Introduction: Providing useful information about sustainability-related risks and opportunities
In October 2020, AICPA® & CIMA® started a programme of thought leadership to explore accountancy and sustainability, highlighted in Sustainability and Business — The Call to Action: Build Back Better.1 This IFRS S2 summary report was created as part of a series of briefs exploring the topic of sustainability, business and the key role that finance professionals can play. These briefs will help organisations consider sustainability issues, how to integrate them into their long-term decision-making, and how to incorporate these issues into internal and external reporting.
This IFRS S2 paper has been designed to summarize a specific standard or framework. While it has been written from the management-accounting perspective, attest and assurance issues will also be considered because they are vital in the evolving world of sustainability reporting.
A framework or a set of standards? The difference
A framework is a set of principles-based guidance for how information can be structured and prepared and what broad topics should be covered. Standards are specific, replicable and detailed requirements for what should be reported for each topic. They are rules-based requirements.
Background
One of the many significant developments in increasing disclosures of climate-related and other sustainability-related information was the IFRS® Foundation Consultation Paper on Sustainability Reporting in 2020. Based on overwhelming feedback in support of the foundation’s role in developing international sustainability reporting standards, the IFRS Trustees announced the formation of the International Sustainability Standards Board (ISSB) at COP 26 in Glasgow in 2021.2
In addition to the formation of the ISSB, the announcement included the consolidation of the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation (VRF — the combined entity of the Integrated Reporting Framework and the Sustainability Accounting Standards Board (SASB) Standards). The other significant development announced was the publication of two prototype standards. These were followed in June 2023 with the launch of the inaugural ISSB standards after consultation on their respective exposure drafts:3
IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information
IFRS S2, Climate-related Disclosures