The International Sustainability Standards Board (ISSB) issued on June 26th its inaugural standards – IFRS S1 and IFRS S2, effective for annual reporting periods beginning on or after 1 January 2024.
The objectives of IFRS S1 and IFRS S2 are to require an entity to disclose information about its sustainability-related and climate-related risks and opportunities respectively. This information is useful to users of general-purpose financial reports in making investment decisions.
The new standards set the beginning of a new era of sustainability-related disclosures in capital markets worldwide. They will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions.
At its meeting in December 2022, the International Sustainability Standards Board (ISSB) also voted that companies must report their Scope 1, 2, and 3 greenhouse gas emissions from 2024, following the standards.
A series of guidelines and reliefs to help companies report their Scope 3 greenhouse gas emissions will be part of IFRS S2 which is the climate-related disclosures standard. These guidelines also aim to improve the processes of measuring and disclosing Scope 3 emissions.
The CDP (Carbon Disclosure Project) – the not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts, announced its support of the launch of the final IFRS reporting standards. Companies disclosing through CDP – 18,700 in 2022 or half of global market capitalization, will be asked to disclose against the ISSB climate standard from 2024 as well.
The simplified and streamlined reporting of sustainability and climate disclosures will provide valuable data to a range of stakeholders in a way that is consistent and comparable across regions.
“Today represents the outcome of more than 18 months of intense work to deliver an inaugural set of sustainability disclosure standards for the global capital markets. The ISSB Standards have been designed to help companies tell their sustainability story in a robust, comparable and verifiable manner… Today’s publication is just the starting point as we consult on our future priorities, beyond climate,” commented Emmanuel Faber, ISSB Chair.