Stockholm (NordSIP) – Sometimes it is easier to work to a hard deadline. With that in mind the International Sustainability Standards Board (ISSB) decided at its Montreal meeting on February 16 that its initial IFRS Sustainability Disclosure Standards, S1 and S2, will become effective in January 2024.
The organisation is acutely aware of the pressing need for a coherent set of global sustainability standards to free up capital flows and eradicate greenwashing. There is a general acceptance of the fact that regional and cultural differences will prevent the establishment of single global set of standard. The key words are interoperability and alignment, with standard setters working towards maximising the overlap between the various frameworks. The ISSB Board therefore agreed to reference the European Sustainability Reporting Standards (ESRS) alongside its S1 general requirements and continues to work in this manner with other organisations to ensure the final rollout of the most useful and cost-effective framework for market participants.
Commenting on the outcome of the Montreal meeting, ISSB Chair Emmanuel Faber said: “As requested by our stakeholders we have built from existing market-accepted frameworks and standards. This means that the thousands of companies already using the TCFD Recommendations and SASB Standards will be in a strong position to use S1 and S2.”
The new standards are expected to be issued by the end of Q2 this year, which will allow for a period of adaptation before they are put into effect. The ISSB stressed that it wishes to help ensure a level playing field for developing economies and smaller companies, by providing easily accessible guidance and training materials equally to all market participants. This effort is being conducted in collaboration with around 30 public and private sector organisations around the world, in the context of the Partnership Framework that was launched at COP27.
The proposed timing would imply that the first corporate reports to follow the IFRS S1 and S2 would be released in 2025. Depending on the jurisdiction, companies will initially face either voluntary or mandatory compliance. The ISSB has made efforts to create complementary standards, allowing the inclusion of European Sustainability Reporting Standards (ESRS) or Global Reporting Initiative (GRI) metrics where there are gaps in the IFRS, which is to be welcomed.
