What to know about the recent release of the ISSB sustainability disclosure standards:
The International Sustainability Standards Board (ISSB) has issued its new global sustainability reporting standards - International Financial Reporting Standard S-1, the General Requirements for Disclosure of Sustainability-related Information, and IFRS S-2, Climate-Related Disclosures.
IFRS S-2 specifically addresses climate-related risks and opportunities and is intended to be used alongside IFRS S-1, which provides a set of disclosure requirements that enables companies to communicate to investors the sustainability-related risks and opportunities they face over the short, medium, and long term. These standards also incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
These standards were developed to support an all-inclusive global baseline to ensure companies prepare sustainability-related disclosures alongside financial statements and accounting requirements, in one reporting package.
WHY SHOULD YOU CARE: Well, the global baseline approach is supported by the G20, the G7, the International Organization of Securities Commissioners, the Financial Sustainability Board, and more. This means there's validity and authority backing the goal of a global baseline on sustainability reporting instead of using MANY different frameworks.
Will Scope 3 emissions reporting be required? YES! This means that if companies have not already begun doing so, will need to start compiling Scope 3 data to disclose in the next 2-3 years (companies will receive a 1-year grace period for Scope 3 reporting).
Effective Date: IFRS S-1 and IFRS S-2 are effective for annual reporting periods beginning on or after Jan 1, 2024 - meaning a company would report its first sustainability-related disclosures in 2025.