ISSB launches groundbreaking digital sustainability taxonomy

The ISSB has announced the publication of its much-anticipated IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy).

This launch marks a significant step in empowering investors and capital providers to navigate and analyse sustainability-related financial information more efficiently.

The ISSB Taxonomy, which is informed by extensive market feedback, aligns with the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, including their associated guidance. It aims to enhance dialogue between companies and investors, ensuring that sustainability information is tagged consistently if prepared using ISSB Standards.

Although the taxonomy does not introduce new reporting obligations, it supports compliance with existing standards by providing a framework that integrates with the IFRS Accounting Taxonomy. This integration allows companies to offer comprehensive digital financial reporting packages, thus promoting greater transparency and comparability in capital markets.

ISSB Chair Emmanuel Faber highlighted the significance of the taxonomy’s release, noting, “As jurisdictions around the world are considering the adoption or other use of ISSB Standards, the publication of the ISSB Taxonomy only a few months after the effective date of our inaugural Standards is critical to support capital market transparency and efficiency and enable companies and investors to digitally process sustainability-related financial disclosures provided through use of the ISSB Standards.”

Faber further elaborated on the taxonomy’s design to foster interoperability with other frameworks, “Furthermore, we have taken steps to ensure the ISSB Taxonomy can help facilitate interoperability with other taxonomies when necessary—for example, to facilitate interoperability with the taxonomy being developed by EFRAG—enabling all companies and investors to immediately more effectively identify disclosures required by the ISSB.”

This strategic initiative is expected to facilitate enhanced digital engagement between companies and their stakeholders, ensuring that sustainability data is both accessible and actionable. This development not only underscores the growing importance of sustainability in global financial reporting but also positions the ISSB as a leader in shaping international standards that integrate environmental, social, and governance (ESG) factors into the financial narrative.

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