The International Sustainability Standards Board (ISSB), under the IFRS Foundation, has recently published a new detailed guide that is designed to help companies identify and disclose information about sustainability-related risks and opportunities. The initiative highlights ISSB's commitment to supporting the global adoption of its standards. 

Private equity/credit companies, asset managers, and impact investors can use the new guide released by IFRS to affect their cash flows positively and access to finance or cost of capital over the short, medium, or longer term. 

Let’s discuss the new guide released by IFRS on sustainability-related risks in detail. 

About the guide 

The new guide released by IFRS is a set of guidelines that serves as a practical resource for companies that want help with sustainability reporting. It provides insights on how businesses can effectively identify material sustainability-related risks and opportunities that can potentially impact their performance. The focus of the guide is to align with ISSB’s recently established IFRS Sustainability Disclosure Standards, specifically helping companies understand IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information. 

Key aspects of the new guide

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  The guide sets out a process companies can follow that is closely aligned with the four-step process illustrated in the International Accounting Standards Board’s IFRS Practice Statement 2: Making Materiality Judgements. This alignment can help companies that are already familiar with IFRS standards easily integrate ISSB Standards in reporting practices.

• The new guide highlights the need for connectivity between sustainability-related financial disclosures and traditional financial statements to ensure that financial reporting reflects the overall sustainability impacts of a company. 

• 
  The guide provides insights for the companies that are aiming to address the information needs of diverse stakeholders and investors by offering considerations for applying ISSB Standards in conjunction with other frameworks like the Global Reporting Initiative (GRI) and the European Sustainability Reporting Standards (ESRS). 

Next steps

IFRS is encouraging companies worldwide to review the guide thoroughly to understand its full implications for their reporting practices. Companies must assess their current reporting practices, implement materiality judgments, engage with stakeholders, and constantly monitor regulatory changes to harness the full potential of this guide. 

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