The International Sustainability Standards Board (ISSB) is a standard-setting body established under the IFRS Foundation to develop a global baseline of sustainability-related financial disclosure standards. Its inaugural standards, IFRS S1 and IFRS S2, set out general sustainability and climate-specific disclosure requirements for capital markets. The ISSB consolidated earlier voluntary frameworks to reduce fragmentation and improve the comparability of corporate sustainability information.
- The International Sustainability Standards Board (ISSB) is a standard-setting body under the IFRS Foundation that develops a global baseline of sustainability-related financial Disclosure standards.
- Its first standards, IFRS S1 and IFRS S2, define general sustainability and climate-specific disclosure requirements for capital markets.
- It builds directly on the TCFD recommendations and consolidates earlier voluntary frameworks to improve comparability.
- It anchors credible Sustainability Reporting and supports Sustainable Finance decision-making.
Overview
- The ISSB was announced at COP26 in 2021 to address the proliferation of overlapping voluntary sustainability frameworks that hindered investor comparability.
- It absorbed the work of the Value Reporting Foundation (SASB and Integrated Reporting) and the Climate Disclosure Standards Board, positioning itself as the global baseline that jurisdictions can build upon.
- IFRS S1 sets out general requirements for disclosing material sustainability risks and opportunities, while IFRS S2 focuses specifically on climate, incorporating the four pillars of the TCFD: governance, strategy, risk management, and metrics and targets.
- The standards are designed to be interoperable with jurisdiction-specific regimes such as the EU’s CSRD, allowing companies to satisfy multiple reporting obligations with a common core.
Key aspects
- A global baseline of investor-focused sustainability disclosure.
- Financial materiality lens centred on enterprise value.
- Climate-first sequencing through IFRS S2.
- Interoperability with regional regimes and existing frameworks.
- Use of GHG Protocol methodologies for emissions metrics.
Mechanisms
- Adoption of the TCFD four-pillar structure for climate disclosure.
- Requirement for scenario analysis to assess climate resilience.
- Reliance on materiality assessment to scope disclosed topics.
- Phased transition relief to ease initial implementation.
Applications
- Issuance of sustainability and climate disclosures in annual financial filings.
- Investor screening and capital allocation in sustainable finance.
- Jurisdictional adoption as the basis for mandatory disclosure rules.
- Assurance and audit of reported sustainability metrics.