related risks and opportunities;
  • The entity’s strategy for managing sustainability and climate-related risks and opportunities;
  • The processes the entity uses to identify, assess, prioritize and monitor sustainability and climate-related risks and opportunities, including whether and how those processes are integrated into and inform the entity’s overall risk management process; and
  • The entity’s performance in relation to its sustainability and climate-related risks and opportunities, including progress towards any climate-related targets it has set, and any targets it is required to meet by law or regulation.

Both IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024. Earlier application is permitted if the entity adopts both standards concurrently. However, adoption dates are subject to the endorsement of the standards by local jurisdictions.

Full copies of these standards may be obtained from the IFRS Website after enrolling for a free account.

This article was written by RSM US LLP and originally appeared on 2023-07-13.
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