IFRS

International Sustainability Standards Board confirms effective date of new Standards

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The International Sustainability Standards Board (ISSB) recently met in Montreal to make final decisions on the technical content of the first two Sustainability Standards it plans to issue. They also determined that the two Standards, which are due to be released in June 2023, will become effective for periods commencing on or after January 1, 2024.

The first two Sustainability Standards will be: 

  • IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’‚Äč  
  • IFRS S2 ‘Climate-related Disclosures’ 

The decision to minimize the period between the release date and the effective date is based on strong demand from investors of reporting entities around the world to disclose consistent, comprehensive, and comparable sustainability-related information. Parties ranging from the International Organization of Securities Commissions (IOSCO) to leaders of the G20 have been vocal about the urgent need for sustainability standards to take effect as soon as possible. Disclosing information about sustainability-related risks and opportunities is seen by many, including the ISSB, as essential to protecting investors and supporting systemic financial stability. 

Since a full suite of IFRS Sustainability Standards is still to be issued, the ISSB also agreed to provide guidance for entities to use by referencing the European Sustainability Reporting Standards (ESRS) within an appendix to IFRS S1. This appendix is designed to help reporting entities readily identify metrics and disclosures that meet the information needs of investors.  

Between now and the June 2023 release date, the ISSB will focus on creating further guidance and training material to support and explain how IFRS S1 and IFRS S2 should be applied. They will also create programs to support reporting entities in applying the Standards appropriately and consistently as market infrastructure and capacity related to the Standards is built.

Our thoughts

We support the ISSB selecting the effective date of periods commencing on or after January 1, 2024, as it will respond to the investor demands for these Standards; but the short implementation timeframe could create significant challenges for entities not yet familiar with reporting on sustainability. We urge reporting entities to start evaluating the impact of these two new Standards as soon as possible. If you require support in navigating these new standards, reach out to our trusted advisors today. 

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