IFRS Issues Comprehensive Guide for Voluntary ISSB Standards Adoption

The International Financial Reporting Standards (IFRS) Foundation has unveiled a comprehensive guide to support companies in voluntarily adopting the International Sustainability Standards Board (ISSB) Standards. This initiative, titled "Voluntarily applying ISSB Standards—A guide for preparers," responds to the growing global investor demand for comparable and decision-useful sustainability-related disclosures.

The guide serves multiple purposes, aiming to support companies as they begin to apply ISSB Standards voluntarily, help them communicate their progress to investors effectively, and position them to meet potential future regulatory requirements across multiple jurisdictions. The IFRS Foundation emphasizes that voluntary adoption can serve as a "passport" for companies to meet global sustainability disclosure requirements, as an increasing number of jurisdictions move towards introducing such mandates.

A key feature of the guide is its outline of transition reliefs built into the ISSB Standards, allowing for a phased approach to implementation. These reliefs include options for "climate-first" reporting, flexibility in the timing of reporting, temporary exemptions for comparative disclosures, and specific allowances for greenhouse gas emissions reporting. This phased approach enables companies to prioritize climate-related disclosures before expanding to other sustainability topics, and gradually implement different aspects of the standards.

The guide also highlights the proportionality mechanisms incorporated into the ISSB Standards. These built-in measures ensure that the standards can be applied across various company sizes and sectors, accommodating the diverse range of company capabilities and circumstances. This approach makes the standards more accessible and implementable for a wide range of organizations.

For companies already using investor-oriented frameworks, the guide provides a clear path forward. It specifically addresses how organizations using Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, Sustainability Accounting Standards Board (SASB) Standards, Climate Disclosure Standards Board (CDSB) materials, or the Integrated Reporting Framework can transition to ISSB Standards. The guide emphasizes that companies using these frameworks are already on the path towards compliance with IFRS S1 and IFRS S2, and highlights resources published by the IFRS Foundation to facilitate this transition.

The IFRS Foundation is actively working to ensure interoperability between ISSB Standards and other reporting frameworks. This includes publishing an "ESRS—ISSB Standards Interoperability Guidance" to help companies apply ISSB Standards while meeting European Sustainability Reporting Standards (ESRS) requirements. Collaboration is also underway with the Global Reporting Initiative (GRI) to achieve full direct interoperability, starting with aligning the GRI 101 Biodiversity Standard with ISSB's project on Biodiversity, Ecosystems and Ecosystem Services.

The Foundation alsohas released an interoperability resource titled "Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standard" to address greenhouse gas emissions reporting across different frameworks. The IFRS Foundation is also partnering with CDP to streamline the disclosure landscape, with ISSB's climate standard serving as the foundational baseline for CDP's climate disclosure platform.

The Voluntary Application Guide is part of a broader suite of publications designed to support the implementation of IFRS S1 and IFRS S2. These resources are available under the Application Support section of the IFRS website, providing companies with a comprehensive toolkit for navigating the complex landscape of sustainability reporting.

As sustainability reporting continues to evolve globally, the IFRS Foundation's comprehensive guide and associated resources aim to simplify the adoption process for companies. By providing clear guidance and promoting interoperability, the Foundation seeks to meet the evolving needs of investors, regulators, and reporting entities worldwide. The IFRS Foundation encourages companies to utilize these resources as they prepare for the future of sustainability reporting and potential regulatory requirements.

The GRC Report is your premier destination for the latest in governance, risk, and compliance news. As your reliable source for comprehensive coverage, we ensure you stay informed and ready to navigate the dynamic landscape of GRC. Beyond being a news source, the GRC Report represents a thriving community of professionals who, like you, are dedicated to GRC excellence. Explore our insightful articles and breaking news, and actively participate in the conversation to enhance your GRC journey.