What is ISSB?

What is ISSB?

The International Sustainability Standards Board (ISSB) is a standard-setting body established by the IFRS Foundation in November 2021 at COP26 in Glasgow. Its mandate is to develop a comprehensive global baseline of sustainability-related financial disclosure standards that meet the information needs of capital markets. The ISSB consolidated the Value Reporting Foundation (which housed SASB) and the Climate Disclosure Standards Board (CDSB) into its operations, unifying fragmented sustainability standard-setting under a single governance structure. Its inaugural standards—IFRS S1 (General Requirements) and IFRS S2 (Climate-related Disclosures)—were issued in June 2023.

Why It Matters

Before the ISSB, the sustainability disclosure landscape was a patchwork of competing voluntary frameworks—GRI, SASB, CDP, TCFD, IIRC—each with different scopes, audiences, and methodologies. Companies reported under multiple frameworks, investors couldn't compare disclosures across jurisdictions, and the lack of standardization undermined data reliability. The ISSB was created specifically to solve this fragmentation problem by establishing a single global baseline, analogous to how IFRS accounting standards unified financial reporting across 140+ jurisdictions.

Adoption momentum has been rapid. By early 2026, the UK, Canada, Japan, Australia, Singapore, Nigeria, Brazil, and numerous other jurisdictions have adopted or announced plans to adopt ISSB standards—either directly or through nationally adapted equivalents. The UK's Sustainability Disclosure Standards largely mirror IFRS S1 and S2. Japan's SSBJ standards build on the ISSB framework. This adoption wave means that a majority of publicly listed companies globally will report under ISSB-aligned requirements within the next three to five years.

The ISSB's strategic position within the IFRS Foundation gives it unique institutional legitimacy. IFRS accounting standards are already required or permitted in over 140 jurisdictions. By housing sustainability standards alongside financial reporting standards, the ISSB signals that sustainability disclosure is not a separate discipline but an extension of financial reporting. This positioning facilitates integration between financial statements and sustainability disclosures—a long-sought goal of investors who want to understand how sustainability factors affect financial performance.

For companies, ISSB adoption reshapes the cost-benefit calculation of sustainability reporting. Jurisdictions that mandate ISSB-aligned standards create legal reporting obligations with assurance requirements, enforcement mechanisms, and liability exposure comparable to financial reporting. The voluntary era—where companies chose what to disclose and how—is ending for public companies in ISSB-adopting jurisdictions. Companies that built reporting capabilities around GRI or CDP will need to map and supplement their existing disclosures to meet ISSB requirements.

How It Works / Key Components

The ISSB framework is built on two foundational standards. IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) establishes the overarching framework—governance, strategy, risk management, and metrics and targets across all sustainability topics. IFRS S2 (Climate-related Disclosures) provides detailed climate-specific requirements, effectively codifying and extending the TCFD recommendations that the ISSB absorbed.

The ISSB applies a single materiality lens focused on enterprise value. Sustainability information is material if omitting, misstating, or obscuring it could reasonably influence decisions by primary users of financial reports—investors, lenders, and creditors. This investor-oriented focus distinguishes the ISSB from the EU's ESRS, which applies double materiality encompassing both financial impact and environmental/social impact. The ISSB has acknowledged that jurisdictions may layer additional requirements (including impact-oriented disclosure) on top of the ISSB baseline.

ISSB standards require forward-looking information that goes well beyond historical performance reporting. Companies must describe their sustainability-related risks and opportunities over short, medium, and long-term horizons, explain the resilience of their strategy under different scenarios (including climate scenarios for IFRS S2), and disclose transition plans with associated metrics and targets. This forward-looking orientation requires management judgment and scenario analysis capabilities that many companies are still developing.

The ISSB is expanding beyond climate. Its 2024–2026 work plan includes research projects on biodiversity, ecosystems, and ecosystem services; human capital; and human rights. The board is also enhancing IFRS S2 with guidance on Scope 3 emissions measurement and transition plan disclosures. Sector-specific requirements based on the SASB standards—which the ISSB inherited—provide industry-tailored metrics that companies are encouraged (and in some jurisdictions will be required) to use alongside the cross-sector standards.

Council Fire's Approach

Council Fire helps clients prepare for ISSB-aligned reporting by conducting readiness assessments against IFRS S1 and S2, identifying gaps in data infrastructure and governance processes, and building the scenario analysis and transition planning capabilities the standards require. We work across jurisdictions, helping multinational clients navigate the differences between ISSB baseline requirements and national adaptations while maintaining a coherent global reporting approach.

Frequently Asked Questions

How do ISSB standards differ from the EU's ESRS?

The primary differences are materiality (ISSB uses single/financial materiality; ESRS uses double materiality), scope (ESRS covers all ESG topics through 12 standards; ISSB currently has two standards focused on general requirements and climate), and prescriptiveness (ESRS specifies over 1,100 data points; ISSB is more principles-based). ESRS disclosures are generally a superset of ISSB requirements, meaning companies compliant with ESRS can derive ISSB-aligned outputs with limited additional effort. EFRAG and ISSB have published interoperability guidance to facilitate this mapping.

When will ISSB standards become mandatory for my company?

The timeline depends on your jurisdiction. UK-listed companies face mandatory reporting under the UK Sustainability Disclosure Standards from fiscal year 2026. Canada's CSSB standards take effect in 2025–2027 depending on company size. Japan, Australia, Singapore, and others have announced timelines extending to 2025–2028. Companies not yet subject to mandatory adoption should begin voluntary alignment—the standards are effective immediately for voluntary adopters, and early implementation demonstrates governance maturity to investors and rating agencies.

Do ISSB standards require Scope 3 emissions disclosure?

Yes. IFRS S2 requires disclosure of Scope 3 greenhouse gas emissions as part of the complete GHG inventory. However, recognizing measurement challenges, the ISSB provided a one-year transition relief allowing companies to omit Scope 3 in their first year of reporting. Beyond that, companies must disclose Scope 3 using the GHG Protocol Corporate Value Chain Standard categories, with measurement approaches ranging from supplier-specific data to spend-based estimates. The ISSB is developing additional guidance on Scope 3 measurement to improve data quality and comparability.