IFRS Foundation publishes guide for companies as investors call for voluntary application of ISSB Standards

Investors globally have called on companies to voluntarily apply ISSB Standards to provide investors with decision-useful, globally comparable information in the absence of regulatory requirements to apply ISSB Standards.

To support companies meet this demand, the IFRS Foundation has today—at New York Climate Week—published Voluntarily applying ISSB Standards—A guide for preparers. The guide aims to support companies as they start to apply ISSB Standards voluntarily as well as helping them communicate their progress to investors.

As increasing numbers of jurisdictions take steps to introduce sustainability disclosure requirements—including through widespread use of ISSB Standards—the Standards serve as a passport for companies to meet requirements globally while providing investors with a global baseline of disclosures to help inform investment decisions.

The guide will be a useful tool for companies, particularly in jurisdictions without regulatory requirements to apply ISSB Standards, including providing guidance on how companies can describe their application of ISSB Standards.

The guide is the latest in a series of publications designed to support the implementation of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. Furthermore, when used in tandem with tools such as the ESRS—ISSB Standards Interoperability Guidance, companies can apply ISSB Standards to meet investor demand and regulatory requirements around the world.

Speaking at New York Climate Week, the recently appointed Chair of the ISSB Investor Advisory Group (IIAG), Carine Smith Ihenacho, Chief Governance and Compliance Officer, Norges Bank Investment Management stated:

For sustainability information to support investment decisions, risk management processes and ownership activities across a diversified portfolio, it must be consistent and comparable across companies and over time. NBIM asks companies to use, and jurisdictions to adopt, the ISSB Standards as a global baseline. This baseline is critical for cost-effective, decision-useful reporting to investors, including in markets where disclosure requirements go further to meet the needs of other stakeholders, such as Europe.

The comments build on a presentation the Global Head of ESG and Impact Investing at Neuberger Berman and new IIAG Vice Chair, Jonathan Bailey, gave to the ISSB at its September 2024 meeting in Frankfurt:

Neuberger Berman believes in the necessity of financially material, investor-relevant sustainability data. The ISSB Standards, building on the SASB Standards and TCFD recommendations, are pivotal in providing high-quality, comparable information for informed decisions. We encourage companies to apply ISSB Standards voluntarily in their investor communications.

Investors such as BlackRock, Vanguard, Capital Group and Neuberger Berman have encouraged application of ISSB Standards through proxy voting guidelines.

Speaking at New York Climate Week, ISSB Chair Emmanuel Faber said:

Companies around the world already provide investors with sustainability-related information in response to investor demand. However, they use a patchwork of frameworks and standards to do so, leaving investors unable to compare the performance and prospects of companies. With many frameworks and standards now consolidated into the ISSB, the voluntary application guide helps companies navigate from their current reporting practices to applying ISSB Standards, providing a cost-effective route for companies to provide decision-useful, assurable financial information to investors.

The ISSB Investor Advisory Group is comprised of 117 members from 62 leading asset owner and asset manager organisations from around the world committed to improving the quality and comparability of sustainability-related financial disclosures. Its members are global investors with global portfolios, hailing from major markets in Asia, Europe and North America representing more than US$54 trillion in assets. The group provides strategic guidance on developing ISSB Standards and helps ensure the investor perspective is articulated clearly and is considered in the ISSB’s standard-setting process.