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Wednesday, June 19, 2024

IFRS reports half global economy moving towards ISSB sustainability reporting standards

The financial standards are now aligned with sustainability standards that save capital from wastage. The IFRS Foundation is a not-for-profit organization that develops and promotes the International Financial Reporting Standards (IFRS). These standards are designed to bring transparency, accountability, and efficiency to financial markets around the world.

The IFRS Foundation unveiled significant progress towards the establishment of a consistent global baseline for a corporate sustainability reporting system, revealing that jurisdictions representing more than half of the global economy have announced steps to use or align with the International Sustainability Standards Board’s (ISSB) disclosure standards.

The International Sustainability Standards Board (ISSB) is an initiative launched by the International Financial Reporting Standards (IFRS) Foundation. Its main objective is to develop a comprehensive global baseline of sustainability-related disclosure standards. The ISSB aims to provide transparent, reliable, and comparable sustainability information to investors and other stakeholders, enhancing the decision-making process related to environmental, social, and governance (ESG) factors.

The ISSB consists of members with diverse expertise in sustainability, financial reporting, and standard-setting. The board operates independently but is accountable to the IFRS Foundation Trustees.

Companies can benefit from using ISSB standards to enhance the credibility and comparability of their sustainability disclosures, which can improve stakeholder trust and potentially reduce the cost of capital.

Investors gain access to consistent and reliable sustainability information, enabling them to make more informed decisions regarding risks and opportunities associated with ESG factors.

Since the release of the ISSB’s initial general sustainability and climate reporting standards last year, more than 20 jurisdictions have decided to use the ISSB standards, or are taking steps to introduce the standards in their own frameworks, representing nearly 55 percent of global GDP, and over half of global greenhouse gas emissions.

Most recently, China’s Ministry of Finance proposed sustainability reporting standards for businesses, based primarily on the ISSB standards.

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