Benson Badger Insights

ISSB Disclosures: One ESG Reporting Standard to Rule Them All

Whether we like it or not, the global economy is undergoing a fundamental shift towards a ‘climate economy’, where climate considerations are a core part of doing business.  This is being led by capital markets, consumers and increasingly regulators with the introduction of new climate-related reporting requirements.  Getting a handle on your company’s carbon footprint is only the beginning; companies are expected to have a comprehensive view of their climate risks and opportunities, a strategy for mitigating them, and demonstrable evidence of their progress.  Climate data will be held to the same standards as financial data.

Benson Badger Advisory Group helps you understand your reporting landscape.  This includes mandatory and voluntary reporting, relevant frameworks and ESG factors to consider.  As well, the residual reporting resulting from larger companies or banks within your value chain, as they look to report their scope 3 emissions.  

STEP (Saskatchewan Trade and Export Partnership) is offering a temporary ESG Strategy Support Program, which covers 50% of your ESG consulting fees – up to a maximum reimbursement of $5,000.  

Reach out today to learn more.

On June 26, 2023, the ISSB (International Sustainability Standards Board) issued its disclosure standards IFRS S1 and IFRS S2 (explained below), establishing a global baseline for material sustainability information in capital markets.  

The ISSB was established in 2021, to deliver a global baseline of sustainability-related disclosures for global capital markets.  ISSB has largely been the focus and reporting standard for the SEC (Securities Exchange Commission) and CSA (Canadian Securities Administrators) for their climate related disclosure setting.  Additionally, most other ESG-related global standards and frameworks have either formally consolidated with ISSB, collaborated, or remain as a foundation for ISSB.  

IFRS S1 – General Requirements for Sustainability-related Disclosures

Builds off SASB (Sustainability Accounting Standards Board), includes sustainability related risks and opportunities useful to investors in making decisions.  This includes information about all sustainability-related risks and opportunities that could reasonably be expected to affect the company’s cash flow, access to finance or cost of capital over short, medium, or long-term.   

Key Components of IFRS S1:

    • Requires industry specific disclosures, directly connected to business model and activities, SASB standards is included as source of guidance.
  • Disclosures should be included if material.  Follows IFRS Accounting Standards definition of materiality: information is material if omitting, misstating, or obscuring it could reasonably be expected to influence investor decisions.  
  • Applies TCFD (Task Force on Climate-related Financial Disclosures) architecture of governance, strategy, risk management and metrics and targets.  How are you governing, strategy to deal with it, risk management, and metrics and targets to monitor and assess performance.

IFRS S2 – Climate Related Disclosures

Builds off TCFD recommendations and framework specifically encompassing governance, strategy, risk management and climate risks and opportunities.

Key Components of IFRS S2:

  • Scope 1, 2 and 3 Emissions in accordance with GHG Protocol Corporate Standard.  Scope 3, Category 15 (Investments) – requires disclosure about financed emissions, including loans and investments.
  • Climate Resilience and Scenario Analysis – implications of climate change for strategy and business model, financial capacity to adapt over short, medium, and long-term.  Applying scenario analysis to assess climate resilience (both physical and/or transitional risk), to inform potential impacts on the company.
  • Industry-specific climate-related risks and opportunities, most likely to affect companies in a particular industry with associated metrics. 

IFRS S1 & S2 Disclosures are an Important Milestone

  • ISSB’s new climate-related disclosures provide a comprehensive global baseline of ESG-related disclosures and reporting. 
  • This is the beginning of ESG-related disclosures being introduced, with speculation that biodiversity or human capital management disclosures will follow suit. 
  • These new disclosures require proof of governance, strategy, and risk management.  Appropriate strategy and programming are essential.
  • Regulatory bodies are expected to adopt, endorse, or revise slightly.  This is anticipated to be done by the end of 2023.  These regulatory bodies include:
    • CSSB – Canadian Sustainability Standards Board
    • SEC – Securities Exchange Commissions
    • CSA – Canadian Securities Administrators
    • IOSCO – (International Organization of Securities Commissions) – July 25, 2023, announced endorsement of ISSB’s standards, calling its member jurisdictions to incorporate the ISSB Standards into their regulatory frameworks.

If you don’t have an ESG strategy, or a climate management plan, we recommend you start now.  Here are a few key steps your business can take:

  1. Identify your disclosures – mandatory reporting requirements, and any relevant voluntary reporting. 
  2. Understand your stakeholder expectations and reporting requirements throughout your value chain.  Do you have a key supplier, or customer that is regulated under one of the regulatory bodies above?    
  3. Measure early and carefully.  Start measuring your emission before disclosures are required.  Ensuring accuracy, establishing internal controls and governance for climate data is critical.  
  4. Start establishing reduction strategies and climate risk mitigation strategies (both physical and transitional risks).   

Learn more about Benson Badger’s ESG Strategy practice.  If you have any questions about how our team can help you develop, integrate, or improve your ESG strategy, contact us today. 


This article was written by Benson Badger Senior Associate, Gabrielle Schubach, CPA.