In a milestone moment for the creation of a global common language for sustainability reporting, the International Sustainability Standards Board (ISSB) on Monday issued its first two standards.
IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2, Climate-related Disclosures have an effective date of Jan. 1 for some portions, pending adoption in more than 140 jurisdictions worldwide.
IFRS S1 features a global baseline for reporting requirements on the disclosure of sustainability-related risks and opportunities. IFRS S2 features reporting requirements specific to climate-related disclosures, in concert with the reporting framework established by IFRS S1.
“Today represents the outcome of more than 18 months of intense work to deliver an inaugural set of sustainability disclosure standards for the global capital markets,” Emmanuel Faber, ISSB chair, said in a news release. “The ISSB standards have been designed to help companies tell their sustainability story in a robust, comparable, and verifiable manner. We have consulted closely with the market to ensure the standards are proportionate and will result in disclosures that are relevant for investment decision-making.
“We know that better information leads to better economic decisions. Today’s publication is just the starting point as we consult on our future priorities, beyond climate.”
Standards issued by the IFRS Foundation – which oversees the ISSB – aren’t formally adopted in the United States. The new standards, however, establish a guideline that can support sustainability reporting on a voluntary basis now and can assist with any SEC-issued reporting requirements in the future.
“Clear, consistent, and globally accepted reporting standards are essential for high quality sustainability accounting, and the disclosure baselines released today move us closer to that goal,” Barry Melancon, CPA, CGMA, the CEO of AICPA & CIMA, said in a news release. “We’re in a new era in corporate reporting. Investors, lenders, regulators, and other stakeholders are demanding broader sets of business information, and capital markets are looking for the same level of rigor in reporting for sustainability as for financial information. As this global framework matures, we expect professional accountants to play a critical role in delivering consistency and trust in both sustainability reporting and assurance.”
AICPA & CIMA, together as the Association of International Certified Professional Accountants, represent the largest among 10 accounting institutes in the Global Accounting Alliance (GAA). Entities in the GAA have a combined 1.4 million members in 180-plus countries.
The GAA released a statement Monday that read, in part: “The global accounting profession has an important public interest responsibility. Professional accountants play a critical role in the integrity and effective functioning of our capital markets, and these standards will enhance confidence in sustainability information. As finance and accounting professionals, our members have an important role to play in the effective implementation of and in providing assurance services over these new standards.”
AICPA & CIMA are among the sponsors of a forum Monday at the New York Stock Exchange, part of a series of events planned by the IFRS Foundation around the world to commemorate the launch of the standards.