Stockholm (NordSIP) – At the start of May, the International Financial Reporting Standards (IFRS) Foundation and the European Financial Reporting Advisory Group (EFRAG) published guidance material to illustrate the high level of alignment achieved between the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards (ISSB Standards) and the European Sustainability Reporting Standards (ESRS). This report follows the publication of the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy) by the International Sustainability Standards Board (ISSB) at the end of April.
Essentially, both the ESRS and the ISSB Standard do the same thing. They provide the structure for companies to disclose a range of information on ESG issues, not least climate change impacts, to inform investors and help them understand the sustainability impact of the companies they invest in. The ESRS–ISSB Standards Interoperability Guidance illustrates how a company can apply both the ISSB and the ESRS standards, including detailed analysis of the alignment in climate-related disclosures.
The 33-page document is divided into four sections. Section 1 comments on general reporting requirements in ESRS and ISSB Standards and explains the interoperability of the two standards with respect to materiality, presentation and disclosures for sustainability topics other than climate. Section 2 discusses common climate‑related disclosures and illustrates the high level of interoperability regarding climate across the two standards, cross-referencing the paragraphs in ISSB Standards with their equivalent ESRS counterparts. Section 3 considers the information that an entity starting with ESRS needs to know when also applying ISSB Standards to enable compliance with both sets of standards. Section 4 does the opposite, considering the information that an entity starting with ISSB Standards needs to know when also applying ESRS to enable compliance with both sets of standards.
“On the basis of our joint efforts, we are very happy to be able to issue this very practical guidance on interoperability illustrating in particular how ESRS embed the global baseline approach developed by the ISSB. It demonstrates EFRAG’s commitment to the much needed international convergence of sustainability-related disclosures, on climate and other critical sustainability matters, and our full support to the global momentum in this crucial space,” EFRAG Sustainability Reporting Technical Expert Group Chair Chiara Del Prete said.
“The release of this guidance is a milestone for progressing interoperability and quality of sustainability-related data. ESRS preparers are able to report on climate, also in compliance with ISSB Standards, only with a very limited number of points to consider, clearly identified in Section 3 of this document. This document also explains that ESRS preparers are able to utilise ESRS to comply with ISSB Standards to report on matters beyond climate. This guidance reflects our commitment to avoid duplicative reporting and support preparers and other stakeholders in their implementation challenges. Now, our next step is digital interoperability,” ISSB Chair Emmanuel Faber concluded.
