ISSB issues sustainability disclosure standards

The International Sustainability Standards Board (ISSB) has issued its inaugural standards, IFRS S1 and IFRS S2. Both herald a transformative shift in the realm of sustainability-related disclosures in global capital markets, poised to significantly enhance decision-making processes for asset managers.

IFRS S1 and IFRS S2 will provide asset managers with a more insightful perspective on the companies they invest in. IFRS S1 lays out a set of disclosure requirements enabling companies to express the sustainability-related risks and opportunities they anticipate over the short, medium and long term. Working in concert with IFRS S1, IFRS S2 sets out specific climate-related disclosures. Importantly, both standards fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), offering a comprehensive and nuanced approach to sustainability disclosure.

Answering the market’s call

The creation of IFRS S1 and IFRS S2 is a clear answer to the extensive market feedback demanding more consistent and comprehensive sustainability-related disclosures. The backing of global finance stakeholders, including the G20, the Financial Stability Board, the International Organization of Securities Commissions (IOSCO), and key figures in the business and investor communities, underscores the significance of these standards.

The ISSB’s Standards are designed to fit seamlessly within existing financial reporting frameworks. They’re developed to be employed alongside any accounting requirements, and will draw on the underlying principles of the globally recognised IFRS Accounting Standards, mandated in over 140 jurisdictions. This design ensures that the ISSB Standards can be applied globally, contributing to a truly international benchmark for sustainability-related disclosures.

Implementing the change: The road to adoption

With the formal release of IFRS S1 and IFRS S2, the ISSB’s focus shifts to encouraging and aiding adoption across jurisdictions and companies. The initial phase will involve the establishment of a Transition Implementation Group to guide companies through the application of these standards. Concurrently, the ISSB will initiate capacity-building programs to facilitate effective execution. The response from industry leaders has been overwhelmingly supportive, suggesting a smooth transition and integration of these standards across the industry.

This marks a critical step towards a global capital market that is not only transparent but also aligned with the urgent imperatives of sustainability. The forthcoming evolution in investment strategies and decisions, driven by comprehensive sustainability insights, promises a future of more resilient and responsible asset management.


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