Accountancy sector welcomes ISSB’s new sustainability standards

Accountancy firms and regulatory bodies have welcomed yesterday’s publication of two ground-breaking global standards from the International Sustainability Standards Board (ISSB). 

The standards will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions. IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. 

Helen Brand, ACCA chief executive, said: “The launch of these first two global sustainability standards is an important and significant step forward in business reporting, providing a global baseline for comparable information on sustainability issues, which will help investors, financial markets and society more widely. The focus they provide will help drive the positive changes we need in the way businesses operate in the face of the threat from climate change.

“ACCA will continue to support the ISSB’s important work. The influence of the accountancy profession, with its members working inside and advising businesses across the world, means it has a hugely important role to play in creating a better, more sustainable world that works for everyone. Consistent global standards are a key part of that picture and we look forward to playing our role in driving their success.”

The first corporate reports aligned with the new standards will be for 2024 reports published in 2025 with the picture varying by jurisdiction. In some jurisdictions large and listed companies and public interest entities will be required to publish sustainability reports as early as 2025. And SMEs may well be required to provide sustainability reporting as part of value chain reporting. 

Building on the framework for Integrated Reporting (IR), IFRS S1 emphasises the need for consistency and connection between financial statements and sustainability reporting. IFRS S2 incorporates The Task Force on Climate-Related Financial Disclosures’  (TCFD) recommendations and guidance including the structure of governance, strategy, risk management metrics/targets. 

ACCA has been closely involved with the creation of the standards and has worked with the ISSB improving and refining the original draft standard. 

Financial services brand PwC and the Financial Conduct Authority have also welcomed the new ISBB standards. 

Gilly Lord, global leader for public policy and regulation, PwC UK, said: “Today’s publication by the ISSB marks a major step towards providing stakeholders and management with the information they need to make better informed, more effective, decisions. It will be far easier to directly compare businesses, knowing that they are reporting against the same definitions and standards.

“With so many global businesses soon required to report on sustainability as a result of the EU’s Corporate Sustainability Reporting Directive (CSRD) and other regulatory changes, these standards are urgently needed.”

Sacha Sadan, director of environmental, social and governance, at the FCA said: “At its launch at COP26 in November 2021, our CEO, Nikhil Rathi, referred to the ISSB as a ‘game-changer’ and what we’ve seen over the past 18 months or so is that he was absolutely right. 

“We have been working closely with the ISSB since the start and are hugely supportive of its mission to create a common, global language for companies around the world to communicate their sustainability stories in a consistent and comparable way. That is why we are delighted to see the final standards launched today.”