As we enter summer, an extraordinary shift is taking place in the realm of corporate sustainability. A momentous occasion occurred on Monday, June 26th, marking a significant milestone in our journey towards a more sustainable and resilient economy. The International Sustainability Standards Board (ISSB), an independent entity operating under the esteemed IFRS Foundation, has introduced its groundbreaking inaugural standards: the IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2: Climate-related Disclosures. These transformative standards, set to come into effect on January 1, 2024, are poised to revolutionize the complex landscape of sustainability reporting, rendering it more accessible for businesses and analysts alike.
This unveiling of the IFRS Sustainability Standards is akin to the birth of a new language—one that distills intricate concepts into actionable insights. Are we standing on the precipice of a game-changer? All signs point to a resounding yes.
Imagine a shared vocabulary that empowers stakeholders to discern, compare, and evaluate companies uniformly, presenting a transparent and cohesive view of the corporate sustainability panorama. This is precisely the promise encapsulated by these pioneering standards.
The IFRS S1 and S2 are anchored on four foundational pillars: Governance, Strategy, Risk Management, and Metrics and Targets. Remarkably, this structure mirrors the esteemed recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), underscoring the IFRS Foundation’s dedication to harmonizing standards and elevating the realm of corporate sustainability reporting.
The Governance pillar serves as the bedrock for both standards. It mandates that organizations provide a lucid overview of the structures overseeing sustainability and climate-related risks and opportunities within their ranks. It falls upon companies to demonstrate how their boards have acquired the necessary acumen and expertise to tackle sustainability challenges head-on. Moreover, the governance element delves into how boards actively consider sustainability and climate-related risks and opportunities in their strategic planning, risk management, and target-setting processes.
The advent of the IFRS Sustainability Disclosure Standards necessitates immediate action. For board members and business leaders, this presents an unparalleled opportunity. By shaping investment decisions, you possess the ability to guide your organizations—and by extension, the global economy—toward a future that is sustainable and prosperous.
As we navigate this pivotal transition, ask yourselves: Are you prepared to seize this opportunity? Will your organization rise to the occasion, confronting new challenges while championing sustainability? How will these game-changing standards impact your journey towards a sustainable future?
We find ourselves at a definitive crossroads. The choices we make today will mould our tomorrow. Let us ensure that sustainability lies at the very core of our global economy, driving our actions and influencing our decision-making processes. It is time to embark on the sustainability revolution and unleash the power of boardroom leadership.
Join the movement. Shape the future. Embrace the IFRS Standards for sustainable success!
Helle Bank Jorgensen is the CEO and founder of Competent Boards, offering online ESG and climate programs that draw on the experience of more than 180 renowned board members, business leaders, and investors. Hundreds of directors and senior executives have enrolled in these programs in order to transform their careers and their companies. As of this Fall, Competent Boards will also offer cohorts in APAC time zones for our renowned Global Competent Boards ESG Designation Program.