The IFRS Foundation has launched a new guide to assist companies in identifying and reporting on sustainability-related risks and opportunities.
This initiative aims to meet the growing demands of investors and global capital markets for detailed sustainability information to enhance investment decision-making.
The guide is grounded in the principles of the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. It focuses on the integral connections between a company, its stakeholders, society, the economy, and the natural environment throughout its value chain.
This approach encourages companies to think integrally about how their operations rely on and impact human, intellectual, financial, natural, manufactured, and social resources and relationships. These dependencies and impacts can lead to sustainability-related risks and opportunities that could significantly influence a company’s cash flows, access to finance, or cost of capital.
Moreover, the guide suggests that companies already applying IFRS Accounting Standards may find it easier to adopt these new sustainability standards, thanks to their existing processes for making materiality judgements when preparing financial statements. Over 140 jurisdictions globally adhere to IFRS Accounting Standards, and the guide notes that such alignment aids in smoothly integrating sustainability-related disclosures with conventional financial reporting.
For companies aiming to address the information needs of a broader range of stakeholders, the guide provides insights into how ISSB Standards can be used in conjunction with other frameworks like the European Sustainability Reporting Standards (ESRS) or the Global Reporting Initiative (GRI) Standards. This connectivity is crucial for companies that are increasingly expected to disclose how sustainability-related risks and opportunities could affect their financial position and performance.
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