International Sustainability Standards Board (ISSB) set to release first two standards in June 2023 for general sustainability-related and climate-related disclosures
Following consultation during 2022, the International Sustainability Standards Board (ISSB) and International Financial Reporting Standards (IFRS) Foundation is expected to release two standards in June 2023:
IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2 Climate-related Disclosures
IFRS S1 sets out baseline sustainability reporting and core content for sustainability-related financial disclosures, requiring companies to disclose material information about the sustainability-related risks and opportunities to which it is exposed. IFRS S2 addresses the specific topic of climate change, to generate climate-related disclosures to align with the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD).
The Australian Government Treasury recently consulted on key considerations for a mandatory, internationally-aligned disclosure requirement for climate-related financial risks and opportunities in Australia. Currently, approximately half of ASX-200 companies report voluntarily to TCFD, and that number continually increasing.
The IFRS standards represent a internationally comparable reporting disclosure system. The EU and US have announced they will align with ISSB, and China and UK have indicated the same. It is likely Australian companies will be required by the Australian Securities and Investment Commission (ASIC) to mandatorily report to ISSB from financial year 2024/2025. Businesses should be preparing for this new benchmark in assessment and reporting, and companies that do not address current and future environmental concerns risk access to capital and reputational damage with customers and investors.
Read more about the General Sustainability-related Disclosures (IFRS S1) standard here: https://www.ifrs.org/projects/work-plan/general-sustainability-related-disclosures/
Read more about Climate-related Disclosures (IFRS S2) here: https://www.ifrs.org/projects/work-plan/climate-related-disclosures/
