Sustainability disclosure landscape

In response to the demand from investors and businesses to simplify the global sustainability disclosure landscape, the IFRS Foundation formed the International Sustainability Standards Board (ISSB), bringing together the Climate Disclosure Standards Board and the Value Reporting Foundation (which housed the SASB Standards and the Integrated Reporting Framework). The ISSB is developing a global baseline of sustainability-related disclosure standards (the IFRS Sustainability Disclosure Standards) and a taxonomy to facilitate digital reporting, building upon the existing work of market-led investor-focused reporting initiatives, including the SASB Standards, the Task Force for Climate-related Financial Disclosures (TCFD) and the World Economic Forum. IFRS Sustainability Disclosure Standards will enable companies to provide comprehensive information about sustainability matters to the financial markets, emphasising consistency and connectivity between financial statements and sustainability-related disclosures.

IFRS Sustainability Disclosure Standards direct companies to the industry-based SASB Standards as priority materials for identifying sustainability risks and opportunities. Specifically:

  • In IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, to help companies identify their sustainability-related risks and opportunities and provide appropriate disclosures using IFRS S1, companies are required to refer to and consider the applicability of the industry-based SASB Standards for topics beyond climate.
  • IFRS S2 Climate-related Disclosures is based on the TCFD Recommendations and includes industry-specific climate metrics derived from the SASB Standards as accompanying guidance.

SASB Standards can be used to provide investor-focused sustainability disclosures in the absence of specific IFRS Sustainability Disclosure Standards. Similarly, SASB Standards enable robust implementation of the Integrated Reporting Framework, providing the comparability sought by investors.

Other sustainability-related disclosure frameworks serve their own unique purposes, and ultimately, companies must evaluate and decide which meet the needs of their key stakeholders.

Prior to the establishment of the ISSB, investors increasingly coalesced around a combination of the TCFD recommendations and SASB Standards as foundational tools to provide capital markets with effective climate- and sustainability-related financial disclosure. As such, the ISSB’s first two standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, combine key aspects of the two.

IFRS S1 and IFRS S2 fully incorporate the TCFD Recommendations, so companies will not need to apply both the TCFD Recommendations and ISSB Standards. An entity applying IFRS S2 would also satisfy the TCFD Recommendations. IFRS S1 requires companies to consider the SASB Standards as a source of guidance, in the absence of a specific IFRS Sustainability Disclosure Standard, for identifying sustainability-related risks and opportunities and appropriate information to disclose. IFRS S2 includes climate-related metrics derived from the SASB Standards as accompanying guidance.

Therefore, companies that already apply the TCFD Recommendations and the SASB Standards are in prime position to apply the ISSB Standards. For more information about how the TCFD recommendations and SASB Standards fit together, see the SASB Climate Risk Technical Bulletin. Visit the IFRS project page for information on the ISSB's IFRS S2 Climate-related Disclosures.

Within the growing field of sustainability-related disclosure, a variety of frameworks and standards have been developed to help establish a foundational layer of relevant, comparable and reliable data from companies.

  • Disclosure frameworks, like the Integrated Reporting Framework, provide a set of principles-based guidance for how information is structured and prepared, and which broad topics are covered.
  • Disclosure standards, like the IFRS Sustainability Disclosure Standards, provide specific, replicable and detailed requirements for what should be reported for each topic. In other words, standards make frameworks actionable by providing comparable, consistent, reliable information.

Disclosure frameworks and standards are complementary and designed to be used together.

SASB Standards and the Global Reporting Initiative (GRI) Standards are compatible standards for sustainability reporting. They are designed to fulfil different purposes and are based on different approaches to materiality. SASB Standards focus on sustainability issues most likely to influence investor decision-making. GRI Standards focus on the economic, environmental and social impacts of a company in relation to sustainable development, which is of interest to a broad range of stakeholders.

Many companies—including ArcelorMittal, PSA Group, Diageo, and Nike—have used both SASB Standards and GRI Standards to meet the needs of their audiences.

Still, both organisations recognise that the sustainability disclosure landscape can appear complicated, and for companies that use both sets of standards, the reporting effort can be high. To help address this, a joint paper demonstrates how some companies—including General Motors and Suncor Energy—have used both sets of standards together and the lessons that can be shared.