As the ISSB introduces the IFRS Sustainability Disclosure Standards, it creates a level-playing field for companies to disclose the effects of climate-related risks and opportunities for the first time. Here’s how Ecolibrium’s SmartSense can empower businesses with real-time data to comply with the new guidelines and navigate complex reporting while championing a sustainable future.
The International Financial Reporting Standards (IFRS) announced the formation of the International Sustainability Standards Board (ISSB) on 3rd November 2021 at COP26 in Glasgow, following strong demand for its establishment.1 The ISSB aims to develop a global baseline for sustainability disclosures focused on investor and financial market needs.
One of the core reasons behind creating the ISSB was to ease the complex reporting landscape organisations have long been grappling with. But are organisations ready to embrace the newly defined standards?
The era of standardised reporting begins.
The ISSB Chair Emmanuel Faber issued the first 2 IFRS Sustainability Disclosure Standards on the 26th of June, consisting of:
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
- IFRS S2 Climate-related Disclosures.2
The IFRS S1 requires an organisation to disclose information about its sustainability risks and opportunities, enabling investors to make better, more informed decisions. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1, serving the same objective of enhancing transparency and informing decision-making.
But, with multiple reporting frameworks, organisations may find it challenging to navigate this complex landscape. The good news is that the ISSB standards are not entirely new but rather built on the existing work of 4 –
- The Climate Disclosure Standards Board (CDSB)
- The Task Force on Climate-related Financial Disclosures (TCFD)
- The Value Reporting Foundation’s Integrated Reporting Framework and
- industry-based guidance from the Sustainability Accounting Standards Board (SASB).
Companies that have already adopted the above are well-positioned to apply IFRS S1 and S2. In fact, organisations applying for ISSB standards will be fully compliant with the TCFD recommendations.
In Emmanuel Faber’s words, frameworks like the Global Reporting Initiative (GRI) aim to meet the broader information needs of various stakeholders, while the ISSB standards fulfil the data requirements of investors and other capital providers.
Organisations that want to provide a comprehensive set of information that caters to the needs of investors and other parties can easily combine the ISSB and GRI standards. The ISSB established a memorandum of understanding with GRI last year to align their works.3
Until now, one of the major obstacles to sustainability reporting has been the absence of global standardised frameworks and reporting. With the introduction of the ISSB in June 2023, this issue is effectively addressed. The standards not only provide a unified framework but also alleviate the pressure of duplicative reporting for companies operating under multiple jurisdictional requirements.
What about the data for reporting?
Innovative technologies like Ecolibrium's SmartSense serve as the perfect solution, enabling organisations to gather valuable data, making the invisible, visible.
SmartSense, for instance, is specifically designed to accelerate carbon reduction, optimise operational efficiency, save energy and productivity costs, and simplify compliance reporting like the ISSB. It collects comprehensive real-time data on carbon emissions and energy usage across all portfolios, centralising them on a single dashboard ready for reporting inputs.
It is only through a holistic approach that balances people, the planet and profit that organisations can successfully navigate the complexities of reporting requirements in the ever-evolving sustainability landscape.
Since our inception in 2011, SmartSense has delivered tangible results for over 100 blue chip organisations within 60 days of appointment. To read up on how we have done this, take a look at some of our case studies.
By leveraging SmartSense, organisations can enhance their sustainability performance by actively pursuing Net Zero targets and other environmental goals while effectively complying with standardised sustainability reporting frameworks such as the ISSB. To find out how we can help your organisation, please reach out to our team here.
Bibliography
1 Editorial Staff. International Sustainability Standards Board. IFRS. [online] https://www.ifrs.org/groups/international-sustainability-standards-board/#:~:text=IFRS%20%2D%20International%20Sustainability%20Standards%20Board,accounting%20and%20sustainability%20disclosure%20standards.
2 Editorial Staff, 2023. General Sustainability-related Disclosures. IFRS. [online] https://www.ifrs.org/projects/completed-projects/2023/general-sustainability-related-disclosures/
3 Grant Harrison, 2023. The first ISSB reporting standards are here — what that means for investors. GreenBiz. [online] https://www.greenbiz.com/article/first-issb-reporting-standards-are-here-what-means-investors
