ISSB: IFRS S1 and S2 Global Standards
I. Definition
ISSB (International Sustainability Standards Board) is an international body that creates global standards for sustainability reporting.
IFRS S1 and IFRS S2 are the first two standards published by the ISSB.
They help companies disclose clear, comparable, and reliable information about sustainability and climate-related risks and opportunities.
II. Context
The ISSB was created to respond to the growing need for global consistency in sustainability reporting.
Before IFRS S1 and IFRS S2, companies used many different frameworks. This made comparisons difficult for investors and regulators.
IFRS S1 focuses on general sustainability-related disclosures.
It helps companies explain how sustainability topics affect their business, strategy, and financial performance.
IFRS S2 focuses specifically on climate-related disclosures.
It covers climate risks, climate opportunities, governance, strategy, risk management, and metrics.
These standards are designed to work with financial reporting and align sustainability information with decision-making needs.
They are also compatible with other major frameworks and regulations.
III. Related terms
- SFDR: Sustainable Finance Disclosure Regulation
https://www.orizscore.com/blogs/sfdr-sustainability-financial-disclosures - GRI: Global Reporting Initiative Mapping
https://www.orizscore.com/blogs/gri-standards-mapping-csrd - SBTi: Science Based Targets Initiative
https://www.orizscore.com/blogs/sbti-science-based-targets-initiative - CBAM: Carbon Border Adjustment Mechanism
https://www.orizscore.com/blogs/cbam-carbon-border-adjustment-mechanism
IV. Example
A multinational company prepares its annual report.
Using IFRS S1, it explains how sustainability risks affect its long-term strategy.
Using IFRS S2, it discloses its exposure to climate risks and its transition plan.
As a result, investors can better understand the company’s sustainability performance and compare it with other companies using the same standards.
