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What are the ISSB’s new sustainability standards?

Updated: January 05, 2024

This article was adapted from a piece by BDO Australia, ISSB launches new global sustainability standards. We’ve revised the article to provide a Canadian perspective.


On June 26, 2023, the International Sustainability Standards Board (ISSB) released its new sustainability standards, IFRS S1 – General Requirements for Disclosure of Sustainability-Related Financial Information and IFRS S2 - Climate-Related Disclosures.

Since the International Financial Reporting Standards (IFRS) Foundation announced the formation of the ISSB at COP26 in Glasgow in 2021, the organization has been addressing calls for “high-quality, globally comparable information on sustainability-related risks and opportunities.” Its new standards improve trust in sustainability disclosures so investment decisions are more informed.

Canadian regulators will likely look to the Canadian Sustainability Standards Board (CSSB) and the ISSB when determining the standards to adopt in Canada. This collaboration helps to address issues specific to Canadian organizations and ensure alignment between ISSB standards and potential future CSSB standards.

In this piece, we look at the new ISSB standards and what they mean for organizations in Canada.

What are the new ISSB standards?

Today, general sustainability and climate-related issues are seen as material to an organization’s long-term value. The ISSB’s two new standards help companies assess and communicate relevant, related disclosures. According to the ISSB, IFRS S1 and S2 “set a global baseline to enable companies to provide information about sustainability-related risks and opportunities that is useful for investors’ decision-making.”

IFRS S1 requires an entity to “disclose information about its sustainability-related risks and opportunities that is useful to primary users of general-purpose financial reports in making decisions relating to providing resources to the entity,” states the ISSB in its Basis for Conclusions on IFRS S1. 

This is to say that organizations should consider any and all material information relating to sustainability-related risks and opportunities that could reasonably be expected to affect cash flows, access to finance, or cost of capital over the short, medium, or long term.

IFRS S2, on the other hand, requires an entity to “disclose information about its climate-related risks and opportunities” through its general-purpose financial reporting, according to the Basis for Conclusions on IFRS S2. This will help stakeholders and decision-makers understand an organization’s exposure and resilience to climate-related physical risks and transition risks. For example, IFRS S2 requires organizations to calculate their carbon footprint in relation to Scope 1, 2, and 3 greenhouse gas (GHG) emissions.

In developing these standards, the ISSB has incorporated existing sustainability reporting initiatives, where appropriate. Both IFRS S1 and S2 fully incorporate the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The standards and frameworks also reference the standards issued by the Climate Disclosure Standards Board (CDSB), the Value Reporting Foundation’s Integrated Reporting Framework, industry-based Sustainability Accounting Standards Board (SASB) Standards, and the World Economic Forum’s Stakeholder Capitalism Metrics.

What are the TCFD disclosures?

The Task Force on Climate-Related Financial Disclosures (TCFD) recommendations are closely connected with the International Sustainability Standards Board's (ISSB) sustainability disclosure standards. 

We help you understand what the TCFD framework is and how it connects with the ISSB sustainability standards.

Learn more

IFRS S1 and IFRS S2 timelines

The ISSB is requiring organizations to apply IFRS S1 and IFRS S2 for annual reporting periods beginning on or after Jan. 1, 2024. Earlier application is permitted if IFRS S1 and S2 are both applied at the same time, but each jurisdiction can decide on the effective dates. It is important to note that no regulatory body in Canada has yet indicated when S1 and S2 will be required.

Canadian authorities will likely start with the ISSB standards as a baseline. They may, in the future, look at other sustainability reporting frameworks and standards when setting their requirements.

The ISSB has also announced that one year of transition relief is available for IFRS S1. For an organization applying for the first time, IFRS S1 requirements would apply only as they relate to the disclosure of climate-related financial information in accordance with IFRS S2, and would require disclosure of the use of transitional relief1.

Relief in the first annual reporting period has also been granted for the following cases:

  • Reporting sustainability-related disclosures after the related financial statements1.
  • When measuring Scope 1, 2, and 3 emissions, if the entity has been using a different methodology to the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (2004) in the period immediate to the first application of IFRS S2, it can continue to use the alternate method2.
  • Disclosing Scope 3 emissions2. Scope 3 requirements will apply in the second annual reporting period.

Collaboration is key to adopting sustainability standards

As organizations progress towards assessing sustainability- and climate-related disclosures, collaboration between sustainability, finance, and risk leaders will help ensure a complete understanding of the risks and opportunities.

Care is also required to ensure the reporting format and location meet all stakeholder and regulator needs, and that all information is disclosed in the relevant component of the report. IFRS S1, for example, says, “An entity is required to provide disclosures required by IFRS Sustainability Disclosure Standards as part of its general-purpose financial reports”, noting that the location within the report may differ based on the jurisdiction requirements.

Additional ISSB standards coming

The launch of IFRS S1 and S2 marks the formal start of the ISSB’s sustainability standards journey. Efforts are reportedly underway to develop standards for biodiversity, the workforce, and supply chains.

As mandatory sustainability reporting trickles through the business world, banks, investors, supply chains, and other stakeholders will likely be interested in this data from organizations of all sizes. This aspect of doing business will continue to impact access to capital, markets, and people.

We can help you comply with IFRS S1 and S2

Wherever you are on your sustainability journey, our national sustainability team can help your organization with:

  • Applying for IFRS S1 and S2
  • Sustainability reporting in accordance with globally recognized standards and frameworks
  • Carbon footprint calculations or mandatory climate-related disclosures
  • Developing your sustainability strategy
  • Carbon emission reduction strategies
  • Assurance over your carbon footprint or sustainability reporting
Simon Hutton
National Sustainability Leader
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1 IFRS S1 - General Requirements for Disclosure of Sustainability-Related Financial Information, Appendix E, E5, International Sustainability Standards Board, June 2023.2 2 

2 IFRS S2 - Climate-Related Disclosures, Appendix C, C4, International Sustainability Standards Board, June 2023.