In a significant development toward a global baseline for sustainability-related financial disclosures, IFRS has released the ISSB standards. Companies with operations or subsidiaries in the European Union are preparing for new mandatory sustainability disclosures under the EU’s Corporate Sustainability Reporting Directive (CSRD). Meanwhile, the final versions of the European Sustainability Reporting Standards (ESRS) will be released later this year. The WBCSD CFO Network has produced side-by-side guidance to help companies navigate these standards. This valuable resource analyzes the requirements of the ISSB Standards & European Sustainability Reporting Standards (ESRS).
There is increasing demand for clear, comprehensive and comparable sustainability reporting from Financial Institutions, Regulatory Bodies, Consumers and Civil Society. Financial Institutions are increasingly looking for comparable and verified information on sustainability-related risks, opportunities, impacts and strategies to inform their assessment of long term business resilience when making investment decisions. For this reason sustainability performance and disclosure increasingly fall into the realm of the CFO and finance teams.
The purpose of this Guidance is to help CFOs and their teams prepare to implement the new sustainability reporting requirements to inform strategic decision-making on corporate sustainability performance and respond to requests from investors, banks and regulators.
The Guidance provides side-by-side analysis of two new sustainability disclosure standards that are setting the bar for sustainability reporting globally, and highlights priority issues for finance professionals identified through WBCSD’s CFO Network. The Guide focuses on:
- The IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2: Climate-related Disclosures (released on 26 June 2023). These standards have been developed by the International Sustainability Standards Board (ISSB) under the International Financial Reporting Standards (IFRS). The ISSB Standards are intended to create a global baseline for sustainability disclosure by providing decision-relevant information to investors which is directly related to the financial value of the enterprise.
- The European Sustainability Reporting Standards (ESRS) ESRS 1: General Requirements and ESRS2: General Disclosures. The draft ESRS standards, in addition to these two cross-cutting standards, includes 10 topic-specific standards covering environmental, social and governance disclosures. These standards have been developed by the European Financial Reporting Advisory Group (EFRAG) to support implementation of the Corporate Sustainability Reporting Directive (CSRD) adopted by the European Commission, which requires companies within its scope to report in compliance with European Sustainability Reporting Standards (ESRS). The ESRS intends to provide comprehensive sustainability disclosures for all key stakeholders – including investors, employees, civil society and beyond.
The guidance also provides consideration for companies preparing to report against the U.S. Securities and Exchange Commission (SEC) climate disclosure rule (currently awaiting release) which is also intended to inform investor decision-making and help protect investors.