The International Sustainability Standards Board (ISSB) has released the IFRS Sustainability Disclosure Taxonomy, designed to reflect the IFRSS1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRSS2 Climate-related Disclosures, along with their accompanying guidance. This taxonomy provides elements for tagging sustainability-related financial information prepared in accordance with IFRS Sustainability Disclosure Standards. These elements enable companies to tag information about their sustainability-related risks and opportunities in general purpose financial reports, making the information computer-readable. This allows investors to automatically extract, compare, and analyze sustainability-related financial information in a digital format.
The taxonomy employs eXtensible Business Reporting Language (XBRL) and is adaptable to include additional jurisdiction-specific requirements. It is consistent with the IFRS Accounting Taxonomy and does not introduce new requirements or affect an entity’s compliance with existing standards.
The European Commission welcomed the interoperability guidance provided for ESRS, noting that this demonstrates EU companies reporting under European standards can comply with global standards with minimal additional effort. The aim is to reduce complexity, fragmentation, and duplication for companies applying both ISSB Standards and ESRS. Companies utilizing this guidance will be better equipped to collect, govern, and control decision-useful data efficiently.
The guidance describes the alignment of general requirements on key concepts such as materiality, presentation, and disclosures for sustainability topics other than climate. It also outlines what a company needs to know to enable compliance with both sets of standards starting from either set of standards. Furthermore, it addresses interoperability for climate-related disclosures from two perspectives:
1. An entity applying ESRS that wants to meet all climate-related disclosure requirements in IFRSS2 Climate-related Disclosures and apply necessary requirements in IFRSS1.
2. An entity applying ISSB Standards that aims to meet all disclosure requirements on climate change in ESRSE1 and relevant requirements in ESRS 1 and ESRS 2.
For more detailed information on incorporating climate and ESG insights into risk assessment processes, visit Moody's Analytics Climate and ESG Risk Microsite.
Related Links:
- ISSB Press Release
- EFRAG Announcement
- EC Statement on Interoperability
