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FIRST GLOBALLY CONSISTENT SUSTAINABILITY REPORTING STANDARDS RELEASED

FIRST GLOBALLY CONSISTENT SUSTAINABILITY REPORTING STANDARDS RELEASED

27 June 2023

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The International Sustainability Standards Board (ISSB) has issued its inaugural standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

The Standards bring in a new era for sustainability-related disclosures in capital markets worldwide, with the aim of improving trust and confidence in company disclosures about sustainability to inform investment decisions. And for the first time, the Standards create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects.

The Standards have been widely welcomed by the investor, accounting, finance and ESG communities, here are a few of the reactions: 
  • Bloomberg LP’s vice chair for global public policy Mary Schapiro, also head of the TCFD secretariat: “The global economy needs common reporting standards to reduce fragmentation and drive comparability in climate-related financial data. Built upon the foundation of the TCFD framework, the ISSB standards provide a global baseline for companies to disclose decision-useful, climate-related financial information – information that is critical for creating more transparent markets, helping achieve a smooth low-carbon transition, and building a more resilient and sustainable global economy.”
  • The World Economic Forum’s executive chair Klaus Schwab: “The publication of the first two ISSB Standards represent a vital step forward in establishing a global baseline for sustainability reporting. Consistent and comparable sustainability information, paired with financial information, empowers investors and stakeholders to gain a comprehensive understanding of a company’s performance and their commitment to driving sustainable value creation. We look forward to our continued collaboration.”
  • The Association of Chartered Certified Accountants’ (ACCA) chief executive Helen Brand: “The launch of these first two global sustainability standards is an important and significant step forward in business reporting, providing a global baseline for comparable information on sustainability issues, which will help investors, financial markets and society more widely. The focus they provide will help drive the positive changes we need in the way businesses operate in the face of the threat from climate change.”
  • EY’s global vice chair for sustainability, Steve Varley: “The current global disparity in sustainability reporting makes clear our need for a common language and baseline for sustainability-focused disclosures, particularly regarding investments. Having worked with chief sustainability officers from around the world, both at EY and as co-chair of the S30, I’ve seen first-hand just how vital a harmonised approach is. The standards put forward by ISSB will give organisations freedom from ambiguity and opportunity to go further, faster.”
  • Asian Development Bank managing director Woochong Um: “We welcome the inaugural standards which deliver a global baseline of sustainability-related financial disclosures that have the potential to enhance Asian capital markets by attracting more investment and boosting private sector development in Asia. We encourage Asian Development Bank members to give their consideration to the adoption of the Standards.”
  • European Round Table for Industry (ERT) Chair Jean-François van Boxmeer: “Global alignment is crucial to provide a comprehensive and clear view of a company’s sustainability performance and to allow for the comparability of disclosures on a global level. Separate and differing sets of standards for sustainability reporting in different jurisdictions would lead to a de facto double reporting for preparers and, consequently, unnecessary additional costs and reduced validity and comparability for users. We therefore strongly encourage jurisdictions around the globe, including the EU, to take on board the ISSB standards and to integrate them into their own regulatory framework.”

Morrow Sodali Managing Director, Head of ESG International, Jana Jevcakova with the Vice-Chair of ISSB Sue Lloyd

MORROW SODALI IS ON THE GROUND

Jana Jevcakova, Morrow Sodali’s Head of ESG International, is attending the IFRS conference in London where ISSB Chair Emmanuel Faber launched the Standards during his keynote speech at the IFRS Foundation Conference 2023.

“The audience in the room, consisting of preparers/issuers, investors, consultants, policy makers and regulators has been very engaged, asking a lot of questions and providing comments”, Jana shared.

Going on to say “And you can tell that both IASB and ISSB feel relieved having the Standards finally out in the market. The key message is that ISSB is not prescribing sustainability, rather it is describing it, with the goal of companies checking on the materiality of sustainability factors and reporting on those that are material.”

Adding that “The ISSB Standards allow sustainability to be embedded into accounting standards and mark a new era for transparency. However, some questions regarding enforceability and applicability of the Standards across individual jurisdictions are yet to be answered.”

ACCESSING THE STANDARDS

You can find out more about the two Standards here and access them using the new IFRS Sustainability Standards Navigator.

Alongside the Standards, the ISSB have also published accompanying guidance, bases for conclusions, an effects analysis, a project summary and a feedback statement.

If you’d like to find out more about the new international reporting standards and potential impacts for your organisation, please contact the Morrow Sodali team.


 

Summary

The International Sustainability Standards Board (ISSB) has issued its inaugural standards, IFRS S1 and IFRS S2.

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