The International Sustainability Standards Board (ISSB) is committed to supporting the implementation of ISSB Standards around the world. To this end, the IFRS Foundation has published a new comprehensive guide designed to help companies with the fundamental task of identifying and disclosing material information about sustainability-related risks and opportunities that could reasonably be expected to affect their cash flows, their access to finance or cost of capital over the short, medium or long term.

Investors and global capital markets are increasingly demanding this information to inform investment decision making.

A key focus of the guide is helping companies understand how the concept of sustainability-related risks and opportunities is described in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, including how these can arise from a company’s dependencies and impacts.

At the heart of the ISSB’s approach is the notion of integrated thinking—considering the inextricable link between a company and its stakeholders, society, the economy and the natural environment throughout its value chain, a concept the guide explains.

IFRS S1 explains that a company both depends on resources and relationships—such as human, intellectual, financial, natural, manufactured and social—throughout its value chain, and also affects those resources and relationships. This can contribute to the preservation, regeneration and development, or to the degradation and depletion of these resources and relationships. It is a company’s dependencies and impacts on those resources and relationships that might give rise to sustainability-related risks and opportunities that could reasonably be expected to affect its prospects.

In addition, the guide highlights how companies applying ISSB Standards can benefit from the process they might already follow in making materiality judgements when preparing financial statements, particularly when applying IFRS Accounting Standards. The guide sets out a process a company can follow which is closely aligned with the four-step process illustrated in the International Accounting Standards Board’s IFRS Practice Statement 2: Making Materiality Judgements. As a result, although the ISSB Standards can be used with any generally accepted accounting principles, those companies already applying IFRS Accounting Standards—in over 140 jurisdictions worldwide—as well as those, for example, in the US where there is strong alignment with a focus on providing material information to investors, will be particularly well prepared to apply the concept of materiality using ISSB Standards.

The guide also sets out some of the considerations a company might make to drive connectivity between sustainability-related financial disclosures and a company’s financial statements. Furthermore, for those looking to meet the information needs of a broader set of stakeholders, it provides considerations for those applying ISSB Standards alongside the European Sustainability Reporting Standards (ESRS) or Global Reporting Initiative (GRI) Standards.