The International Financial Reporting Standards Foundation (IFRS) and the European Financial Reporting Advisory Group (EFRAG) jointly published interoperability guidelines for authorized entities. The guidelines align highly with those of the International Sustainability Standards Board (ISSB) and the European Sustainability Reporting Standards (ESRS), specifically on climate-related disclosures. 

The guidelines were issued on May 2, 2024 and apply to large EU and non-EU companies and financial institutions with more than 500 employees.

Let’s explore this release in detail. 

What do the guidelines do?

• Align general requirements such as presentation, materiality, and disclosures for sustainability topics other than climate. 
• 
  Provide Information about the alignment of climate disclosures and what entities starting with either set of standards need to know for compliance. 

For detailed information, read the full ESRS and ISSB interoperability guidelines.

The need for interoperability guidelines

The interoperability guidelines are designed to reduce the fragmentation and complexity of authorized entities that apply ISSB and ESRS standards. Therefore, organizations using this new document will be better able to collect, govern and control decision-useful information.

Even though EFRAG and IFRS standards are already in effect, the interoperability guidelines improve transparency, comparability, and accountability between them.

Next Steps

The authorized entities that are required to report or are already voluntarily reporting under IFRS and ESRS sustainability standards are recommended to consider the interoperability guidelines to improve efficiency in the reporting process. 

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