ISSB is gaining momentum. What’s next?
It’s been about a year and a half since the International Sustainability Standards Board (ISSB) released the final version of its global sustainability disclosure standards, IFRS S1 and IFRS S2. Since then, more than 20 jurisdictions have already decided to use or are taking steps to integrate ISSB Standards into their legal or regulatory frameworks. Together, these jurisdictions account for nearly 55% of global GDP and over 40% of global market capitalization. We expect to see the initial wave of ISSB-compliant reports from first-phase companies in certain jurisdictions in the 2024-2025 reporting cycle.
What’s driving this rapid adoption? Investors need, and increasingly demand, sustainability-related disclosures that are reliable, verifiable, consistent, transparent and easily accessible. ISSB has stepped up to deliver, with standards intended to provide consistent, comparable and actionable disclosures for capital markets. These standards go beyond just climate by requiring companies to address how they identify risks and opportunities as well as manage and measure the impact of each material ESG issue. While many companies have already disclosed this type of information for climate as part of TCFD reporting, most do not fully address other material topics in current disclosures.
The ISSB Standards: A guide, not a roadmap
What exactly will ISSB-compliant reporting look like? That’s where things get a little more complex. ISSB and the IFRS Foundation, the organization responsible for creating and maintaining the standards, have developed resources, such as the Inaugural Jurisdiction Guide and Regulatory Implementation Program Outline, to make it easier for jurisdictions to adopt and integrate the Standards. But because the Standards are meant to act as a guide for jurisdictions to adapt into their own legal and regulatory frameworks, the IFRS Foundation does not specify in what format information should be presented.
Instead, it is up to individual jurisdictions to decide how they may require entities to report information on their material ESG topics. In lieu of jurisdictional guidance, the ISSB Standards suggest relying on current reporting formats, such as traditional sustainability reports, or following reporting format requirements laid out by CSRD or other regulatory sustainability standards and frameworks.
How to prepare for ISSB compliance
How, then, should organizations proceed in preparing for ISSB? The ISSB Standards integrate current SASB disclosures, are heavily influenced by the structure of TCFD and are interoperable with GRI. Therefore, strengthening your organization’s disclosures for those voluntary frameworks is a good place to start. From there, you’ll likely want to address any gaps in how your organization manages and collects information for each material topic. This could include an exposure assessment to determine if your organization or any listed entities meet the criteria for disclosure in the jurisdictions that have adopted, or plan to adopt, the ISSB Standards. This assessment will help determine when and where you are required to report, or if you will be required to report at all, under the current jurisdictional landscape.
Understanding this landscape — let alone complying with IFRS S1 and IFRS S2 — may seem daunting. CRI has developed a custom decision process that walks you through the jurisdictional requirements that you may fall under, identifies gaps in your current reporting and makes recommendations to address and close those gaps. We can help you get up to speed with consistent, reliable and comparable disclosures that will allow you to stay ahead as global sustainability reporting evolves.
