ISSB issues inaugural IFRS S1 and S2 sustainability disclosure standards

The International Sustainability Standards Board issued its inaugural standards, IFRS S1 and IFRS S2, establishing a global baseline for sustainability and climate-related financial disclosures that fully incorporate TCFD recommendations. The standards create the reference framework that Indian regulators and companies are increasingly aligning BRSR and climate disclosures toward.

The International Sustainability Standards Board (ISSB) issued its first two standards, IFRS S1 and IFRS S2, creating a globally comparable baseline for sustainability-related disclosures. IFRS S1 sets comprehensive requirements for disclosing sustainability risks and opportunities over short, medium and long term; IFRS S2 addresses climate-specific disclosures and is used alongside S1. Both fully incorporate the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. Developed over more than 18 months, the standards respond to calls from the G20, Financial Stability Board and IOSCO, and integrate with IFRS Accounting Standards.

Companies in global capital markets are affected, required to provide sustainability-related information alongside financial statements within the same reporting package. The standards target investors seeking decision-useful, globally comparable disclosure of climate and sustainability risks and opportunities. The ISSB will collaborate with jurisdictions adopting the standards, establish a Transition Implementation Group, launch capacity-building initiatives, and work with the Global Reporting Initiative (GRI) to ensure efficient reporting when ISSB standards combine with other frameworks. Stock exchanges in Frankfurt, Johannesburg, Lagos, London, New York and Santiago hosted launch events.

Indian listed companies and large corporates should evaluate gaps between current BRSR disclosures and the IFRS S1/S2 baseline, particularly on climate scenario analysis and Scope emissions. Entities should monitor the Transition Implementation Group's guidance and capacity-building initiatives, and watch how Indian regulators may reference the ISSB baseline. Firms should track the ISSB's forthcoming consultation on priorities beyond climate, and the ongoing ISSB-GRI collaboration to streamline reporting where multiple standards apply.

Key figure — Inaugural standards issued: IFRS S1 and IFRS S2