This article highlights key features of the proposed sustainability disclosure standards issued by the International Sustainability Standards Board (ISSB) for consultation in March this year.

On 3 November 2021, the International Financial Reporting Standards (IFRS) Foundation formally launched its new standard-setting board – the International Sustainability Standards Board (ISSB) – to develop a comprehensive global baseline of sustainability disclosures. On 31 March 2022, the ISSB launched a consultation on its first two proposed standards: 

  1. General Sustainability-related Disclosure Requirements (IFRS S1), and 
  2. Climate-related Disclosure Requirements (IFRS S2).

The proposed standards are focused on requiring sustainability disclosures that meet the information needs of investors. They set out requirements for the disclosure of material information about a company’s significant sustainability-related risks and opportunities. The judgement as to what is material should be made in the context of the sustainability-related financial information necessary for users of general purpose financial reporting (investors) to assess enterprise value. Enterprise value is the total value of an entity’s equity and net debt, and reflects expectations of the amount, timing and uncertainty of future cash flows over the short, medium and long term and the value attributed to those cash flows (reflecting the cost of capital). 

Since the information disclosed in accordance with the proposed standards would need to be disclosed as a part of a company’s general purpose financial reporting, it would be required to be published at the same time as the financial statements. Nevertheless, the proposed standards point out that the information that could be relevant to the assessment of enterprise value is broader than information reported in the financial statements. It includes information about a company’s impacts and dependencies on people, the planet and the economy when relevant to the assessment of the company’s enterprise value. 

The proposed standards: highlights 


Scope of reporting. The proposed IFRS S1 requires disclosure of material information about sustainability-related risks and opportunities across a company’s value chain. The proposed standard defines a value chain as the ‘full range of activities, resources and relationships related to a company’s business model and the external environment in which it operates.’ 

Relevant activities, resources and relationships include those in the company’s operations, such as human resources; those along its supply, marketing and distribution channels, such as materials and service sourcing and product and service sale and delivery; and the financing, geographical, geopolitical and regulatory environments in which the company operates. 

The sustainability-related financial information relevant to a company would depend on many factors, such as the company’s activities or the industry to which it belongs, the locations in which it operates, its products and manufacturing processes, and the nature of its reliance on employees and supply chains. Disclosures would be specific to each company and while the definition of value chain is broad, the information a company would be required to provide is limited to that necessary to enable investors to assess the company’s enterprise value. 

Connected information. The proposed IFRS S1 would require companies to provide information that allows investors to assess the connections between different sustainability-related risks and opportunities. It would also require a company to disclose how sustainability-related financial information is related to information in its financial statements. 


Building on existing standards. Both IFRS S1 and S2 build on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Like the TCFD recommendations, the proposed standards are centred on a company’s consideration of its:

  1. governance
  2. strategy 
  3. risk management, and 
  4. metrics and targets.

In some instances, however, the proposed ISSB standards require more detailed disclosures than the TCFD. The differences between the proposed IFRS S2 and the TCFD recommendations are summarised on the IFRS Foundation website (

IFRS S2 is also built on the industry-specific requirements of the Sustainability Accounting Standards Board (SASB) standards. The industry-based topics and associated metrics are available in Appendix B of IFRS S2. A company can view all of the topics and metrics, or just those for a specific industry. There are 68 industry-based sets of disclosure requirements in separate volumes.  

Climate resilience. To help investors understand a company’s resilience to climate-related risks and opportunities, IFRS S2 would require a company to disclose information such as whether it can continue to use its assets and investments the way it has been doing or whether a climate-related risk, such as an increased flooding risk, is likely to cause the company to relocate, decommission or upgrade assets. Companies would be required to disclose whether they have sufficient finance available to withstand the climate-related risks and to take advantage of climate-related opportunities. 

IFRS S2 would require a company to use climate-related scenario analysis to assess its risks and opportunities when it is able to, but it also addresses other quantitative methods. IFRS S2 also proposes requiring a company to disclose how its climate-related analysis aligns with the latest international agreement on climate change – for example, the Paris Agreement, which sets a goal of limiting the global temperature increase in this century to 2 degrees Celsius while pursuing efforts to limit the increase even further to 1.5 degrees. 

GHG emissions. IFRS S2 would require a company to disclose its absolute gross Scope 1, Scope 2 and Scope 3 GHG emissions, in metric tonnes of CO2 equivalent, and the intensity of those emissions. The company would be required to calculate these emissions using the GHG Protocol. A consolidated group would be required to disclose GHG emissions by associates and joint ventures separately from those by the consolidated group. The requirement to disclose Scope 3 emissions reflects the importance of providing information related to a company’s value chain. 

Source: IFRS Foundation. This article is based on the IFRS’ high-level summary of the proposed ISSB standards. The full Exposure Draft – Snapshot is available on the IFRS website (



The International Financial Reporting Standards (IFRS) Foundation announced the creation of the International Sustainability Standards Board (ISSB) in November 2021 at COP26 (the United Nations global summit to address climate change) held in Glasgow, the UK. 

The launch of the ISSB was a significant development since the proliferation of different standards for sustainability disclosure was leading to inconsistencies in the data available to stakeholders when trying to assess organisations’ exposure to climate-related risks and opportunities. The fragmentation of different standards was also leading to increased cost and complexity for companies and regulators.

The intention was for the ISSB to deliver a comprehensive global baseline of sustainability-related disclosure standards that would provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities. The creation of the ISSB represented a significant consolidation of the many different standard-setting bodies in this space – including the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF), itself an alliance between the Integrated Reporting Framework and the Sustainability Accounting Standards Board. 

Simultaneous with the creation of the ISSB, the IFRS Foundation published prototype climate and general disclosure requirements developed by its Technical Readiness Working Group (TRWG). These prototypes were the result of six months of joint work by representatives of the CDSB, the International Accounting Standards Board, the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, the VRF and the World Economic Forum, supported by the International Organization of Securities Commissions and its Technical Expert Group of securities regulators. 

The proposed standards now released for consultation (the General Sustainability-related Disclosure Requirements and the Climate-related Disclosure Requirements) are based on feedback to the prototype climate and general disclosure requirements developed by the TRWG. The ISSB is seeking feedback on the proposed standards over a 120-day consultation period closing on 29 July 2022. It will review feedback to the consultation in the second half of 2022 and aims to issue the new standards by the end of the year.