Companies will not be required to disclose their non-climate risks and opportunities in the first year of reporting under IFRS S1, owing to a transitional relief approved by the International Sustainability Standards Board today (ISSB) today (4 April).
The board voted unanimously in favour of the IFRS staff’s recommendation to include this transitional relief which is designed to give entities more time to prepare for reporting on their non-climate risks and opportunities and help them with their initial implementation of the standards.
The board praised the recommendation, with members arguing it would alleviate the concerns raised by stakeholders that the requirement to report on the full range of sustainability-related risks and opportunities would be challenging in the first year of reporting.
Vice-chair Jingdong Hua said: “When companies start to [report on the full breadth of] S1 in year two, they will do a much better job than if they are forced to do it from day one without too much capacity building or hand holding. This relief is very welcome, so fully supportive.”
Notably, the relief does not apply to reporting climate-related risks and opportunities in IFRS S2, which companies will still be required to disclose in the first year of reporting.
Richard Barker said this “made a lot of sense” as the requirements are narrower in S2 and companies are generally more familiar with disclosing climate risks and opportunities, as they are included in the TCFD framework. He added that the transition relief for S1 would help entities in “building familiarity” with disclosing risks and opportunities.
The ISSB also voted in favour of the staff’s recommendation that all companies that use this transitional relief will have to disclose the fact they have done so.
Companies:ISSB
