New Era : ISSB Launches Inaugural Standards for Global Disclosures
In today’s edition, I am excited to share the latest developments in sustainability-related disclosures in the global capital markets. The (International Sustainability Standards Board ) ISSB Launches Inaugural standards, marking a significant milestone in enhancing trust and confidence in company disclosures about sustainability.
In today’s edition, I am excited to share the latest developments in sustainability-related disclosures in the global capital markets. The International Sustainability Standards Board (ISSB) has issued its inaugural standards, marking a significant milestone in enhancing trust and confidence in company disclosures about sustainability.
The ISSB’s first two standards, IFRS S1 and IFRS S2, aim to create a common language for disclosing the impact of climate-related risks and opportunities on a company’s prospects. These standards provide a framework for companies to communicate sustainability-related risks and opportunities to investors over the short, medium, and long term.
To celebrate this important milestone, ISSB Chair Emmanuel Faber will officially launch the Standards at the IFRS Foundation’s annual conference. The launch will be accompanied by a series of events hosted by stock exchanges worldwide, including Frankfurt, Johannesburg, Lagos, London, New York, Santiago de Chile, and Singapore.
IFRS S1, the general requirements standard, enables companies to provide investors with information on sustainability-related risks and opportunities. IFRS S2 focuses specifically on climate-related disclosures and is designed to be used in conjunction with IFRS S1. Both standards incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
The development of these standards has received broad support from various stakeholders, including the G20, the Financial Stability Board, and the International Organization of Securities Commissions (IOSCO). The demand for a consistent understanding of how sustainability factors affect companies’ prospects has been a driving force behind the creation of these global baseline standards.
The ISSB Standards are designed to be used alongside any accounting requirements and are built on the same concepts as the widely adopted IFRS Accounting Standards. This global applicability ensures a consistent approach to sustainability-related disclosures worldwide.
With the issuance of IFRS S1 and IFRS S2, the ISSB will now focus on supporting jurisdictions and companies in adopting these standards. This includes establishing a Transition Implementation Group to assist companies in implementing the standards effectively. The ISSB will also collaborate with jurisdictions that wish to require additional disclosures beyond the global baseline and work with the Global Reporting Initiative (GRI) to facilitate efficient reporting when combining ISSB and GRI Standards.
Emmanuel Faber emphasizes the importance of the ISSB Standards in enabling companies to communicate their sustainability story robustly and comparably. Better information leads to better economic decisions, and the ISSB Standards are designed to provide decision-useful information for investment decision-making.
The global support for the ISSB’s work reflects the need for a single, trusted set of global standards for sustainability reporting. The ISSB Standards consolidate existing initiatives such as the TCFD recommendations, SASB Standards, CDSB Framework, Integrated Reporting Framework, and World Economic Forum metrics. This consolidation streamlines sustainability disclosures, reducing duplicative reporting and providing a comprehensive view of a company’s sustainability performance.
The ISSB Standards have several key features that make them significant for companies and investors:
- Global disclosure standards: ISSB Standards provide a global baseline for sustainability disclosures, allowing companies and investors to standardize their reporting.
- International support: The ISSB’s work has garnered strong support from investors, companies, policy makers, and regulators worldwide.
- Material information disclosure: The standards focus on material, proportionate, and decision-useful information for investors, ensuring the relevance of disclosures.
- Connections with financial statements: The ISSB Standards are designed to be provided alongside financial statements, streamlining reporting processes.
- Developed through consultation: The ISSB Standards have been developed through an inclusive and transparent process, with extensive market feedback and input.
- Interoperability with broader sustainability reporting: The partnership with the Global Reporting Initiative ensures interoperability, reducing the reporting burden for companies using both ISSB and GRI Standards.
- Capacity building partnership: The ISSB is committed to capacity building, supporting high-quality reporting across developed and emerging economies.
The issuance of these inaugural standards is just the beginning of the ISSB’s journey. The board is seeking feedback on future priorities and welcomes stakeholder input until September 1, 2023.
The new standards provide companies with a transition period, allowing them to focus on climate-related disclosures in the first year of reporting. This phased approach enables companies to gradually implement sustainability disclosures while familiarizing themselves with the ISSB Standards.
In conclusion, the release of the inaugural IFRS Sustainability Disclosure Standards by the ISSB represents a significant step forward in establishing a global baseline for sustainability reporting. These standards will enhance transparency, comparability, and trust in the sustainability disclosure landscape, empowering investors and stakeholders to make informed decisions.
We look forward to the continued development and adoption of these standards, driving us closer to a more sustainable and resilient global economy.
If you would like to learn more or need help with ISSB, contact us -firstname.lastname@example.orgDr. Nisha Kohli