The International Sustainability Standards Board (ISSB) has published its first global sustainability disclosure standards as part of its work to develop a consistent international baseline for climate risk reporting.
Both the new criteria have been created with the aim of standardising international disclosure reporting requirements and report quality when integrating climate risk data into corporate financial reports.
The long-awaited standards will apply to all large businesses and have been widely welcomed by governments and financial regulators.
IFRS S1 provides a set of disclosure requirements which companies must communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. These include company impact, scope 1, 2 and 3 emissions and waste management.
IFRS S2 sets out more specific climate-related disclosures – such as climate adaption – and is designed to be used in conjunction with IFRS S1.
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The ISSB developed IFRS S1 and IFRS S2 in response to market feedback and in response to calls from the G20, the Financial Stability Board and the International Organisation of Securities Commissions (IOSCO), as well as leaders across the business and investor community.
The standards will ensure that companies provide all relevant sustainability-related information alongside their financial statements and as part of the same reporting package.
UK Financial Conduct Authority’s director of ESG Sacha Sadan said the FCA is “delighted” with the ISSB.
“At its launch at COP26 in November 2021, our CEO, Nikhil Rathi, referred to the ISSB as a ‘game-changer’ – and what we’ve seen over the past 18 months or so is that he was absolutely right,” he said.
“We have been working closely with the ISSB since the start and are hugely supportive of its mission to create a common, global language for companies around the world to communicate their sustainability stories in a consistent and comparable way.”
