Regulation | ~ 2 min. read

Incoming: new standards for sustainability reporting

The International Sustainability Standards Board (ISSB) expects to issue the technical content of its initial two sustainability reporting standards1 by the end of June. What does this mean for companies and investors?

Backed by international forums such as the G7 and G20, the ISSB was created by the International Financial Reporting Standards (IFRS) Foundation in 2021 with a mission to unify corporate sustainability disclosures.

What should be the impact of the launch of the new standards?

It is hoped that the creation of one global standard for sustainability disclosure will facilitate broader adoption by companies because it should reduce the number of standards a company must report against. It should also help investors and other stakeholders to better direct their capital flows by allowing them to compare sustainability performance more easily across global companies.

What are the two standards?

The first standard, IFRS S1, sets the global core baseline for general sustainability reporting while S2 focuses on climate-related disclosure.

Embedded in S1 is the concept of an integrated reporting framework, which means companies would report financially material sustainability topics at the same time as the related financial statements.2

The standards build on existing frameworks such as those of the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD).

What does it mean for companies?

The standards will be effective from January 2024. Companies can begin by prioritising reporting on climate-related risks and opportunities in 2025 but will need to provide full reporting on general sustainability-related topics beyond climate3 from 2026, together with Scope 3 emissions.4

Companies that already use existing market sustainability reporting standards are likely to find aligning to S1 and S2 standards easier. Companies that are new to sustainability disclosure should benefit from the ISSB’s guidance and capacity-building programmes (including workshops and seminars) in 2023 to prepare for the future application of these standards. The ISSB has a particular focus on supporting smaller companies and emerging markets5, and reporting requirements will be proportionate to a company’s size and scope.

Will adoption be mandatory?6

The ISSB collaborates closely with jurisdictions to foster adoption of the two standards. But it is for jurisdictional authorities to decide whether to mandate the use of the standards7, and variations will exist in different jurisdictions when applying the standards.


Recent insights

Five themes for 2024

Our fourth theme for 2024 looks at how sustainability regulation is beginning to promote tangible progress on climate transition.

Discover more

Five themes for 2024

We believe that ESG will return to its original purpose of risk materiality - a theme explored in the third of our blog series on sustainability in 2024.

Discover more

Biodiversity | ~ 4 min read

Clothing and consumer textiles have a heavy cost in terms of CO2 emissions and resource usage. How can the textile industry be more sustainable?

Discover more
  • Disclaimer
    Investing involves risk. The value of an investment and the income from it will fluctuate and investors may not get back the principal invested. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security.

    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its affiliated companies at the time of publication. Certain data used are derived from various sources believed to be reliable, but the accuracy or completeness of the data is not guaranteed and no liability is assumed for any direct or consequential losses arising from their use. The duplication, publication, extraction or transmission of the contents, irrespective of the form, is not permitted.

    This material has not been reviewed by any regulatory authorities. In mainland China, it is for Qualified Domestic Institutional Investors scheme pursuant to applicable rules and regulations and is for information purpose only. This document does not constitute a public offer by virtue of Act Number 26.831 of the Argentine Republic and General Resolution No. 622/2013 of the NSC. This communication's sole purpose is to inform and does not under any circumstance constitute promotion or publicity of Allianz Global Investors products and/or services in Colombia or to Colombian residents pursuant to part 4 of Decree 2555 of 2010. This communication does not in any way aim to directly or indirectly initiate the purchase of a product or the provision of a service offered by Allianz Global Investors. Via reception of his document, each resident in Colombia acknowledges and accepts to have contacted Allianz Global Investors via their own initiative and that the communication under no circumstances does not arise from any promotional or marketing activities carried out by Allianz Global Investors. Colombian residents accept that accessing any type of social network page of Allianz Global Investors is done under their own responsibility and initiative and are aware that they may access specific information on the products and services of Allianz Global Investors. This communication is strictly private and confidential and may not be reproduced. This communication does not constitute a public offer of securities in Colombia pursuant to the public offer regulation set forth in Decree 2555 of 2010. This communication and the information provided herein should not be considered a solicitation or an offer by Allianz Global Investors or its affiliates to provide any financial products in Brazil, Panama, Peru, and Uruguay. In Australia, this material is presented by Allianz Global Investors Asia Pacific Limited (“AllianzGI AP”) and is intended for the use of investment consultants and other institutional/professional investors only, and is not directed to the public or individual retail investors. AllianzGI AP is not licensed to provide financial services to retail clients in Australia. AllianzGI AP is exempt from the requirement to hold an Australian Foreign Financial Service License under the Corporations Act 2001 (Cth) pursuant to ASIC Class Order (CO 03/1103) with respect to the provision of financial services to wholesale clients only. AllianzGI AP is licensed and regulated by Hong Kong Securities and Futures Commission under Hong Kong laws, which differ from Australian laws.

    This document is being distributed by the following Allianz Global Investors companies: Allianz Global Investors GmbH, an investment company in Germany, authorized by the German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Allianz Global Investors (Schweiz) AG; in HK, by Allianz Global Investors Asia Pacific Ltd., licensed by the Hong Kong Securities and Futures Commission; in Singapore, by Allianz Global Investors Singapore Ltd., regulated by the Monetary Authority of Singapore [Company Registration No. 199907169Z]; in Japan, by Allianz Global Investors Japan Co., Ltd., registered in Japan as a Financial Instruments Business Operator [Registered No. The Director of Kanto Local Finance Bureau (Financial Instruments Business Operator), No. 424], Member of Japan Investment Advisers Association, the Investment Trust Association, Japan and Type II Financial Instruments Firms Association; in Taiwan, by Allianz Global Investors Taiwan Ltd., licensed by Financial Supervisory Commission in Taiwan; and in Indonesia, by PT. Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK).

    2858941

Allianz Global Investors

You are leaving this website and being re-directed to the below website. This does not imply any approval or endorsement of the information by Allianz Global Investors Asia Pacific Limited contained in the redirected website nor does Allianz Global Investors Asia Pacific Limited accept any responsibility or liability in connection with this hyperlink and the information contained herein. Please keep in mind that the redirected website may contain funds and strategies not authorized for offering to the public in your jurisdiction. Besides, please also take note on the redirected website’s terms and conditions, privacy and security policies, or other legal information. By clicking “Continue”, you confirm you acknowledge the details mentioned above and would like to continue accessing the redirected website. Please click “Stay here” if you have any concerns.