What is the ISSB?

Quick Answer: The International Sustainability Standards Board (ISSB) is a global standard-setting body, established by the IFRS Foundation in 2021, that develops sustainability disclosure standards for use by companies and investors worldwide. Its two inaugural standards, IFRS S1 and IFRS S2, set out what companies must disclose about sustainability-related risks and opportunities, with IFRS S2 specifically covering climate-related disclosures including greenhouse gas emissions. The ISSB designed the standards to create a consistent, comparable baseline for sustainability reporting across capital markets globally.

What is the International Sustainability Standards Board?

The International Sustainability Standards Board (ISSB) is the body responsible for developing a global baseline of sustainability-related financial disclosure standards. It sits under the IFRS Foundation, the same organisation that oversees the International Accounting Standards Board (IASB), which sets financial accounting standards used in more than 140 countries.

The IFRS Foundation announced the ISSB at COP26 in November 2021, in direct response to demand from investors, regulators, and policymakers including the G20, G7, and the International Organization of Securities Commissions (IOSCO) for standardised, decision-useful sustainability information. Before the ISSB existed, companies chose from a fragmented set of voluntary frameworks, making it difficult to compare sustainability performance across organisations or markets.

The ISSB consolidated the work of several pre-existing initiatives: the Task Force on Climate-related Financial Disclosures (TCFD), the Climate Disclosure Standards Board (CDSB), the Sustainability Accounting Standards Board (SASB), and the Value Reporting Foundation's Integrated Reporting Framework. Rather than starting from scratch, it built on what was already widely used.

What are IFRS S1 and IFRS S2?

The ISSB issued its first two standards in June 2023, effective for annual reporting periods beginning on or after 1 January 2024.

IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information sets out the overarching requirements for how companies should disclose material sustainability-related risks and opportunities. It covers governance, strategy, risk management, and metrics and targets, following the four-pillar structure established by the TCFD. Companies must disclose information that is useful to investors over the short, medium, and long term.

IFRS S2: Climate-related Disclosures is the specific standard for climate. It requires companies to disclose:

• Their governance processes around climate-related risks and opportunities
• How climate risks and opportunities affect their business strategy and financial planning
• How they identify, assess, and manage climate-related risks
• Metrics and targets, including Scope 1, Scope 2, and (where material) Scope 3 greenhouse gas emissions

IFRS S2 requires companies to measure emissions in accordance with the GHG Protocol Corporate Standard, the world's most widely used carbon accounting methodology. Companies already measuring emissions under the GHG Protocol are well positioned to meet this requirement without significant additional work.

In 2024, responsibility for monitoring companies' progress on climate-related disclosures transferred from the Financial Stability Board to the IFRS Foundation, effectively folding the TCFD's monitoring role into the ISSB framework.

Why does the ISSB matter for companies managing carbon?

For companies that report on their carbon footprint, the ISSB standards represent a significant shift: what was previously voluntary is becoming mandatory in a growing number of jurisdictions.

The ISSB does not itself mandate adoption. Instead, it provides a global baseline that individual countries and regulators can adopt, adapt, or build on. Australia, the UK, Singapore, Japan, and Canada are among the jurisdictions that have moved to adopt or align with ISSB standards in their own regulatory frameworks. The result is that companies operating across multiple markets face increasing pressure to report in line with IFRS S1 and IFRS S2, whether or not their home jurisdiction has formally mandated it.

For investors, the value is comparability. When companies report against the same standard, using the same methodology for measuring emissions, it becomes possible to assess and compare climate-related risk across a portfolio. For companies, alignment with ISSB standards signals credibility to investors, lenders, and other stakeholders who rely on sustainability disclosures to make decisions.

The ISSB designed the standards to work alongside regional requirements. In the European Union, the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) go further than the ISSB baseline, covering a broader range of sustainability topics. The ISSB and ESRS frameworks are built to work together, so companies reporting under CSRD can use their ISSB-aligned disclosures as part of a broader reporting process.

How does the ISSB relate to carbon accounting?

Carbon accounting sits at the heart of IFRS S2. The standard requires companies to measure and disclose their Scope 1, 2, and 3 emissions using the GHG Protocol, the same methodology that underpins most credible carbon footprinting work today.

This means the quality of a company's carbon data directly affects the quality of its ISSB-aligned disclosures. Companies with thorough, well-documented carbon accounting processes, covering all three scopes and using activity-based data where possible, are in a much stronger position than those relying on high-level spend-based estimates.

The ISSB also requires companies to disclose the assumptions, data sources, and estimation methods behind their figures. Transparency about methodology is not optional. This raises the bar for what counts as credible carbon reporting and makes the case for investing in accurate, auditable data from the outset.

For companies working with Seedling, the GHG Protocol-aligned methodology used to measure their carbon footprint provides a direct foundation for ISSB-compliant climate disclosures. The outputs, including full Scope 1, 2, and 3 coverage with documented assumptions and data sources, meet the transparency requirements that IFRS S2 demands.

What does ISSB compliance look like in practice?

Applying IFRS S1 and IFRS S2 requires companies to produce disclosures across four areas: governance, strategy, risk management, and metrics and targets. In practice, this means:

• Documenting how the board and senior leadership oversee climate-related risks and opportunities
• Explaining how climate risks and opportunities affect the company's business model, strategy, and financial planning, including scenario analysis
• Describing the processes used to identify, assess, prioritise, and monitor climate-related risks
• Reporting quantitative emissions data (Scopes 1, 2, and 3) and any climate-related targets, including progress against them

The ISSB built proportionality into the standards. Companies without the resources to provide quantitative financial impact estimates for every risk can provide qualitative information instead, at least in early reporting periods. This makes the standards more accessible for smaller or less experienced reporters without reducing the overall rigour of the framework.

For companies new to structured sustainability reporting, the TCFD-aligned structure of IFRS S1 and S2 means that existing TCFD disclosures provide a useful starting point. The transition is not a complete rebuild, but it does require more rigour around emissions measurement and more explicit connection between climate risks and financial outcomes than many voluntary disclosures have historically provided.

As ISSB adoption spreads across jurisdictions, the distinction between "voluntary" and "mandatory" sustainability reporting continues to narrow. Companies that build accurate, well-documented carbon accounting processes now are not just meeting today's expectations; they are building the data infrastructure that future disclosure requirements will depend on.