The new international sustainability principles

05 July 2023


The International Sustainability Standards Board (ISSB), the international body responsible for developing global sustainability standards, published the first two new sustainability accounting principles, IFRS S1 and IFRS S2, on June 26th.

These principles aim to provide guidelines for reporting and communicating corporate sustainability. While designed to be compatible with International Financial Reporting Standards (IFRS), they can also be applied by those using other accounting standards.

IFRS S1 covers general requirements for sustainability-related financial reporting. Its main objective is to ensure that companies provide information on sustainability risks and opportunities that are relevant to current and potential investors, lenders, and creditors.

On the other hand, IFRS S2 focuses on climate-related reporting. This principle requires companies to disclose information on climate-related risks and opportunities. Climate risks considered include both physical risks and those associated with transitioning to a low-carbon economy.

Both principles will be effective for financial reporting periods beginning on or after January 1, 2024, with early adoption permitted. However, it is important to note that the standardization of sustainability reporting is not yet complete, with other standards still under development or proposal. The introduction of IFRS S1 and IFRS S2 represents a significant step towards standardizing corporate sustainability reporting. However, further efforts are needed to achieve shared and globally consistent standards to facilitate comparable reporting and analysis of companies’ sustainable performance.

For further information and support regarding corporate sustainability reporting and communication, please contact our professionals.

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