ISSB Launches Long-Awaited Global Sustainability Disclosure Standards
Authored by Célia Le Lièvre, Senior Regulatory Compliance Specialist at Compliance & Risks
This blog was originally posted on June 26th 2023. Further regulatory developments may have occurred after publication. To keep up-to-date with the latest compliance news, sign up to our newsletter.
On 26 June 2023, the International Sustainability Standards Board (ISSB) officially released the long-awaited sustainability reporting standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.
IFRS S1 and IFRS S2 are the first two IFRS Sustainability Disclosure Standards developed by the ISSB and serve as a comprehensive global baseline of sustainability disclosures for the capital markets.
IFRS S1 requires both public and private companies to disclose information about the “sustainability-related risks and opportunities” that may affect the entity’s cash flow, its access to finance or cost of capital over the short, medium and long-term. IFRS S2 sets out specific climate-related disclosures and is designed to be used in conjunction with IFRS S1. This information is intended to help investors make informed decisions about providing financial resources to private and public entities.
Both IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after 1 January 2024. Earlier application is nonetheless permitted as long as IFRS S1 and S2 are applied simultaneously.
Transition periods are provided for the first year of application of these standards. In particular, in the first annual reporting period, entities are not required to disclose comparative information and Scope 3 greenhouse gas (GHG) emissions information. Moreover, in the first annual reporting period, entities may also choose to only disclose information about climate-related risks and opportunities in accordance with IFRS S2. In addition, entities do not have to disclose sustainability-related financial information at the same time as their related financial statements. Sustainability disclosures, including climate-related disclosures under IFRS S2 may be reported after publication of the financial statement issued for the first reporting period.
Note that IFRS S1 and IFRS S2 are voluntary standards. Companies are not obliged to apply these standards unless jurisdictional authorities specifically require them to do so.
ISSB also issued a series of supporting documents, including:
- Guidance on General Requirements for Disclosure of Sustainability-related Financial Information
- Project Summary of IFRS S1 and IFRS S2
- Effects Analysis on IFRS S1 and IFRS S2
- Basis for Conclusions on General Requirements for Disclosure of Sustainability-related Financial Information
The final standards and accompanying documents can be found directly on the IFRS Foundation website. The full text of these Standards can be accessed by registered users of IFRS.org.
Unfortunately, C&R is unable to add the full text of the final standards to C2P for copyright reasons.
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