ISSB Issues Final Sustainability Disclosure Standards

IFRS S1

The IFRS S1 standard 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 S1 prescribes how an entity prepares and reports its sustainability-related financial disclosures. It sets out general requirements for the content and presentation of those disclosures so that the information disclosed is useful to users in making decisions relating to providing resources to the entity. In particular, an entity is required to provide disclosures about:

• the governance processes, controls, and procedures the entity uses to monitor, manage, and oversee sustainability-related risks and opportunities
• the entity’s strategy for managing sustainability-related risks and opportunities
• the processes the entity uses to identify, assess, prioritize, and monitor sustainability-related risks and opportunities
• the entity’s performance in relation to sustainability-related risks and opportunities, including progress toward any targets the entity has set or is required to meet by law or regulation

IFRS S2

IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. It applies to climate-related risks to which an entity is exposed, including physical and transition risks, as well as to the climate-related opportunities available to the entity. In particular, IFRS S2 requires an entity to disclose information that enables users of general purpose financial reports to understand:

• the governance processes, controls, and procedures the entity uses to monitor, manage, and oversee climate-related risks and opportunities
• the entity’s strategy for managing climate-related risks and opportunities
• the processes the entity uses to identify, assess, prioritize, and monitor climate-related risks and opportunities, including whether and how those processes are integrated into and inform the entity’s overall risk management process
• the entity’s performance in relation to its climate-related risks and opportunities, including progress toward any climate-related targets it has set and any targets it is required to meet by law or regulation

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