International and Australian Sustainability Standards

The IFRS consolidated Climate Disclosure Standards Board (CDSB), an initiative of the Carbon Disclosure Project in January 2022, and has completed the consolidation with the Value Reporting Foundation (VRF) (merged from the Sustainability Accounting Standards Board and the International Integrated Reporting Council) in August 2022. 

In October 2021, the Technical Readiness Working Group (TRWG), a group formed by the IFRS Foundation Trustees to undertake preparatory work for the ISSB, released prototype climate and general disclosure requirements. These prototypes are the result of joint work by representatives of the CDSB, the International Accounting Standards Board (IASB), the TCFD, the VRF and the World Economic Forum (WEF), supported by the International Organization of Securities Commissions (IOSCO) and its Technical Expert Group of securities regulators. 

IFRS uses the recommendations by the TCFD as the starting point for its Climate-Related Disclosures Prototype and General Requirements Prototype as well as the architecture of the sustainability standards, which includes governance, strategy, risk management, and metrics and targets sections. 

On 31 March 2022, the International Sustainability Standards Board (ISSB) published its first two proposed IFRS Sustainability Disclosure Standards. 

• S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft) 
• S2 Climate-related Disclosures (Climate Exposure Draft)

The Exposure Drafts use the four-pillar structure from The Task Force on Climate-Related Financial Disclosures (TCFD): Governance, Strategy, Risk Management, Metrics and Targets as the architecture of the standards whilst also incorporating industry-based disclosure requirements derived from the Sustainability Accounting Standards Board (SASB) Standards.

The ISSB redeliberated the proposals after considering feedback on the Exposure Draft and has issued its first two standards S1 and S2 on 26 June 2023 with the effective date from 1 January 2024. 

In the final standards the ISSB incorporated key concepts and principles from the Integrated Reporting <IR> Framework, such as value creation over different time horizons through different resources and relationships as well as the connectivity of information.

The ISSB uses the Building Blocks approach in order for the IFRS Sustainability Disclosure Standards to fit together with reporting requirements set by other reporting standards and at jurisdictional level. ISSB has ongoing dialogue with jurisdictions and standard setters like GRI and the European Financial Reporting Advisory Group (EFRAG) to drive interoperability. 

In October 2023, the Australian Accounting Standards Board (AASB) released ED SR1 Australian Sustainability Reporting Standards (ASRS Standards) – Disclosure of Climate-related Financial Information. Using a climate-first approach, the ED adopts the IFRS Sustainability Disclosure Standards as a baseline with modifications for Australian-specific matters and requirements.

In January 2024, the Australian Treasury released its final policy position for climate-related disclosures, including an exposure draft legislation to amend parts of the Australian Securities and Investment Commission Act 2001 and the Corporations Act 2001 to introduce mandatory requirements for large businesses and financial institutions to disclose their climate-related risks and opportunities. In March 2024, the climate-related financial disclosures Treasury Bill was introduced into Parliament.