Consistent with this vision, the IFRS Foundation launched the ISSB at the United Nations Climate Change Conference (COP26). This is a significant development. It’s the first step towards developing a global baseline corporate reporting standard on climate change and sustainability matters, integrated with financial reporting standards under the IFRS Foundation’s robust governance structure.

The ISSB has international support with its work to develop sustainability disclosure standards backed by the G7, the G20, the IOSCO, the Financial Stability Board, African Finance Ministers and Finance Ministers and Central Bank Governors from more than 40 jurisdictions.

The ISSB has set out four key objectives:

• to develop standards for a global baseline of sustainability disclosures;
• to meet the information needs of investors;
• to enable companies to provide comprehensive sustainability information to global capital markets; and
• to facilitate interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups.

The ISSB builds on the work of market-led investor-focused reporting initiatives, including the Climate Disclosure Standards Board (CDSB), the Task Force for Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and industry-based Sustainability Accounting Standards Board (SASB) Standards, as well as the World Economic Forum’s Stakeholder Capitalism Metrics.

ISSB issues inaugural global sustainability disclosure standards

On 26 June, The International Sustainability Standards Board (ISSB) has issued its inaugural standards, IFRS S1 and IFRS S2, ushering in a new era of sustainability-related disclosures in capital markets worldwide. The Standards will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions. For the first time, the Standards create a common language for disclosing the effect of climate-related risks and opportunities on a company’s prospects. FRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. Both fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The ISSB will work with jurisdictions and companies to support adoption. 

The FCA has welcomed the International Sustainability Standards Board (ISSB) launch of its first sustainability – related reporting standards: the General Requirements for Disclosure of Sustainability-related financial information (IFRS S1), and the requirements for Climate-related Disclosures (IFRS S2). The FCA has been a strong advocate of the development of international corporate reporting standards on sustainability and has supported the work of the IFRS Foundation in this area. The UK Government also recently signalled support for the ISSB and announced that it would be establishing a mechanism for formal UK endorsement and adoption of the standards. Once available for use in the UK, the FCA’s intention is to update its climate-related disclosure rules to reference the ISSB standards