Please find below a short video that explains IFRS Sustainability disclosure standards - S1 and S2 standards. I have shared the transcript of the same below the video.
Transcript:
How does the ISSB serve as an anchor in the sustainability disclosure landscape?
The ISSB was founded by the IFRS foundation in 2021 at COP 26 in Glasgow supported by investors and international policy makers including G20 the financial stability board and IOSCO the ISSB builds on the legacy of its sister board the IASP which sets the IFRS accounting standards used by more than 140 jurisdictions the IFRS foundation which is accountable to a monitoring Board of Capital Market authorities has a mission to develop high quality IFRS standards that bring transparency accountability and efficiency to financial markets around the world
ISSB is working with key players in the sustainability disclosure landscape to deliver an efficient reporting landscape as a global Baseline of sustainability related Financial disclosures is established through the ISSB standards in July 2023. IOSCO endorsed the ISSB standards and called on its 130 member jurisdictions Capital Market authorities that regulate more than 95% of the world's security markets to consider how they can incorporate IFRS S1 and IFR SS2.
Already over 25 jurisdictions that make up around 55% of global gross domestic product have decided or are consulting on using ISSB standards jurisdictions such as Brazil,Canada,Japan and Nigeria.
IFRS ss1 provides a set of disclosure requirements designed to enable companies to communicate material information to investors about the sustainability related risks and opportunities that 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 SS1.
The ISSB standards fully incorporate the Task force on climate related Financial disclosures or TCFD recommendation. This led to TCFD being disbanded in 2023. The ISSB standards require industry specific disclosures to support this. SASB standards are required to be considered for topics beyond climate. Other sources of guidance include CDSB materials.IFRS S2 incorporates industry specific disclosures based on SASB standards to secure an efficient disclosure system.SASB, TCFD recommendations and CDSB materials have been Consolidated into our standards.
Another vital aspect of achieving an efficient reporting system is through supporting better connections between sustainability related disclosures and a company's financial statements IFRS S1 provides that companies disclose sustainability related financial information connected to and alongside financial statements. The ISSB standards are designed to be used with financial statements based on any GAAP but the standards work particularly well with with IFRS Accounting Standards.
An integrated report or the management commentary can be a suitable occasion for companies for information provided using IFRS S1 and S2. The integrated reporting framework can help companies communicate holistically to investors. IFRS S1 builds on concepts in the integrated reporting framework.
Interoperability with leading standards in the landscape is integral to reducing duplication enabling companies to collect,govern and control decision useful data once. GRI standards help companies meet the information needs of a broad range of stakeholders including investors about an organization's impacts. Companies can use GRI standards with ISSB standards when they want to meet the information needs of both investors and a broader range of stakeholders. Companies required to use the European sustainability reporting standard (ESRS) can start with ISSB standards as a global baseline and add other disclosures to meet ESRS. For companies operating in the US, there are significant similarities between the US SEC climate Rule and IFRS S2. Several Frameworks and standard setters with different mandates to the ISSB have used the ISSB standards as a basis for their requirements theyby reducing complexity and fragmentation. Companies around the world respond to the CDP questionnaire to provide information to investors this questionnaire is now aligned to IFRS S2. The BASEL committee on banking supervision sets standards for credential regulation of banks. It has proposed that its climate disclosures build on IFRS S2. The international public sector Accounting Standards Board set public sector disclosure standards it has proposed that its climate standard will be built on IFRS S2. the ISSB seeks to deliver harmonization of the sustainability disclosure landscape and reduce complexity involved in varying sustainability reporting initiatives. IFRS S2 requires GHG emissions to be measured in accordance with the GHG protocol corporate standard 2004. ISSB will be actively engage in any updates to the protocol including having an observer on the GHG protocol Standard setting board.
Companies with transition plans are required to disclose information about them when applying IFRS S2. The IFRS foundation is now responsible for the Transition Plan Taskforce's disclosure-specific materials that can help companies with these disclosures. The task force on nature related Financial disclosures (TNFD) recommendations have been designed to help companies disclose nature related information. The ISSB is considering how to build upon the TNFD recommendations as part of ISSB's project on nature. The ISSB was called on by the market and international policy makers to deliver an efficient reporting landscape ending the alphabet soup of voluntary initiatives and meeting investor demand for decision-useful comparable information. As such the ISSB remains committed to serving as an anchor in the sustainability disclosure landscape working closely with partners around the world to drive efficiencies.
