Embracing ISSB's IFRS S1 & S2.

Recently OASIS Consulting Group organised a webinar with support of International Sustainability Standards Board (ISSB) Beijing office. Here are the key takeaways from this wonderful webinar!

A Truly Global Baseline of Disclosures

Companies operate across borders, investors seek diversified portfolios, and regulatory environments vary widely. To address these challenges, the International Sustainability Standards Board (ISSB) has been working to establish a truly global baseline of disclosures. This initiative aims to provide consistent, comparable, and reliable information on sustainability-related financial disclosures, ensuring that stakeholders can make informed decisions regardless of the jurisdiction.

ISSB Milestones

The journey of the ISSB is marked by significant milestones that reflect its commitment to establishing high-quality sustainability standards. Key milestones include:

1. Formation and Establishment: The ISSB was officially formed in November 2021 under the auspices of the International Financial Reporting Standards (IFRS) Foundation. This marked the beginning of a concerted effort to create a global framework for sustainability disclosures.
2. Consultation and Feedback: In 2022, the ISSB released its first two draft standards for public consultation—IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). The feedback process involved extensive engagement with stakeholders worldwide, ensuring that diverse perspectives were considered.
3. Integration with Existing Frameworks: The ISSB has worked closely with other standard-setting bodies, such as the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD), to align its standards with existing frameworks. This collaboration aims to streamline reporting requirements and avoid duplication of efforts.
4. Finalization and Adoption: By mid-2023, the ISSB finalized and published IFRS S1 and S2, marking a significant step towards global harmonization of sustainability reporting.

Priorities 2024

As the ISSB looks ahead to 2024, several key priorities will guide its efforts:

1. Implementation Support: Ensuring smooth adoption of the new standards is critical. The ISSB will provide comprehensive guidance, training, and resources to help companies and jurisdictions implement IFRS S1 and S2 effectively.
2. Capacity Building: To promote widespread adoption, especially in emerging markets, the ISSB will focus on capacity building initiatives. This includes working with local regulators, professional bodies, and industry groups to enhance understanding and application of the standards.
3. Enhancing Standards: The ISSB will continue to refine its standards based on feedback and evolving best practices. This iterative process will ensure that the standards remain relevant and effective in addressing new sustainability challenges.
4. Stakeholder Engagement: Ongoing dialogue with stakeholders is essential for the success of the ISSB’s mission. In 2024, the ISSB will strengthen its engagement with investors, companies, regulators, and civil society to gather insights and foster collaboration.

Jurisdictional Journey Adopting ISSB

The adoption of ISSB standards across jurisdictions varies, reflecting differing regulatory landscapes and levels of readiness. Some jurisdictions have quickly embraced the new standards, recognizing the benefits of a unified approach to sustainability reporting. For instance, the European Union has integrated ISSB standards into its Corporate Sustainability Reporting Directive (CSRD), ensuring alignment with its ambitious sustainability goals.

In other regions, adoption is more gradual, with jurisdictions adapting the standards to fit local contexts. The ISSB supports this journey by providing tailored guidance and engaging in capacity-building efforts. This flexible approach allows for the standards to be adapted while maintaining the integrity of a global baseline.

IFRS S1 and S2 Introduction

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information

IFRS S1 sets out the overarching principles and requirements for sustainability-related financial disclosures. It aims to provide a comprehensive framework that ensures disclosures are relevant, faithfully represented, comparable, and understandable. Key aspects include the identification of material sustainability risks and opportunities, the integration of these factors into governance and strategy, and the communication of how they impact financial performance and position.

IFRS S2: Climate-related Disclosures

Building on the foundation of IFRS S1, IFRS S2 focuses specifically on climate-related disclosures. It aligns closely with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), emphasizing the importance of transparency in climate-related risks and opportunities.

Here is Link of the complete webinar recording offering detailed understanding of above topics. https://www.youtube.com/watch?v=g1UfEiU50bE&t=2625s