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The ISSB Standards “will build on the work of existing investor-focused reporting initiatives to become the global standard-setter for sustainability disclosures for the financial markets.” Article.
The ISSB aims to create a global baseline of standards that can be integrated into legislated requirements as unlike financial reporting standards, sustainability reporting regimes lack coherency. By building on existing reporting standards and frameworks, the ISSB is designed to enhance interoperability with existing jurisdictional and international standards to better support adoption.
The ISSB will have to keep pace with local jurisdictions, such as the European Sustainability Reporting Standards (ESRS), which is coming into effect on 1 January 2024. The ESRS will be a source of guidance for companies to identify if their metrics and disclosures meet the information needs of the investors. The ISSB standards will call for companies to report their sustainability-related financial information alongside their annual financial statements, an action consistent with reporting proposals in certain jurisdictions such as the EU.
ISSB and GRI
Whilst ISSB is focused on the information needs of investors, namely information on business performance, GRI standards serve the needs of multiple stakeholders (meaning information on business impacts). It would not make sense for ISSB to simply adopt GRI as its own standard. However, the ISSB has confirmed that it will allow companies to use GRI alongside ESRS standards to help identify sustainability related risks and opportunities.
IFRS S1 and SASB
To fulfil IFRS S1, all organisations must consider SASB standards, disclosures and metrics and may consider CDSB guidance. With all SASB and CDSB materials housed within the ISSB, a one-stop resource for organisations to follow is effectively created. IFRS S1 stipulates that all companies must provide material information on all significant sustainability-related risks and opportunities that allows investors to assess enterprise value.
IFRS S2 and TCFD
The four thematic pillars (governance, strategy, risk management, metrics and targets) and the 11 recommended disclosures in the TCFD are consistent with IFRS S2 disclosure requirements. While it mostly aligns with TCFD, IFRS S2 requires additional information, for instance it will require companies to report on Scope 1, Scope 2 and Scope 3 greenhouse gas emissions (Table 1).
Table 1: Similarities and differences between TCFD and ISSB. Source
Both ISSB standards place greater demands in the areas of strategy, metrics and targets. Overall, this means that thousands of companies already using TCFD recommendations and SASB standards will be in a strong position to use IFRS S1 and IFRS S2.