Proposed disclosures on reporting sustainability published for comment

The IFRS Foundation established the International Sustainability Standards Board (ISSB) in November 2021. Prior to the establishment of the ISSB there were several bodies, organisations or initiatives that issued guidance on reporting on sustainability and related issues. The purpose of the ISSB is to issue a single source of international guidance on reporting sustainability information in general purpose financial reports.

The ISSB published two proposed IFRS Sustainability Standards for comment. Access the documents and find out more here. The two IFRS Sustainability Standards deal with:

• IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
• IFRS S2 Climate-related Disclosures.

The general disclosure requirements are similar to the Conceptual Framework for General Purpose Financial Reporting (Conceptual Framework) and include principles for describing the users of financial statements, the boundary of reporting, materiality, linkages between the financial statements and sustainability disclosures in financial reports, and overarching principles. Importantly, the focus of the sustainability reporting is on primary investors, i.e. capital providers.

Apart from the broad similarities between the principles in the Conceptual Framework and the general reporting requirements for sustainability disclosures, sustainability disclosures will focus on information in the following areas:

• Governance
• Strategy
• Risk management
• Metrics

IFRS S2 deals with climate related risks and opportunities and explains the type of information that should be disclosed by entities in each of these areas listed above  . An annexure provides guidance for different industries and activities.

The disclosures focus on the private sector as this is the mandate of the IFRS Foundation. The IPSASB monitors the work of the ISSB, and may decide to undertake more detailed work in this area.