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Elana Goldstein

5 things to know about the new ISSB reporting standards

In September, CRI hosted a webinar focused on the new International Sustainability Standards Board (ISSB) reporting standards. Before we dive into our takeaways, a bit of background on the ISSB.

The ISSB standards were developed by the International Financial Reporting Standards (IFRS) Foundation, which also oversees the IFRS Accounting Standards used in 120 countries globally. The new ISSB standards reflect consolidation in the reporting space, bringing the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and Integrated Reporting standards together into one investor-focused standard. Two ISSB standards have been released so far: IFRS S1 and IFRS S2. The IFRS S1 standard focuses on general disclosures about sustainability-related financial information. IFRS S2 is more targeted, with a specific focus on climate-related disclosures.

During our recent webinar, we heard from Neil Stewart, Director of Corporate Outreach for the IFRS Foundation, who helped shed light on this new standard.

Here are our takeaways from the event:

Look forward to interoperability.

The ISSB standards are emerging at a time of significant shifts in the reporting landscape, particularly due to the new European reporting standards created under the EU’s Corporate Sustainability Reporting Directive (CSRD). While the ISSB and the European standards have core differences, particularly related to materiality, there are efforts to make the standards (along with the Global Reporting Initiative, or GRI) interoperable. Both reporting standards use the same definition of financial materiality, enabling a core set of financial material topic disclosures under both reporting frameworks.

Get ready for 2025.

Our webinar highlighted that the upcoming reporting cycle will likely not be impacted by the new ISSB standards. We should expect to see the ISSB standards come into use in the following reporting cycle, for reports issued in 2025. This is important to note because it gives companies a bit more time to prepare.

Use ISSB and TCFD to prepare.

As the ISSB is based on the SASB and TCFD standards, the best way to prepare for the transition to ISSB is to ensure that your company is preparing SASB and TCFD reports in the upcoming reporting cycle. Robust reporting is key here. If you haven’t done climate scenario planning under TCFD, now is a good time to start.

Expect mandatory reporting in some jurisdictions.

While ISSB is a voluntary framework, it may be used as the basis for mandatory reporting in some jurisdictions. The UK, Canada, China, Japan, Australia and several other countries have already stated that they will be using ISSB as the basis for their sustainability reporting schemes.

Formalize your data controls.

ISSB asks for sustainability disclosures to be aligned with financial reporting to create a more holistic understanding of a company’s sustainability-related financial risk for investors. To prepare for this transition, companies will need to formalize their control processes to make sure that the data they disclose is accurate and investor-grade.

The ISSB standard is the next evolution in the reporting landscape and will help simplify the “alphabet soup” of ESG. However, many companies will still need to make meaningful changes to make the transition to ISSB.

CRI is here to help.

We are developing new tools and expertise to guide you through this transition and help identify gaps in your reporting practices. Reach out to learn more about how you can prepare for this new era of reporting.