The New ISSB Standards Today, the IFRS® Sustainability Disclosure Standards include IFRS S1 and IFRS S2, the inaugural standards issued by the ISSB. The ISSB Standards and the IASB Standards approach materiality with the same focus on the needs of investors: in- formation is material if omitting, misstating, or obfuscating it could reasonably be expected to influence investor decisions. IFRS S1 is an overarching standard for the disclosure of


material information about a business’s sustainability-related risks and opportunities. Note that IFRS S1 applies the TCFD’s widely adopted four-pillar structure—governance, strategy, risk management, and metrics and targets—across a business’s relevant sustainability issues. IFRS S2 is the ISSB climate disclosure standard. Some have


nicknamed it “TCFD-plus” because it fully incorporates the TCFD recommendations, with added clarity and consistency, result- ing in assurable information that is suitable for the mandatory disclosure that many jurisdictions are already moving toward. IFRS S2 incorporates all aspects of the TCFD framework


around disclosures on transition planning, climate resilience, and scenario analysis; and Scope 1, 2 and 3 greenhouse gas (GHG) emissions.


Both IFRS S1 and IFRS S2 require industry-specific disclosures


because different industries face different sustainability-related risks and opportunities, and investors use this industry-specific information to understand the performance of companies in their portfolios. Here is where consideration of the SASB Standards comes in. IFRS S1 requires companies to consider the SASB Standards, while IFRS S2 incorporates the climate topics and metrics from the SASB Standards as industry guidance. The SASB Standards are already used widely by companies and investors around the world, with over 3,100 reporters, 60% outside the United States, and including 88% of the S&P 500. Companies should understand that this industry-specific layer reduces, rather than adds to, their reporting burden. Focus-


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ing on those sustainability factors likely to affect a company’s prospects in its industry enables it to limit the cost and effort of gathering data, assuring it, and reporting it.


Achieving a Truly Global Baseline In keeping with the ISSB mission to create a global baseline of sustainability-related financial disclosures, the ISSB Standards are designed to be compatible with requirements across differ- ent jurisdictions. We call this interoperability, and it is the focus of intensive work taking place directly with jurisdictions such as the European Union, China, Japan, the United Kingdom, and the United States, with the aim of reducing reporting duplication. While the ISSB Standards are intended primarily to serve the


needs of investors, another main advantage for large companies is that they will be used around the world. Imagine a company’s operations, subsidiaries, customers, and suppliers speaking the same language of sustainability disclosures, leading to reduced work in gathering the data, auditing it and reporting it, and therefore, reduced risk in compliance and reporting. Te two guiding objectives of the ISSB Standards are to meet


the information needs of investors while balancing those needs against what’s practical and cost-effective for companies, and not just large-cap companies in developed countries like the United States, but companies of all sizes and stages of development in every market. As a result, the ISSB has focused on phasing and scaling, with


transition reliefs and accommodations for smaller companies or companies with less exposure to sustainability factors like climate risk.


What Happens Now? ISSB recently concluded a public consultation on its next two-year work plan, including potential projects around biodiversity and nature, human capital, human rights, and integration in reporting. After considering the feedback received and detailed analysis, the work plan is expected to be finalized in the first half of 2024.


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