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What the Upcoming ISSB Standards Mean for Corporate Reporters and Issuers

Posted on April 4, 2023

John Cameron
John Cameron
Manager, Equity Capital Markets and Corporate Solutions

The world of sustainability and environmental, social and governance (ESG) reporting is on the cusp of unifying around one common language for disclosing associated risks and opportunities. That language is the Sustainability Disclosure Standards being developed by the International Finance Reporting Standard’s (IFRS) International Sustainability Standards Board (ISSB). The IFRS announced at its inaugural Sustainability Symposium in February 2023 that these standards will come into force in January 2024. If you are a corporate issuer, now is the time to start understanding what these standards entail so you can proactively consider how they’ll affect your company. 

As a member of Morningstar Sustainalytics’s Corporate Solutions team, I attended the Montreal symposium and put together the following key takeaways to help you get ready. The insights below draw from both what was announced at the symposium and from what the ISSB released in its draft S1 (general sustainability standards) and S2 (climate-related standards) Sustainability Disclosure Standards. 


Takeaway One: The ISSB is actively working with regulators around the world to ensure the ISSB standards are a “global baseline” for sustainability disclosure requirements. 

The intent of the Sustainability Disclosure Standards is to increase the effectiveness, efficiency, comparability, and decision-usefulness of corporate sustainability and ESG reporting. They also aim to improve the quality of sustainability information available to investors making capital allocation decisions. To this end, the standards consolidate and build from several existing sustainability reporting frameworks such as the Taskforce on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board (SASB) Standards. ISSB is also actively working with regulators to ensure the standards inform coming regulations and are incorporated into existing regulatory frameworks. 

While variations in how different jurisdictions apply the standards are inevitable and necessary to maintain the standards’ relevance, the ISSB’s work is, “backed by the G7, the G20, International Organization of Securities Commissioners (IOSCO), the Financial Stability Board, African Finance Ministers and by Finance Ministers and Central Bank Governors from over 40 jurisdictions.”1 This means the proposed standards have the legitimacy needed to achieve the goal of establishing a “global baseline” on sustainability reporting.

Indeed, some countries are creating their own sustainability standards boards to boost their cooperation with the ISSB. Ultimately, as the Chair of IOSCO Martin Moloney noted, the implementation of the standards will face a “cold hearted, cold headed” policy process in every jurisdiction on their way to implementation.2 It is therefore critical that corporations familiarize themselves with both the standards and the requirements from their local regulators. 


Takeaway Two: The standards will include draft guidance requiring companies to publish their sustainability disclosures at the same time as their financial disclosures.

One of the questions we are most frequently asked by corporate issuers and sustainability reporting professionals is about when they should release their sustainability reporting. This requirement in the new ISSB standard answers that question. The principle underlying the requirement is that sustainability performance is fundamentally linked to financial performance, necessitating that this information be reported simultaneously.

Per the ISSB, this simultaneous reporting requirement illustrates how “a company’s ability to deliver financial value to investors is inextricably linked to the stakeholders with whom it works and serves, the society in which it operates and the natural resources upon which it draws.”3 Once the standards come into effect in January 2024, companies will have a one-year relief period from the simultaneous reporting requirement.4 


Takeaway Three: There is a strong appreciation for how organizations across the corporate value chain need to increase their capacity to compile, understand, and disclose sustainability information.

The need for sustainability capacity was a very hot topic for market participants gathered at the symposium. Nearly everyone we spoke to was concerned about their organization’s ability to comply with the disclosure requirements coming into effect in the next several years. This means that it is critically important for your organization to attract, retain, and develop the sustainability talent that will be vital for success in the coming years.

The ISSB itself is working with organizations and governmental bodies around the globe to help support capacity creation efforts, with a particular focus on supporting smaller companies and emerging markets. To that end, the ISSB standards are providing transition relief, such as phase-in periods and reporting requirements proportionate to a company’s size and scope.5  


Takeaway Four: Scope 3 emissions reporting requirements will be incorporated into the final Sustainability Disclosure Standards. 

This means that the companies currently working to get a handle on their scope 3 emissions are laying the essential groundwork towards eventual compliance. Firms not already doing this work should actively consider their organization’s ability to compile this data and start disclosing it in the next two to three years.

Critically, the ISSB reminded participants at the conference that all disclosed sustainability data needs to pass a materiality test to ensure it is relevant to investors. This includes scope 1, 2, and 3 greenhouse gas (GHG) emissions and other climate risks. The board has also decided that industry-specific climate metrics included in the appendix to S2 of the standards will be illustrative only. Additionally, the board noted that organizations will receive a one-year relief period for measuring scope 1, 2, and 3 GHG emissions in alignment with GHG Protocol (if an organization currently measures them by a different standard) and there will be a one-year relief period for disclosing scope 3 emissions.6


Takeaway Five: The upcoming standards are viewed as critically important to enabling sustainability disclosure from smaller listed and private companies, particularly in emerging economies. 

The standards seek to support and enable more efficient sustainability reporting, by reducing the number of standards a company must report against and thus lowering the cost of disclosing sustainability information.7 Notably, Kathlyn Collins, VP and Head of ESG at Matthews Asia, suggested that these standards will improve banks’ ability to request material sustainability disclosure from the smaller companies they finance, which would help institutional investors put together more intentional investment portfolios: “Some of the smaller banks that are focused just on lending to SME sectors, micro sectors, women, those [companies] are found in emerging economies but today a lot of them don’t have these standards. They’re not reporting on some of the extra-financial impacts that their business is having, so it makes it very difficult to put together portfolios that are intentional.”8 

With the market moving towards one standard for sustainability disclosure, it should become easier for regulators and investors to point companies to a single standard to disclose against, enabling broader adoption and increased capital flows. 


Takeaway Six: Increased standardization of global sustainability disclosures will improve sustainability reporting, facilitating improved analysis by market participants.

From the perspective of an established ESG rating agency, it is important to note that the widespread adoption of the ISSB standards should generally improve the quality of a company’s sustainability disclosures. Having access to higher-quality information will improve the decision-making capabilities of market participants and the quality of evaluations conducted by ESG research teams. 


New standards are coming into force and will form the backbone of disclosure requirements mandated by regulators around the world. These requirements, therefore, will have a real consequence on your company’s ESG and sustainability strategies, policies, and disclosure. Reach out to John Cameron at [email protected] or to the team at [email protected] to discuss how Morningstar Sustainalytics can help you get ready.



1 IFRS. 2022. "ISSB Frequently Asked Questions – How does the ISSB fit in with organizations developing sustainability reporting standards?" IFRS website.

2 IFRS Sustainability Symposium. 2023. "Panel 2: A Global Baseline: Just Around the Corner or a Pipe Dream?" Quoted from panel recorded February 17, 2023 (available to conference attendees only). 

3 IFRS. 2023. “Seven Key Takeaways from the IFRS Sustainability Symposium.” March 6, 2023.  

4 IFRS. 2023. Climate-related Disclosures – Current Stage.   

5 IFRS. 2023. “Seven Key Takeaways from the IFRS Sustainability Symposium.” March 6, 2023.  

6 IFRS. 2023. Climate-related Disclosures – Current Stage.  

7 IFRS. 2022. ISSB Frequently Asked Questions – Why should companies prepare to apply the IFRS Sustainability Disclosure Standards?  

8 IFRS Sustainability Symposium. 2023. "Panel 3: Levelling Up the Reporting Chain: How to Bring Emerging Economies and Small Companies Along for the Ride." Quoted from panel recorded February 17, 2023 (available to conference attendees only). Quoted from panel recording (available to conference attendees only). 

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