IFRS: 36 Jurisdictions Align with ISSB Sustainability Standards

The IFRS Foundation disclosed that 36 jurisdictions worldwide have committed or will commit to International Sustainability Standards Board (ISSB) Sustainability Standards. The report represents a substantial step forward in the use of reliably consistent, globally aligned sustainability-related financial disclosure practices. The publication features publication of comprehensive jurisdictional profiles of 17 jurisdictions and snapshot summaries for others still completing their sustainability reporting plans.

ISSB Standards, prepared with the umbrella of the IFRS Foundation, have the objective of prescribing a global framework for reporting environment, social, and governance (ESG) opportunities and risks by organisations. The standards facilitate capital markets by providing trustworthy, comparable, and decision-relevant information to capital market participants and financial stakeholders. The foundation's most recent update is employed as a tool of transparency for monitoring global adoption and infusing clarity into processes of sustainability reporting in various regulatory frameworks.

Australia, Brazil, Malaysia, and Nigeria are some of the 17 jurisdictions for which full profiles have already been released. The profiles present each jurisdiction's adoption or planned adoption of the ISSB framework. Among the 36 jurisdictions that have signed up so far, 14 have pledged to adopt the standards in full, 2 have concentrated on climate-related disclosures only, and 1 has adopted the framework partially, the IFRS Foundation reports.

Those nations that are yet to finish their regulatory position—i.e., Japan and Canada—have been issued short-form profiles known as "snapshots." These are intended to give an idea of the condition of each nation at the moment as well as their intended plans for execution. Whenever the regulatory and legal procedures in those jurisdictions get finalized, full jurisdictional profiles will be published.

ISSB aims to establish a global consistency framework for sustainability reporting, the next frontier in improving the quality of the ESG data applied for investment and business decision-making. Lack of consistency in cross-border ESG disclosures has been one of the challenges faced by the global capital markets. Investors frequently struggle to value sustainability-related risks and opportunities because of heterogeneous reporting requirements and access to information.

The issuance of jurisdictional profiles is in line with the IFRS Foundation's transparency and standardisation of financial reporting commitment. It is a sequel to the entity's previous "Inaugural Jurisdictional Guide" that had provided an initial glimpse of the manner in which certain countries were addressing the ISSB Standards soon after they had been issued.

In the region of follow-up, the IFRS Foundation continues to track progress in jurisdictions whose sustainability disclosure environment remains in the process of evolving. The country profiles must be revised as governments conclude their policies and advance towards official adoption. The formulation of these standards is also viewed as complementary to other international regulatory efforts such as the European Union's Corporate Sustainability Reporting Directive (CSRD), although the frameworks will likely differ in terms of scope and orientation.

The IFRS Foundation's jurisdictional adoption and profiling initiative is a systematic move towards uniformed ESG reporting. Through synchronizing regulatory frameworks on the basis of a shared point of departure, the step facilitates a level playing field for companies and investors alike. In the long term, this should increase trust in sustainability information and lead to more efficient capital allocation to sustainable business models.

The publication of these profiles will also feed into the policy debate for other jurisdictions that have not yet committed or concluded their sustainability disclosure frameworks. The more countries are planning for the benefits of open ESG disclosure, the more the jurisdictions that will have to adopt or converge to ISSB Standards.

To firms and investors, this transition will translate into greater caution to keep pace with reporting requirements growing more uniform across geographies. Companies operating in or transacting in multiple jurisdictions could be required to get internal sustainability measures and reporting structures aligned with ISSB standards to maintain compliance and transparency to stakeholders.

IFRS Foundation has confirmed that it will continue to supply resources and information to aid regulators and companies during this transition. Its action is part of a wider program to bring elements of sustainability into international financial systems and enable capital markets to be more effective in addressing long-term ESG-related opportunities and risks.

Source:
IFRS Foundation via KnowESG