Quick Guide: Key Sustainability Disclosure Regimes: ISSB standards

The International Financial Reporting Standards (“IFRS”) Foundation created the ISSB in 2021 to develop a global baseline of sustainability disclosure standards that meets the information needs of investors. The IFRS Foundation is hoping to do for sustainability reporting what it has done for financial reporting with the IFRS Accounting Standards.

In 2023, the ISSB published the final version of its first two global sustainability disclosure standards: 

• IFRS S1 - General Requirements for Disclosure of Sustainability-related Financial Information; and 
• IFRS S2 - Climate-related Disclosures.

The ISSB’s intention is to provide a ‘building blocks’ model with a global baseline that countries can adapt or add to if they decide to implement the ISSB standards into their national regimes.

The information required by the ISSB standards is designed to be provided alongside financial statements as part of the same reporting package.  

More than 30 jurisdictions have implemented, or are in the process of  implementing, the ISSB standards into their regulatory frameworks (see here). 

Some countries have adopted the ISSB standards with jurisdiction-specific modifications that are designed to help the standards work at a national level (see “Interoperability” below).

The ISSB standards can be used by corporates, financial institutions and others. 

An entity should make sustainability-related financial disclosures on the same basis as the related financial statements (e.g. if an entity prepares consolidated financial statements for a parent and its subsidiaries, the sustainability-related financial disclosures should also relate to the same group). 

Companies were able to start using IFRS S1 and IFRS S2 on a voluntary basis for annual reporting periods beginning on or after 1 January 2024, with the first set of reports published in 2025. 

In the first year of reporting using the ISSB standards, companies are encouraged to prioritise reporting on climate-related risks and opportunities.

In the second year, companies are expected to provide full reporting on other sustainability-related risks and opportunities in addition to climate issues.

Entities should make disclosures at the same time as financial statements.

IFRS S1 

• Sets out overarching requirements for a company to disclose information about sustainability-related risks and opportunities that is useful to users of general purpose financial reports. 
• Is designed to underpin all other ISSB standards in terms of setting scope, objective, core content, and presentation requirements.
• Uses the same the four pillars as the Task Force for Climate-related Financial Disclosures (“TCFD”) Recommendations in requiring entities to make disclosures about governance, strategy, risk management, metrics and targets. 
• More detailed disclosures on certain sustainability topics may be developed in due course to supplement the general requirements in IFRS S1 (see “Next steps” below). 

IFRS S2 

• Sets out additional requirements that relate to climate-related risks and opportunities.
• Incorporates and builds on the TCFD Recommendations.
• Requires disclosure of Scope 1, 2 and 3 greenhouse gas (“GHG”) emissions. However, preparers do not have to report on Scope 3 emissions in the first year of reporting under the ISSB standards.
• Requires disclosure of (among other things): physical risks resulting from climate change; transition risks associated with the transition to a lower-carbon economy (which could include regulatory, technological, market, legal or reputational risks); and climate-related opportunities available to the entity.
• See below for transition plan requirements.  

The ISSB standards are designed to meet the information needs of investors. The standards therefore have a financial materiality focus, meaning that reporting entities must disclose material information about any sustainability-related risks and opportunities that may affect the entity’s financial position in the short, medium and long term.

Under the ISSB standards, information is "material" if omitting, misstating or obscuring it could reasonably be expected to influence decisions that investors, lenders and other creditors make on the basis of those reports.

The EU’s Corporate Sustainability Disclosure Directive (“CSRD”) and European Sustainability Reporting Standards (“ESRS”), on the other hand, apply a double materiality standard. This requires in-scope companies to report on their impacts on people and the environment (impact materiality), as well as on how social and environmental issues affect them financially (financial materiality). 

The IFRS Foundation took over the monitoring of climate-related disclosures from the TCFD in 2024. The TCFD has since been disbanded.

IFRS S2 incorporates, and builds on, the recommendations of the TCFD. 

Also, IFRS S1 uses the same four pillars as the TCFD in requiring entities to make disclosures about governance, strategy, risk management, metrics and targets in respect of wider sustainability issues.

See “Interoperability” below.

The ISSB assumed responsibility for the SASB standards in 2022. 

IFRS S1 requires preparers to refer to and consider the SASB standards in identifying sustainability-related risks and opportunities, if no relevant IFRS sustainability disclosure standard is available.

See Quick Guide on SASB Standards.

IFRS S2 requires an entity to disclose both retrospective and forward-looking information about its response to climate-related risks and opportunities, including plans to achieve any climate-related targets. 

It does not require a preparer to produce a transition plan if it does not yet have one or to publish a transition plan where it has one. What it requires is the disclosure of certain information about how the preparer is preparing to transition.

In June 2025, the ISSB published guidance on disclosures about transition plans (see here). The guidance is intended to support entities in applying IFRS S2. 

The ISSB guidance builds on the  materials developed by the Transition Plan Taskforce (“TPT”). The IFRS Foundation took over responsibility for the TPT's disclosure-specific materials in 2024. 

As noted above, the ISSB’s intention is to provide a global baseline that countries can adapt or add to if they decide to when implementing the ISSB standards. To date, jurisdictions have taken a variety of approaches and some stakeholders have expressed concerns that the changes made by certain jurisdictions may be too extensive, making reporting across various jurisdictions difficult. 

This is a particular concern for investors and companies that have significant cross-border operations and must comply with more than one set of jurisdictional requirements. Significant changes to the standards at national level could lead to regulatory fragmentation and divergence, ultimately reducing some of the benefits that the ISSB standards set out to achieve.

For further information in relation to interoperability between the ISSB standards and the: 

• TCFD, see here;
• EU ESRS, see here; and 
• Global Reporting Initiative (“GRI”), see here.

The ISSB has indicated that its key focus areas are: 

• supporting the implementation of IFRS S1 and S2;
• enhancing the SASB Standards; and 
• two research projects on biodiversity and human capital announced in May 2024 (see here) which are intended to assist in determining whether additional standards on these topics are required.

• IFRS Sustainability Standards Navigator – you will need to register for free access to the ISSB standards, guidance and other materials
• IFRS S1 
• IFRS S2 
• ISSB guidance & Bases for Conclusions 
• IFRS guidance on transition plans 
• IFRS - Transition Plan Taskforce resources
• Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2 
• Sustainability-related risks and opportunities and the disclosure of material information 
• Disclosing information about anticipated financial effects applying ISSB Standards
• SASB Standards Navigator 
• IFRS Sustainability Knowledge Hub Courses
• See image of “ESG Disclosure Pathway to Convergence” on IFC website

• Blog post - ISSB publishes final versions of first two global sustainability disclosure standards
• Blog post - ISSB consults on changes to climate disclosure standard IFRS S2
• Quick guide on SASB standards
• Quick Guide on TCFD 
• Quick guide on GRI standards