Organizations Release Guide with more Standardized Sustainability Reporting
Overview:
The IFRS Foundation and EFRAG have released guidance to simplify sustainability reporting alignment between ISSB and ESRS standards, easing the burden on EU companies. The document focuses on climate-related disclosures, providing practical support for applying ISSB's standards alongside ESRSs. Despite differing approaches, the guidance aims to ensure consistency in reporting requirements and reduce duplication in sustainability disclosures.
Summary:
The International Financial Reporting Standards Foundation (IFRS Foundation) and the European Financial Reporting Advisory Group (EFRAG) have jointly unveiled new guidance material, highlighting the alignment between the International Sustainability Standards Board’s (ISSB) standards and the European Sustainability Reporting Standards (ESRS). This document aims to streamline the reporting process for companies mandated to disclose sustainability-related information, particularly focusing on climate-related disclosures. European Union’s Commissioner for Financial Services, Mairead McGuinness, applauded the guidance, emphasizing the importance of interoperability between different reporting frameworks to alleviate the reporting burden for EU companies.
The ISSB's goal with its sustainability reporting standards is to inform investor capital allocation decisions by ensuring globally comparable, targeted, and decision-useful disclosures. As companies gear up for their first full year of reporting under ISSB’s initial two sustainability reporting standards (IFRS S-1 and IFRS S-2), the guidance document serves to clarify how these standards align with ESRSs. While the ISSB aims for a global minimum baseline in sustainability reporting, the EU's approach, as outlined in the Corporate Sustainability Reporting Directive (CSRD), is broader and more ambitious, with ESRSs adopting a "double materiality" perspective, requiring reporting on impacts on both people and the environment, along with financial implications.
The guidance addresses complexities and aims to reduce duplication in sustainability reporting, particularly regarding climate disclosures. It offers specific guidance on aligning general requirements, materiality, and presentation, while also providing insight into how companies can comply with both sets of standards when reporting on sustainability issues beyond climate. While there's a significant degree of alignment between ESRSs and ISSB standards, application of both reporting regimes simultaneously requires careful consideration and adherence to the provided guidance, covering topics such as general sustainability reporting, climate disclosures, and the interplay between ESRSs and ISSB standards in climate reporting.
Source: https://www.ipe.com/news/efrag-issb-release-joint-guidance-on-sustainability-reporting/10073137.article
