ISSB: global standards for corporate sustainability reporting

ISSB: global standards for corporate sustainability reporting

The ISSB is an organization set up to develop global standards for corporate non-financial reporting. Its aim is to provide investors with clear and comparable information on corporate sustainability performance. It provides a transparent and consistent framework for companies worldwide, promoting responsible corporate governance and guiding companies towards sustainable practices, marking a major step forward in the transition to a greener economy.

François Tréfois

François Tréfois

CSR & ESG Expert

Update :

The growing need for information on the environmental impact of companies and the actions they are taking in this direction has led to a proliferation of non-financial reporting formats around the world. Although laudable, these numerous initiatives do not always promote transparency of information, preventing stakeholders from having a clear framework for analysis and comparing results from one player to another. 

It was with this in mind that the IFRS foundation, known for its accounting standards, announced the creation of the ISSB (International Sustainability Standards Board), a body tasked with developing an international benchmark for corporate extra-financial reporting, primarily aimed at investors and financial market players.

In a world facing unprecedented environmental and social challenges, the need for concerted action to promote sustainability has become a global priority. In this context, the International Sustainability Standards Board (ISSB) is emerging as a key player in the development of global standards to guide companies towards more sustainable and responsible practices.

What is the ISSB (International Sustainability Standards Board)?

The International Sustainability Standards Board (ISSB) is a global initiative to develop non-financial reporting standards to help companies communicate transparently on their sustainability performance. Launched under the aegis of the International Financial Reporting Standards Foundation (IFRS) at COP26 in Glasgow, the ISSB aims to bridge the current gap in sustainability standards and provide clear, consistent guidelines for companies worldwide.

ISSB has set itself four main objectives:

  • draw up a set of standards intended to become the global benchmark for sustainable development information disclosure
  • meet investors' information needs
  • enable companies to communicate clearly and comprehensively with financial markets
  • promote interoperability between its standards and those specific to certain countries, groups of countries or stakeholders 

The ISSB Board of Directors comprises 14 members with a wide range of expertise and professional backgrounds. Since January 2022, the Board has been chaired by Emmanuel Faber, former CEO of Danone.

To carry out its mission, ISSB drew on the work already carried out by various organizations and investor groups, including..:

  • the Task Force for Climate-related Financial Disclosures (TCFD), a body of the Financial Stability Board
  • Global Reporting Initiative (GRI)
  • SASB (Sustainability Accounting Standards Board) sector-specific standards
  • CDSB (Climate Disclosure Standards Board)
  • VRF (Value Reporting Foundation)

The latter three organizations have also been integrated into the IFRS Foundation as part of the creation of the ISSB.

The organizations behind ISSB
The organizations behind ISSB (Source : ESG Professionals Network)

ISSB standards

In June 2023, the ISSB unveiled two sets of standards, IFRS-S1 and IFRS-2, which came into force in January 2024.

New standards are currently under development, and should enable the ISSB's scope of application to be extended to new ESG indicators.

IFRS-S1 - General requirements for sustainability-related financial disclosures

This IFRS defines the methodology to be followed by a company in identifying and disclosing information about the risks and opportunities associated with sustainable development in its activities.

This involves carrying out a financial materiality analysis to estimate the impact that sustainable development will have on the company's cash flow, access to new financing or capital costs in the short, medium and long term.

Under this IFRS, the company must specify :

  • Governance mechanisms, controls and procedures in place to monitor, manage and oversee risks and opportunities related to sustainability issues
  • The strategy adopted to manage these risks and opportunities
  • The methodology used to identify, assess, prioritize and monitor these risks and opportunities
  • The indicators and targets it has set or is required by law to achieve, and its performance to date in meeting these targets.

IFRS-S2 - Disclosures relating to climate change

Based on the same model as IFRS-S1, this IFRS focuses on issues directly related to climate change.

In the same vein, the company will need to provide an analysis of the impact that climate change will potentially have on its corporate cash flow, access to new financing or capital costs in the short, medium and long term. 

This analysis must take into account the risks and opportunities associated with climate change, including both the physical risks to which the company is exposed and the transitional risks involved in adapting its operations to the consequences of climate change.

As in the case of IFRS-S1, it must provide information on :

  • Its governance mechanisms
  • The strategy adopted to manage climate-related risks and opportunities
  • Processes for managing these risks and opportunities
  • Selected indicators and targets to be achieved, as well as progress in this area

As part of this IFRS project, the company will be required to assess its greenhouse gas emissions in terms of Scopes 1, 2 and 3 of its activities, ideally following the method defined by the GHG Protocol. Finally, it must specify its GHG emissions reduction targets, the timeframe for achieving these targets, and whether the targets are absolute or in terms of intensity.

It should also indicate :

  • if the remuneration of the company's executive is linked in any way to the company's climate policy
  • if an internal carbon price whether an internal carbon price has been introduced, its amount and how it is applied in the decision-making process
  • whether it uses or plans to include a carbon offset mechanism in its strategy, the type of carbon credit involved and the process for validating the emissions program by an independent third party

SASB sector standards

Building on the work previously carried out by the Sustainability Accounting Standards Board (SASB), the ISSB has integrated sector-specific sector-specific standards. These standards currently cover 77 business sectors which are considered to face major financial challenges in terms of sustainable development.

