On 26 June 2023, the International Sustainability Standards Board (ISSB) published its first sustainability-related disclosure standards (the Standards). The publication of the Standards, known as IFRS S1 and IFRS S2, represents a crucial step-forward in the development of a globally consistent and reliable framework for the provision of sustainability information to capital markets, with the ISSB hoping that they will become the global baseline for sustainability-related disclosures.

Who do the Standards apply to?

The Standards will apply to corporate entities that are required or choose to prepare general purpose financial statements and build upon existing market standards, such as those issued by the Task Force for Climate Related Financial-Disclosures and the Sustainability Accounting Standards Board.

What do the Standards require?

IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, relates to the reporting of all sustainability-related risk and opportunities. It requires the disclosure of information about the governance processes, strategies and monitoring and assessment activities in place to manage and oversee those risks and opportunities. It also requires information regarding the entity’s performance in respect of sustainability metrics, and specifically the progress that has been made towards meeting any legal or regulatory sustainability-related targets.

IFRS S2 Climate-related Disclosures requires entities to disclose information about its climate-related risks and opportunities and the governance processes, strategies and monitoring and assessment activities in place to manage and oversee them. The information will relate to both physical climate-related risks, such as extreme weather events, as well as transitional risks, such as the impact of the increased regulation of greenhouse gas emissions. IFRS S2 also provides guidance as to how entities should take account of the impact of climate-related factors on their own valuation.

Together, the Standards are designed to provide a comprehensive and consistent assessment of an entity’s current and future sustainability and climate-related risks and opportunities throughout its entire value chain. This should allow market participants to make fully informed decisions on investments, with the ISSB hoping that the Standards will become the “common language” for assessing those risks and opportunities.

Implementation and development

The Standards will be effective for annual reporting periods beginning on or after 1 January 2024, however it will be up to individual countries and industries to decide whether the application of IFRS S1 and IFRS S2 will be made mandatory. In respect of the UK, the government has indicated an intention to integrate the Standards into its regulatory landscape, but a formal decision is expected to be made on this point within the next 12 months.

More generally, the ISSB is committed to aligning with sustainability reporting initiatives from other jurisdictions and has created the “Transition Implementation Group” to encourage the application of the Standards and to enhance compatibility between IFRS S1 and IFRS S2 and other sustainability-based reporting standards. The ISSB’s aim is to achieve globally recognised standards to provide investors with clarity so that they can make informed investment decisions.


Head of Environment, health and safety, Europe, Middle East and Asia; Partner

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