October 2023: Speaking Sustainability

Navigating #IFRS #ESRS #SustainabilityReporting Key Takeaways:

IFRS sustainability disclosure standards set a global baseline for sustainability reporting.
ESRS demands double materiality, impacting both financial and non-financial reporting aspects.
Interoperability between different frameworks remains a critical, evolving discourse.

Further Insights

IFRS Standards: In June 2023, the ISSB issued IFRS S1 for general sustainability disclosures and IFRS S2 focusing on climate-related disclosures, marking a significant step towards standardized sustainability reporting.
ESRS Adoption: The European Commission adopted ESRS, requiring companies to apply from 2025 depending on their size and type, introducing an impactful, region-specific regulatory framework.
Interoperability Effort: Public commitments from ISSB, EFRAG, and the European Commission to work on compatibility between IFRS sustainability standards and ESRS, aiming to ease the reporting process for multinational companies.
Materiality Perspectives: The evolution from single to double materiality, where the impact of a company on its environment and society becomes as crucial as its financial performance.
Industry-Specific Disclosures: IFRS S2 and ESRS both include requirements for industry-specific metrics, underlining the need for tailored disclosures that resonate with stakeholder concerns.
US and California Moves: Recent advancements in the US, notably California's legislation on greenhouse gas emissions and climate-related financial risk reporting, highlighting growing global alignment on sustainability reporting.

Closing Thoughts: As the landscape of sustainability reporting standards evolves, the challenge for businesses will be not only in adopting these standards but also in navigating their convergence and harmonization. How prepared is your organization to address these complexities?