This week, the International Sustainability Standards Board (ISSB)’s launched its first two sets of sustainability standards, IFRS S1 and IFRS S2. Has the day that investors and companies longing for harmonized ESG reporting standards finally arrived? Not really, but it’s a start.
Despite their distinct features, these standards are built off existing frameworks, heavily influenced by TCFD (using the scenario-based and governance focused approach TCFD uses for climate on other topics) and SASB (focusing on what matters to investors and defining different indicators per industry considering materiality notions). IFRS S1 outlines the requirements for companies to reveal sustainability-related risks and opportunities over different timeframes and scenarios. IFRS S2 narrows down industry-specific climate metrics.
Key things to look out for in planning to adhere to these new standards:
- These standards come into effect in January 2024.
- Companies will be required to publish their sustainability information at the same time as their financial information. One-year relief period for the first reporting year.
- All disclosed sustainability data needs to pass a materiality test to ensure its relevance for investors.
- Scope 1, 2, and 3 GHG emissions in alignment with GHG Protocol will be required. One-year relief period allowed for Scope 3 emissions.
GRI Standards are currently the most widely used in corporate sustainability reporting. As we’ve discussed in other blogs, GRI covers a broader range of stakeholders than other standards. ISSB Standards target investors and capital providers, the way SASB currently does. Companies wishing to offer comprehensive information may continue to effectively use both, focusing on a multi-stakeholder reporting approach.
As the sustainability landscape continues to evolve, the ISSB, GRI, and SASB remain committed to working together, fostering harmonization, and driving the transformation towards a more sustainable and responsible future. We, at Miranda ESG, will be happy to help organizations decide how to better adhere to the best reporting practices.
I hope you found this interesting. As usual, if there is anything we can help you with, or if there is an ESG topic you would like to know more about, please let us know.
CEO, Miranda ESG
Contacts at Miranda Partners