The International Sustainability Standards Board today issued its inaugural disclosure standards—IFRS S1 and IFRS S2—on general sustainability and climate-related topics. The ISSB standards will likely be adopted in countries with sustainability-related reporting regimes—such as countries in the EU—and will be influential as the SEC considers its final rule on climate risk disclosures that are scheduled for an October release. For companies subject to such disclosure requirements, the standards go into effect for reporting year 2024, with certain relief provided until 2025.
ISSB requirements include disclosures of greenhouse gas emissions—including Scope 3 financed emissions—and scenario analysis of climate-related risks. However, board deliberations on materiality and scalability indicate that flexibility will be provided in how such issues are addressed by reporting companies that adopt the standards. Guidance has been issued by the ISSB to accompany the standards, both for reporting companies in general and for the financial services sector.