The sectors concerned are divided into the following categories:

  • Consumer goods (7 industries)
  • Mining and mineral processing (8 industries)
  • Financial data (7 industries)
  • Food and beverages (8 industries)
  • Healthcare (6 industries)
  • Infrastructure (8 industries)
  • Renewable resources and alternative energies (6 industries)
  • Resource processing (5 industries)
  • Services (7 industries)
  • Technology and communication (6 industries)
  • Transport (9 industries)

These standards are designed to meet investors' need for both cross-sector and sector-specific information, depending on their level of exposure to sustainability issues. They therefore complement the analyses carried out under IFRS-S.

What is the impact of ISSB?

While the ISSB primarily targets investors, these international standards have a much broader impact, affecting both companies and their stakeholders.

For investors and financial markets

By striving to develop consistent global standards for sustainability reporting, the ISSB facilitates the comparability and transparency of information disclosed to financial markets.

The related effects are therefore :

  • better decision-making by investors
  • better allocation of capital to sustainable companies or those making efforts to combat climate change
  • the development of new "sustainable" financial products designed to finance these same companies

For companies

While the adoption of ISSB standards may entail implementation costs for companies, in the long term it will prove beneficial. 

ISSB encourages the integration of environmental, social and governance (ESG) considerations into business decisions. By integrating sustainability into their governance practices, these companies will be more resilient to the consequences of climate change, and will have the keys to implementing an efficient ESG strategy.

By providing clear and reliable information on sustainability performance, the ISSB enables companies to strengthen the confidence of investors, consumers and their other stakeholders.

Last but not least, it's an effective way of standing out in the marketplace from competitors who are less inclined to disclose information on ESG criteria. 

For the company

ISSB standards contribute directly to the transition to a more sustainable economy. Both by encouraging companies to take concrete action, and by encouraging investors to finance economic players committed to this process.

They also raise awareness of the environmental and social challenges facing society as a whole.

ISSB and CSRD: differences and similarities

Despite some divergences, the standards issued by IFRS and EFRAG share a common objective and therefore tend to converge both in substance and form. Their main difference concerns materiality analysis.

Financial materiality VS double materiality

While both standards include a materiality analysis as a preamble to disclosure, the ISSB has chosen to focus solely on financial materiality or simple materiality. This involves estimating the impact that climate change will have on a company's activities, focusing on the financial consequences that this represents, in terms of risks and opportunities. This approach is regularly criticized, as it implies that economic players are only capable of acting in the light of potential financial constraints or opportunities.

In the CSRDEFRAG has chosen to ask companies to perform a double-materiality analysis. dual materiality. This involves taking the concept of financial materiality and adding impact materiality. This means that companies must not only estimate the financial consequences of climate change on their activities, but also assess the impact that their activities or their transition to a sustainable model will have on the various ESG indicators. This includes the environment in the broadest sense (greenhouse gas emissions, pollution, biodiversity, water resources, etc.) as well as social and societal dimensions (impact on suppliers, local communities, etc.).

Representation of the "double materiality" principle

How can ESRS and IFRS-S be interoperated?

While the definition of "materiality" differs from one reporting standard to another, the CSRD and ISSB retain many points of convergence.

To reduce the risk of double-reporting to which some companies could find themselves subject, EFRAG and the ISSB have worked together to ensure a high degree of interoperability between their two sets of standards.

IFRS-S1 thus shares many points in common with ESRS 1 and ESRS 2, corresponding to the general criteria of the CSRD.

IFRS-S2 should be viewed in parallel with ESRS E1, which is dedicated to climate change. Most of the datapoints requested in the ISSB are found in the CSRD reports.

To date, however, the ESRS E1 remains more comprehensive than its ISSB counterpart, particularly with regard to actions taken to combat global warming, as well as issues relating to energy consumption and the energy mix.

Furthermore, unlike IFRS-S2, ESRS E1 does not consider carbon credits as a means of achieving greenhouse gas emission reduction targets.

In order to provide a clearer picture, EFRAG has published a cross-reference table between the two non-financial reporting standards, identifying the points of convergence between them.

Comparison of the scope of the main non-financial reporting standards

ISSB application worldwide

As the IFRS-S standards have only recently been published, they are still in the process of being rolled out in many countries.

However, these sustainability standards have already been adopted by many countries, including the UK, Brazil, Costa Rica, Sri Lanka, Nigeria and Turkey.

Other countries are currently holding consultations with a view to their adoption. These include Canada, Japan and Singapore.


The ISSB has rapidly established itself as a major player in the regulation of sustainability reporting. By setting itself the goal of harmonizing standards for the disclosure of extra-financial information by companies worldwide, it will enable companies to demonstrate transparency and take concrete action for the climate. These standards have the potential to transform financial markets and the global economy.

Currently focused on climate indicators, the IFRS Foundation has indicated that it is working on new standards which, like CSRD, could be applied to other ESG indicators.

It is now up to companies and investors to prepare for the adoption of these standards, which are likely to become the benchmark for extra-financial reporting in many countries, just as the CSRD is in the European Union.

Sources :

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