{"id":565,"date":"2023-08-29T08:15:01","date_gmt":"2023-08-29T08:15:01","guid":{"rendered":"https:\/\/iqeq.com\/fr\/2023\/08\/29\/understanding-the-new-issb-disclosure-standards\/"},"modified":"2024-08-16T12:56:23","modified_gmt":"2024-08-16T12:56:23","slug":"understanding-the-new-issb-disclosure-standards","status":"publish","type":"post","link":"https:\/\/iqeq.com\/fr\/insights\/understanding-the-new-issb-disclosure-standards\/","title":{"rendered":"Understanding the new ISSB disclosure standards"},"content":{"rendered":"
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The International Sustainability Standards Board (ISSB) has made a significant stride toward standardising sustainability-related disclosures on a global scale. ISSB recently introduced an <\/strong>inaugural set of disclosure standards<\/strong><\/a>, IFRS S1 and IFRS S2, cementing the importance of transparent ESG reporting in capital markets. <\/strong><\/p>\n

The new Standards are the culmination of work carried out by the Task Force on Climate-related Financial Disclosures (TCFD)<\/a>, whose framework heavily influenced their development. This pivotal move signals an increasing emphasis on the direct relationship between sustainability and financial materiality for investors worldwide.<\/p>\n

About IFRS S1 and IFRS S2<\/h2>\n

Two disclosure standards will take effect for annual reporting periods beginning on or after 1 January 2024: IFRS S1 (the \u2018General Requirements Standard\u2019), aimed at communicating the sustainability-related risks and opportunities investors face over the short, medium and long term; and IFRS S2 (the \u2018Climate Standard\u2019), which establishes specific climate-related disclosures.<\/p>\n

The purpose of IFRS S1 and IFRS S2 is to provide a global baseline for sustainability-related disclosures, improving investor trust and market confidence in company disclosures about sustainability and helping to inform investment decisions. They will also create a shared language for disclosing climate-related risks and opportunities on a firm\u2019s prospects.<\/p>\n

The Standards are built on the same conceptual framework as the IFRS Accounting Standards<\/a>, making them easily translatable across jurisdictions and ensuring that companies provide sustainability reporting in the same reporting package as their financial statements.<\/p>\n

ISSB\u2019s Standards will have a broad reach<\/h2>\n

Where most compliance regulation of this type is directed at large firms, the ISSB Standards have an intentionally broad scope, including companies of all sizes. Numerous jurisdictions, including the UK, Canada, Australia, New Zealand, China, Hong Kong, Singapore, Malaysia, Nigeria and Japan, have already signaled their intention to integrate the new Standards into their regulatory regimes. IOSCO<\/a> has also endorsed the Standards, a move that will likely encourage widespread adoption. EU bodies that recently released the final European Sustainability Reporting Standards (ESRS) that form part of the Corporate Sustainability Reporting Directive (CSRD<\/a>) framework have indicated that the two sets of standards have \u201ca high degree of climate-disclosure alignment.\u201d<\/p>\n

A \u2018climate first\u2019 transitional period is available, which will enable entities to provide only climate-related disclosures in their first year of applying the Standards\u2014but more robust reporting requirements won\u2019t wait for long.<\/p>\n

Overcoming potential challenges<\/h2>\n

Firms that have been engaged in reporting under TCFD<\/a> will likely already have the required elements in place to satisfy the new Standards. Smaller firms, however, may struggle to implement them.<\/p>\n

Here are IQ-EQ\u2019s recommended best practices to ensure a smooth transition:<\/p>\n