IFRS Guide: How to Adopt ISSB Climate Standards

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The International Sustainability Standards Board (ISSB) was established by IFRS in November 2021 with the aim of developing global standards for the disclosure of sustainability information. Led by Emmanuel Faber, the ISSB enjoys broad international support, being backed by the G7, the G20, the International Organization of Securities Commissions (IOSCO), the Financial Stability Board, as well as African finance ministers and governors of central banks from over 40 jurisdictions. Its goal is to provide a unified framework that enhances transparency of sustainability information and enables investors to better assess risks and opportunities.

The standards aim to provide investors with reliable data on the risks and opportunities related to corporate sustainability. In June 2023, two fundamental standards were published: IFRS S1 (General requirements for the disclosure of sustainability-related financial information) and IFRS S2 (Climate-related disclosure). These standards aim to create a shared global base for sustainability reporting, simplifying and consolidating previous frameworks such as the recommendations of the TCFD, the SASB, and the CDSB framework.

To facilitate the adoption of standards, ISSB has introduced a series of exemptions, including the "climate-first" exemption. This allows companies to start reporting by focusing exclusively on climate aspects, with the possibility of including other sustainability aspects in subsequent years. This flexibility allows companies to collect more structured data over time, without the immediate need to cover all ESG aspects. ISSB itself has emphasized that, while investors need complete and consistent data on all sustainability-related risks and opportunities, the current priority is the disclosure of information related to climate change. This progressive approach aims to reduce implementation difficulties and ensure a gradual transition towards complete and consistent disclosure.

The IFRS guide covers several key aspects to support companies in preparing sustainability reports, including:
Definitions and materiality criteria to consider in reporting;
Key factors for disclosing climate risks and opportunities;
Application of metrics and targets;
Reference sources for identifying climate risks;
Methods of reporting decisions made in preparing climate information;
Technical aspects related to the placement of information within corporate reporting and disclosure timelines.
This new guide represents a fundamental tool for companies facing the implementation of ISSB standards, offering a structured path for climate reporting and facilitating the transition to a broader and more integrated disclosure over time.

The adoption of ISSB standards is planned from January 1, 2024, with the possibility of early application provided that both IFRS S1 and IFRS S2 are applied. The ISSB is committed to collaborating with organizations like the Global Reporting Initiative (GRI) to ensure that its standards, primarily focused on investor communication, are complementary and compatible with existing GRI standards. Furthermore, the ISSB aims to ensure that companies provide sustainability information alongside financial statements, promoting integrated reporting that reflects the interconnection between financial performance and sustainability. Additionally, by applying the ISSB standards, companies can avoid double reporting.

This article was created as part of the project "Biodiversity services EU expansion" (CUP: E43D22000480009) under the call by Regione Lombardia "PR FESR 2021-2027 - LINEA INTERNAZIONALIZZAZIONE 21-27", aimed at supporting the internationalization of Italian companies. 3Bee is the naturetech company that develops innovative technologies for the monitoring, protection, and regeneration of biodiversity, supporting companies in defining customized climate strategies based on the analysis of their impacts and dependencies on nature. With an established portfolio in Italy, Germany, and France and notable partnerships, 3Bee continues its expansion into international markets to create a tangible impact through technology.