The ISSB issued two key sustainability reporting standards in 2023: IFRS S1 for general sustainability-related financial information and IFRS S2 for climate-related disclosures. The aim was to provide investors with high-quality, comparable sustainability information and streamline the reporting landscape by consolidating existing frameworks like TCFD, SASB, and CDSB.
With the UK government planning to consult on draft UK Sustainability Reporting Standards (UK SRS), based on IFRS S1 and IFRS S2, in early 2025, companies must develop robust processes and controls to identify, assess, and disclose material sustainability-related risks and opportunities that could reasonably be expected to affect their financial performance.
The IFRS Foundation's guidance offers valuable assistance in navigating the complexities of sustainability reporting and ensuring compliance with the ISSB standards or upcoming UK SRS.
The IFRS’ guidance is structured into three key chapters. The first chapter delves into the concept of materiality, explaining how to identify and assess sustainability-related issues that could significantly impact an entity's financial performance.
The second chapter focuses on identifying sustainability-related risks and opportunities that may affect an entity's prospects. It provides a framework for considering various factors, such as climate change, social impacts, and resource scarcity.
The third chapter outlines the specific disclosure requirements for material sustainability-related information. It offers a step-by-step approach to identifying and disclosing such information, emphasising the importance of alignment with financial statements and other relevant standards like the European Sustainability Reporting Standards (ESRS) and Global Reporting Initiative (GRI).
The guidance also provides information on climate-related issues, risk assessment, and navigating the interplay between international and local regulations. Additionally, it offers practical insights into applying the ISSB Standards through hypothetical scenarios.
The guidance was created with the desire to support companies in identifying, assessing, and disclosing material sustainability-related risks and opportunities. It is now down to businesses to prepare for ISSB disclosures in a meaningful manner.
If you are unsure how to prepare for ISSB or sustainability-related disclosures in general, why not get in touch with us. We can help.
Black Sun Global is a stakeholder advisory and engagement agency that's been driving transformation and positive change for ambitious brands for more than 20 years. With deep expertise in disclosure and reporting, ESG, sustainability, and digital engagement, we reshape how organisations connect with customers, investors, employees, and the wider world.
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