What is ISSB?

The International Sustainability Standards Board (ISSB) is a globally recognised organization established to develop comprehensive sustainability disclosure standards for companies. Its primary goal is to create a global baseline for sustainability-related financial disclosures, ensuring that companies can provide consistent, transparent, and comparable information about sustainability risks and opportunities. It is designed to support investors, regulators, and other stakeholders in making well-informed economic and financial decisions in an increasingly sustainability-conscious world.

 The ISSB (International Sustainability Standards Board) was established by the International Financial Reporting Standards (IFRS) Foundation in 2021. The ISSB is tasked with building a unified framework for sustainability and climate-related disclosures, addressing the growing demand for clear and credible ESG (Environmental, Social, and Governance) information. Before the ISSB, companies reported sustainability information using a wide range of voluntary frameworks, such as:

·       GRI (Global Reporting Initiative)

·       SASB (Sustainability Accounting Standards Board)

·       TCFD (Task Force on Climate-related Financial Disclosures)

 This had created inconsistencies and made it harder for investors to compare company performance. The ISSB aims to solve that by creating a single set of high-quality, global standards.

ISSB Standards: IFRS S1 & IFRS S2

 In June 2023, the International Sustainability Standards Board (ISSB) had published its first two global sustainability disclosure standards: IFRS S1 and IFRS S2. These standards  provide a foundational framework for companies to disclose material sustainability and climate-related information in a way that is relevant to investors and aligned with financial reporting practices.

 IFRS S1 and IFRS S2 include reporting requirements across four content areas:

·       Governance

·       Strategy

·       Risk management

·       Metrics and Targets

 IFRS S1 establishes a broad-based framework that outlines the general principles and requirements for disclosing sustainability-related risks and opportunities that could have a material impact on an entity’s current or future financial position. Specifically, it requires companies to report on risks and opportunities that could reasonably be expected to affect their cash flows, access to finance, or cost of capital over the short, medium, or long term.

 IFRS S2 builds upon IFRS S1 by focusing specifically on climate-related risks and opportunities, which are among the most urgent sustainability concerns for businesses today.

 Key features of IFRS:

·       Promotes transparency and consistency in financial reporting within companies

·       Encourages consistent, comparable, and decision-useful information for investors

·       Provides a common language for financial reporting, making it easier for comparison between different organisations

·       Mandatory for listed companies in over 140 countries, including the EU and Australia

·       Voluntarily adapted by many countries to enhance global competitiveness and investor confidence

Why is ISSB important?

 The International Sustainability Standards Board (ISSB) is important because it provides a globally consistent framework for sustainability-related disclosures, helping to resolve the long-standing issue of inconsistent reporting across different countries and industries.

By establishing a single set of high-quality standards, the ISSB provides a comprehensive framework that connects sustainability information with financial reporting, enabling companies to disclose financially material environmental and social risks and opportunities in a way that helps investors and other stakeholders. This enhances transparency, comparability, and accountability, making it easier to assess a company’s long-term value and resilience.

The ISSB also ensures that sustainability information is integrated into the main financial reports, rather than being reported separately, bridging the gap between financial and non-financial disclosures. Aligned with global frameworks like the TCFD, the ISSB supports regulatory readiness and strengthens investor confidence, ultimately helping organisations compete more effectively in global markets and contribute to a more sustainable economy.