The race to address climate change is accelerating, and the IFRS Foundation’s 2024 report ‘Progress on Corporate Climate-related Disclosures‘ underscores just how far we’ve come – and how far we still need to go. With its focus on global alignment and actionable insights, this report is a game-changer for businesses, investors, and policymakers navigating the evolving world of climate disclosure.
At SI Engage, we know our readers are committed to making sense of these changes and staying ahead of the curve. Here’s what the IFRS Foundation’s latest findings mean for you and your organisation…
Fragmented reporting frameworks have long been a barrier to effective sustainability action. Enter the ISSB Standards (IFRS S1 and IFRS S2), which integrate seamlessly with the TCFD recommendations, providing a global baseline for climate-related financial disclosures. This alignment simplifies reporting while ensuring consistency across jurisdictions and sectors.
For businesses, adopting ISSB Standards reduces duplication, aligns sustainability and financial disclosures, and meets growing investor expectations. For investors, this means more consistent, comparable, and reliable data to guide decision-making.
The report highlights significant momentum for ISSB Standards across the globe. Jurisdictions in Africa, Latin America, the Caribbean, and Asia are adopting these standards, joining countries already aligned with TCFD recommendations. Notably, 14 jurisdictions previously aligned with TCFD are progressing to ISSB adoption.
The Inaugural Jurisdictional Guide – published in May 2024 – supports countries in transitioning to ISSB Standards, ensuring a consistent and scalable approach to sustainability reporting.
Asset managers and owners are leading the charge in demanding robust climate disclosures. The report notes that most investors expect companies to transition from TCFD-aligned disclosures to ISSB Standards, emphasising the growing importance of integrating sustainability data into financial reports.
Investors are no longer satisfied with fragmented disclosures. Transitioning to ISSB Standards enables companies to streamline reporting and enhance trust, meeting the demand for integrated and decision-useful data.
While climate-related disclosures are improving, significant gaps remain in Scope 3 emissions reporting and scenario analysis. Only 20% of companies disclosed Scope 3 emissions in 2023, highlighting the challenge of collecting reliable data across value chains.
Similarly, scenario analysis – a cornerstone of resilience planning – remains the least disclosed TCFD recommendation, with few companies fully implementing this practice.
With ISSB Standards offering practical guidance, organisations can better tackle these challenges, equipping themselves to meet future regulatory and market expectations.
One of the standout benefits of ISSB Standards is their ability to integrate sustainability and financial information into general-purpose financial reports. This streamlined approach saves time, reduces complexity, and ensures that sustainability data is as robust and reliable as financial data.
For businesses, moving to ISSB Standards simplifies compliance across multiple jurisdictions, reducing costs and enhancing efficiency. For investors, it provides a clearer, more cohesive view of a company’s overall performance and risks.
The IFRS Foundation has made interoperability a priority, ensuring that companies can meet the requirements of multiple frameworks with ease. The ISSB-ESRS Interoperability Guidance, published earlier this year, shows companies how to align with both ISSB and European standards without duplicating efforts.
Investors increasingly demand audited sustainability data. The report emphasises the need for high-quality assurance to ensure trust and reliability in climate-related disclosures. Many jurisdictions are already moving toward mandatory assurance requirements by 2025.
For businesses, adopting assurance practices now strengthens stakeholder confidence and prepares them for upcoming regulatory changes. For investors, it assures that the data driving their decisions is accurate and credible.
While climate disclosures remain the focus, the ISSB is paving the way for broader reporting on issues like biodiversity and human capital. As frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) gain traction, organisations can expect these topics to become key components of sustainability reporting.
The IFRS Foundation’s 2024 report makes one thing clear: the time to act is now. Businesses that embrace these changes early will position themselves as leaders in the transition to a sustainable economy.
The IFRS Foundation’s 2024 report is more than a progress update – it’s a roadmap for the future of sustainability reporting. By aligning with ISSB Standards, businesses and investors can build a foundation of trust, transparency, and resilience, ensuring they’re ready to thrive in a rapidly changing world.
At SI Engage, we’re committed to helping you navigate these changes. Let’s work together to transform sustainability disclosure from a regulatory requirement into a strategic advantage.
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