The IFRS Foundation and EFRAG have published guidance to support businesses implementing the upcoming sustainability reporting standards.
The development of the ISSB Standards and ESRS represent a significant step forward in sustainability reporting, as both initiatives aim to improve the consistency and quality of reported information.
These standards provide a comprehensive framework for companies to disclose their sustainability performance, offering a clear picture of their progress to stakeholders, including investors and governments. While the ISSB Standards are currently voluntary, the ESRS are mandatory for large companies in the EU under the Corporate Sustainability Reporting Directive (CSRD).
Read next: The ISSB Standards: A primer for businesses of all sizes
Despite the creators of these standards, the IFRS Foundation and EFRAG, collaborating during the development of both standards to ensure a high degree of alignment, companies looking to report across both may still encounter difficulties.
To address potential confusion arising from the overlap between the two, the newly released guidance offers practical support for companies applying both. This includes a detailed analysis of how the standards align, particularly in the area of climate-related disclosures.
“On the basis of our joint efforts, we are very happy to be able to issue this very practical guidance on interoperability illustrating in particular how ESRS embed the global baseline approach developed by the ISSB,” said EFRAG Sustainability Reporting Board Chair Patrick de Cambourg.
“It demonstrates EFRAG’s commitment to the much needed international convergence of sustainability-related disclosures, on climate and other critical sustainability matters, and our full support to the global momentum in this crucial space.”
The guidance covers key areas of interoperability, such as materiality considerations, and provides a mapping between specific ESRS and ISSB disclosure requirements. It also highlights information relevant to entities already using ESRS who intend to additionally apply ISSB standards.
For further guidance, a joint event by the ISSB and EFRAG will be held on May 23, 2024, to discuss the recently published interoperability guidance for sustainability reporting standards. The event will be offered in Brussels and online. You can visit the EFRAG website for more details.
