IFRS Sustainability Disclosure Standards

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The 2023 has seen the approval of several sustainability standards. In addition to the ESRS, in June 2023, the IFRS, which resulted from the work of the ISSB, was approved.

The ISSB aims to develop common standards for sustainability reporting, focusing on financial markets and investors, on which local jurisdictions can introduce additional requirements.

The ISSB is an independent standards-setting body within the IFRS Foundation that released its first IFRS Sustainability Disclosure Standards in June 2023:

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

The objective is to communicate information to investors that enables them to understand the effects of identified risks and opportunities on the company’s cash flows in the short, medium, and long term by guiding decision-making processes and investment choices.

The sustainability reporting structure defined by IFRS S1 is based on four pillars:

  • Governance
  • Value Chain
  • Risk Analysis
  • Performance

IFRS S2 instead assesses indicators of:

  • GHG emissions
  • Influence of assets on climate change
  • Amount of investments used to address climate risks
  • Compensation of top management

It should be noted that IFRS and ESRS are interoperable.