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IFRS Foundation Issues New Guide for Prioritizing Climate-Related Disclosures in Sustainability Reporting
The IFRS Foundation has issued a new guide aimed at assisting companies in reporting only climate-related information using ISSB Standards. This publication is intended for organizations beginning their sustainability reporting journey. It provides a structured framework that addresses data availability challenges and helps companies meet investor expectations.
Addressing Investor Demands with a Targeted Approach
During the development of IFRS S1 and IFRS S2, investors consistently emphasized the critical need for detailed climate-related disclosures. Many companies, however, face challenges in gathering comprehensive sustainability data across all areas. In response, the ISSB introduced targeted transition reliefs.
One significant relief, known as the “climate-first” approach, enables organizations to focus solely on climate-related information at the outset. The new guide offers clear instructions on how to apply IFRS S1 when reporting only on climate matters, aligning with investor needs for timely and relevant data.
IFRS Climate-Related Reporting: Comprehensive Coverage of Requirements
The guide provides a detailed, step-by-step framework for companies that choose a climate-first reporting strategy. Key aspects include:
Materiality Considerations: Insight into determining what is most relevant for inclusion in a sustainability report.
Reporting Climate-Related Risks: Guidance on identifying and articulating both risks and opportunities related to climate change.
Metrics and Targets: Recommendations for setting measurable and reliable performance indicators.
Incorporating External Guidance: Advice on leveraging external frameworks and resources to support the reporting process.
Disclosing Judgements: Instructions on how to communicate the critical judgments made during the preparation of climate-related disclosures.
Technical Specifications: Practical details regarding the optimal placement and timing of disclosures within company reports.
This thorough approach ensures that companies have a clear roadmap for initiating their sustainability disclosures, starting with the most pressing environmental issues.
Reinforcing ISSB Standards Implementation
The publication of this guide underscores the ISSB’s commitment to facilitating the adoption of its standards. By offering a clear pathway for reporting climate-related information, the guide strengthens the consistency and reliability of sustainability disclosures. It serves as an essential resource for companies aiming to align their reporting practices with ISSB Standards while providing investors with comparable, decision-useful information.
Embracing the “Climate-First” Transition Relief
At the core of this guide is the “climate-first” transition relief. Recognizing that many organizations may not yet be ready to report on every sustainability risk, the relief permits a phased approach. Companies can concentrate on the most urgent climate issues first and gradually expand their reporting to include additional sustainability topics.
This method reduces the initial reporting burden and builds a solid foundation for more comprehensive disclosures in the future. By adopting this approach, companies can deliver precise, impactful information that meets investor expectations and paves the way for broader sustainability integration.
Practical Benefits for Companies and Investors
The guide offers significant benefits for both companies and investors. It simplifies the initial reporting process for companies, ensuring that climate-related disclosures are robust and transparent. For investors, it provides access to reliable, decision-useful information, thereby enhancing their ability to assess a company’s exposure to climate risks. The key benefits include:
A clear framework for initiating climate-only reporting.
Consistent application of IFRS S1 and IFRS S2 requirements.
Enhanced data quality that supports more informed investment decisions.
By following the guidance provided, companies can improve their sustainability disclosures, ultimately fostering greater investor confidence and market transparency.
A Call to Embrace a Sustainable Reporting Future
The release of this new guide represents a significant milestone in the evolution of sustainability reporting. It offers a pragmatic and focused approach for companies to begin their reporting journey with a climate-first perspective. Now is the time for organizations to leverage this resource, streamline their disclosure process, and enhance investor communication.
The IFRS Foundation and ISSB are providing the tools necessary for companies to transition smoothly into a future of comprehensive and transparent sustainability reporting. Embracing this change will not only meet current regulatory and investor demands but also contribute to a more sustainable, resilient future for all.
Access the Guide
To review the full guide, please click here.
Explore the guide and start transforming your sustainability reporting today.
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