New guidance for companies to apply ISSB standards voluntarily

The IFRS Foundation – which is behind the ISSB standards for sustainability reporting – has published a new guide for companies looking to apply the standards voluntarily, in the absence of regulations mandating them to do so.

The Foundation says the new guidance is meant to support companies in meeting calls from global investors to adopt the ISSB standard in order to obtain harmonised and comparable sustainability information.

ISSB standards for sustainability reporting, known as IFRS S1 and S2, is already being integrated into disclosure legislation in more than 20 jurisdictions, including Australia, China and…

But many countries are yet to impose nationally standardised climate disclosures on companies. In the US, for example, the Securities and Exchange Commission (SEC) is trying to implement a climate disclosure rule for listed firms, but is facing numerous challenges – despite the fact that the rule is a lot less stringent than ISSB standards.

Investors call for ‘consistent and comparable’ information

Speaking at Climate Week NYC, the recently appointed Chair of the ISSB Investor Advisory Group (IIAG), Carine Smith Ihenacho, Chief Governance and Compliance Officer at Norges Bank Investment Management said: "For sustainability information to support investment decisions, risk management processes and ownership activities across a diversified portfolio, it must be consistent and comparable across companies and over time. 

“NBIM asks companies to use, and jurisdictions to adopt, the ISSB Standards as a global baseline. This baseline is critical for cost-effective, decision-useful reporting to investors, including in markets where disclosure requirements go further to meet the needs of other stakeholders, such as Europe."

The guidance, called Voluntarily applying ISSB Standards – A guide for preparers will help consolidate the “patchwork of frameworks and standards” companies currently use to report sustainability progress to investors – particularly in jurisdictions without mandatory disclosure requirements.

“The voluntary application guide helps companies navigate from their current reporting practices to applying ISSB Standards, providing a cost-effective route for companies to provide decision-useful, assurable financial information to investors," said ISSB Chair Emmanuel Faber.

The guide is the latest in a series of publications designed to support the implementation of IFRS S1 and S2 – including the recent ESRS-ISSB Standards Interoperability Guidance.