The establishment of a single set of international sustainability standards has come a step closer with the ISSB’s announcement that IFRS Sustainability Disclosure Standards S1 and S2 will become effective from January 2024.
An ISSB statement issued after its meeting in Montreal says: “The decision on effective date is answering the strong demand from investors for companies globally to disclose comprehensive, consistent and comparable sustainability-related information.”
The organization also promised to “introduce programmes that support those applying its Standards as market infrastructure and capacity is built”.
S1 and S2 will require companies to disclose information about all of the sustainability-relayed risks and opportunities they are exposed to.
The draft standards were published for consultation last year, and an update on discussions was published in January 2023. Following the agreement reached at the Montreal meeting in February, thorough drafting will take place with the Standards expected to be issued at the end of Q3 2023 so that they can take effect in January 2024.
There has been pressure from the G20 and other governments to establish a global baseline of investor-focused sustainability standards. The ISSB has also announced it is working with the European Commission and the European Financial Reporting Advisory Group “to maximise interoperability of their standards and aligning on key climate disclosures”.
ISSB chair Emmanuel Faber says: “We responded to capital market and G20 demand for a common language of investor focused sustainability-related disclosure, working diligently to deliver standards that fulfil the global baseline. Setting a 2024 effective date is consistent with this demand.
“Now, we will work with regulators around the world as they play their part, creating the conditions within their markets for adoption, so that investors can use comparable information about sustainability-related risks and opportunities in their investment decisions without delay. We will also actively engage with the many preparers who are considering voluntary adoption of S1 and S2, to better answer their investor needs.”