The International Sustainability Standards Board (ISSB) has launched new sustainability-related disclosure standards for capital markets.
The new ISSB standards include the General Requirements for Disclosure of Sustainability-related financial information (IFRS S1), and the requirements for Climate-related Disclosures (IFRS S2). Both standards aim to improve confidence in company disclosures about sustainability and climate change. S1 and S2 are designed to enable TCFD compliance and are fully compatible with GAAP accounting standards.
- IFRS S1, the ‘General Requirements for Disclosure of Sustainability-related Financial Information’, provides a set of requirements for companies to use alongside their financial statements to share forward-looking, sustainability-related risks and opportunities over the short, medium and long term.
- IFRS S2, ‘Climate-related Disclosures’, lays out the detail surrounding climate-related disclosures specifically and is designed to be used with IFRS S1.
Speaking at the release of the standards this morning, Sue Lloyd, vice-chair of ISSB, described the release as a response to the “resounding request from the market to bring an end to the alphabet soup” of current reporting systems.
Emmanuel Faber, the chair of the ISSB, said: “The flurry of about 500 Different ESG metrics, standards and disclosures over the last decade is evidence that despite the very comprehensive accounting systems that we operate, there is apparently something that the market participants are needing and did not find in the current system.”
The International Organisation of Securities Commissions (IOSCO) will now evaluate whether to publicly endorse the standards for adoption across different jurisdictions.
Baroness Penn, the parliamentary secretary with responsibility for ESG within the Treasury, shared the UK government’s support for the framework. “We will continue to make the case for its importance as the global baseline standard,” she said.