Currently, most listed companies choose which frameworks to use for their sustainability reporting, which can lead to companies in the same industry reporting their sustainability initiatives very differently. This makes it difficult to compare companies directly.
The new International Sustainability Standards Board (ISSB) inaugural standards IFRS S1 and IFRS S2, announced on June 26, 2023, will change this by driving greater alignment through standardization.
IFRS S1 and S2 provide companies with additional options to consider when managing their sustainability disclosures. These frameworks expand the range of available choices, allowing companies to handle their reporting processes in line with their specific needs and preferences.
“What we now have is the creation of a common language for disclosing the effect of climate-related risks and opportunities for every company,” notes Caleb Woo, Head of Client Success at Artius Global. “IFRS S1 sets disclosure requirements on sustainability-related risks and opportunities that companies face over the short, medium, and long term, while IFRS S2 sets out specific climate-related disclosures.”
“Logically, as practitioners, we see ESG regulatory disclosure requirements as the next stage for capital market participants to grapple with,” Woo adds.
The ISSB has stated that it will work with jurisdictions that wish to require incremental disclosures beyond the global baseline and with the Global Reporting Initiative (GRI) to support efficient and effective reporting when the ISSB Standards are applied in combination with other reporting standards.
Artius Global, which focuses on shareholding disclosure, sees ESG regulatory disclosure as the next step and has positioned itself to help capital market participants meet those regulatory disclosures.
Read more here: ISSB Issues Inaugural Global Sustainability Disclosure Standards
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