Who does this affect: Once they are finalized, the ISSB Sustainability Standards will be available for voluntary use by public and private companies of any size. Many regulators have announced plans to consider adopting or incorporating the ISSB standards into their regulator frameworks. In addition, the International Organization of Securities Commissions (IOSCO) will consider endorsing the ISSB standards. The ISSB standards have been designed to support jurisdictions in establishing or enhancing sustainability reporting requirements. Broad global use of the ISSB standards by market participants and regulators will lead to more consistent, comparable, and reliable reporting on sustainability-related financial information.
Why was the ISSB established: Founded by the International Financial Reporting Standards (IFRS) Foundation in November 2021 as an effort to create high-quality sustainability standards that better fulfill investors’ information needs. One of the primary goals of the ISSB is to help converge the currently fragmented reporting landscape, creating the next generation of norms for voluntary reporting.
What does it require: The ISSB is in the process of finalizing its IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. S1 sets standards for investor-focused disclosures about its material sustainability-related risks and opportunities and sustainability-related financial information. S2 sets standards for climate-related risks and opportunities, providing guidelines for identifying, measuring, and disclosing this information. Both build upon the TCFD foundation.
When would it come into effect: The standards are expected to be released in June 2023, with an effective date of January 1, 2024. The ISSB has announced that companies reporting using its standards may choose to delay reporting on non-climate-related sustainability information for an extra year to enable companies to “focus initial efforts on ensuring they meet investor information needs around climate change.” Both sets of standards will, however, be available for use as soon as they are issued.
Where is reporting required: In General Purpose Financial Reporting. As jurisdictions choose to adopt, incorporate, or use the standards, their exact location will be determined by individual jurisdictions.
Original text: Exposure Draft on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and Exposure Draft IFRS S2 Climate-related Disclosures
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Who does this affect: The SASB standards can be used on a voluntary basis by companies across 77 industries. The SASB standards identify which ESG topics are relevant to each of these 77 industries to aid companies in their reporting. While the standards are voluntary today, the International Sustainability Standards Board (ISSB) is incorporating the SASB standards into the ISSB standards. As such, companies subjected to mandatory reporting under the ISSB standards may be expected to consider the SASB standards for their industry.
Why has it been introduced: The SASB standards were created to focus on industry-specific metrics rather than broad industry-agnostic disclosure standards since some sustainability issues are more relevant to some industries than others. For example, SASB sees energy management as a relevant issue to companies in the Real Estate industry, but not as much for those in the Toys & Sporting Goods industry.
What do the standards say: SASB standards lay out the ESG issues that are most likely to be financially material for each of the 77 industries covered. For each industry, the SASB standards include:
What is the history of SASB: SASB published their first set of industry-specific standards in 2018. On August 1, 2022, the Value Reporting Foundation, which oversees the SASB standards, became part of the IFRS Foundation, which manages the ISSB.
Where is reporting required: SASB standards do not prescribe where companies should report. Instead they give a range of options, including a stand-alone SASB report, a sustainability report, and integration into financial reports.
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