The International Sustainability Standards Board (ISSB) has unanimously fixed 1 January 2024 for the launch of its long awaited reporting standards.
The ISSB, launched in November 2021, has been reviewing feedback on the Exposure Draft International Financial Reporting Standards S1, General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2, Climate-change Reporting.
The decision means that entities will file reports under the two standards from early 2025.
They set a baseline level of disclosure to meet the market’s needs. Individual countries’ accounting standards boards and other regulators can then adapt the standards to their own jurisdiction’s requirements.
Acknowledging the magnitude of the changes, the ISSB said it understood sustainability disclosures are new for many companies around the world and it will introduce programmes to support those applying its standards.
It adds that the universal decision to set the 2024 deadline was due to the strong demand from investors for companies to disclose sustainability-related data and information.
ISSB chair Emannuel Faber noted that the proposed effective date of 1 January 2024 was, in his view, tantamount to early adoption.
“The ISSB will work with regulators around the world ‘as they play their part, creating the conditions within their markets for adoption so that investors can use comparable information about sustainability-related risks and opportunities in their investment decisions without delay. he said.
He adds, ‘We will also actively engage with the many preparers who are considering voluntary adoption of S1 and S2, to better answer their investor needs.
As requested by our stakeholders, we have built from existing market-accepted frameworks and standards. This means that the thousands of companies already using the Task Force on Climate-related Financial Disclosure (TCFD) recommendations and SASB Standards will be in a strong position to use S1 and S2.’
The SASB Standards guide the disclosure of financially material sustainability information by companies to their investors. Available for 77 industries, they identify the subset of environmental, social, and governance (ESG) issues most relevant to financial performance in each industry.
The next major hurdle for the board to clear once it has published the standards is to secure an endorsement decision from the International Organisation of Securities Commissions (IOSCO).
IOSCO said, “it is very pleased to see the determined progress being made by the ISSB in completing this milestone. It is particularly important that the ISSB has confirmed that its standards will be ready for use as early as January 2024,” said IOSCO chairman Jean-Paul Servais.
He noted that the international audit standard setters intend to establish assurance standards before the end of 2024 too.
Rodrigo Buenaventura, chair of IOSCO’s sustainability task force, said “Together, these standards will meet an urgent need in financial markets to get away from the current fragmented situation when it comes to sustainability disclosures.”
He said, “This announcement enables IOSCO to move forward with its independent assessment of the ISSB standards in terms of quality and governance, with a view to completing its review in 2023.
Our assessment team is ready to go, our assessment criteria have already been published and our board is closely engaged. Mindful of the importance of reliable and robust sustainability information for financial markets around the world, we will make sure the assessment is done in a prompt, orderly, and thorough way.”
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