What we learned about ISSB outlook from the IFRS Sustainability Symposium

Last week I joined the S&P Global delegation that attended the International Financial Reporting Standards (IFRS) Sustainability Symposium in New York. Approximately 1,000 companies, investors, regulators and other key stakeholders from more than 50 jurisdictions were expected leading up to the event. 

Why are the IFRS and ISSB important to our clients?

The IFRS Foundation created the International Sustainability Standards Board (ISSB) in 2021. It is a sister board to the International Accounting Standards Board (IASB), which sets out the financial reporting standards that most countries require companies to use. The ISSB is responsible for developing a global baseline of sustainability disclosures in the form of IFRS Sustainability Disclosure Standards to provide key information of use in making economic and investment decisions. For more on this please read our previous post.

What did we learn at the symposium?

Emmanuel Faber, ISSB Chair through 2027, began the event by reminding the packed audience of the goal behind the ISSB standards: to provide a global framework that yields comparable, consistent, decision-useful insights through corporate disclosure. 

We next heard from ISSB Board Member Richard Barker. He said a sustainable transition will yield greater opportunities than risks and noted that one of the ISSB’s roles is to help companies report to investors the key information needed to enable finance to flow to the transition. He also outlined the ISSB’s 2024 priorities, including a focus on: 

• Capacity building to help companies adopt the first two ISSB standards issued in June 2023. The two standards are IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The ISSB will continue to maintain standards of the Sustainability Accounting Standards Board (SASB), one of the predecessors to the ISSB’s S1 and S2, due to the industry-level metrics SASB’s standards highlight. 
• Interoperability and equivalency to avoid preparing different sets of information than other standards. 
• A digital taxonomy to tag data and information for S1- and S2-aligned reporting so it can be brought into analytical tools more quickly.  
• Creating proportionality mechanisms to accommodate companies that are newer to sustainability reporting or are in the small- to medium-sized enterprise range, so that  expectations of reporting from such companies are proportionate to the reality that they may have a different starting point in their disclosure journey.

Looking ahead, the ISSB will undertake research following public consultation that will lead it to recommend topics for future standards development.  

For the balance of the day, we heard from the corporate, regulatory, investment and academic communities about how each is responding to the first set of standards. Highlights include: 

• Almost 400 companies from 64 countries committed to advancing the global adoption or use of the ISSB’s standards at COP28, the UN’s 2023 climate conference.¹ Many companies are doing deep due diligence to prepare for reporting in line with S1 and S2. Companies are considering how to harmonize their reporting with other voluntary reporting standards to understand how the expectations may align with or differ from S1 and S2. During the symposium some companies shared their preparatory steps for adopting the ISSB standards, including conducting cross-training and education sessions between finance, accounting and sustainability teams; establishing robust governance and controls around data management; and strategically hiring an ESG controller.
• More than a dozen markets have publicly signaled they are on a spectrum of consultation to full adoption of the S1 and S2 standards at a future date, including Australia, Brazil, Canada, Costa Rica, Hong Kong, Japan, Malaysia, Nigeria, Philippines, Singapore, South Korea, Taiwan, Turkey and the UK.² While these locations may collectively account for less than 20% of global GDP, it was clear that their work to consider different degrees and timelines of adoption will be closely watched by investors, companies and other stakeholders. Such stakeholders include IOSCO – the International Organization of Securities Commissions, an association of the organizations that regulate the world's securities and futures markets and that also took part in the symposium. IOSCO endorsed the ISSB standards in July 2023, signaling support for adoption in the 130 jurisdictions it represents.³

S&P Global is a ‘Corporate Champion – Global Ambassador’ of the IFRS Foundation. The Corporate Champions network, established in 2023, recognizes companies that contribute to helping the ISSB drive global standardization of disclosure and build broad reporting capacity for companies across the world.⁴  We look forward to continuing to track developments from the IFRS and ISSB so we can continue to support our clients’ understanding of the evolution of global sustainability standards and its impact on their operations.