Navigating ISSB IFRS S1 & S2: Innovations and Implications for Sustainable Reporting
Through the ISSB’s first two sustainability disclosure standards - IFRS S1 and S2 - business leaders face a defining moment. These standards aim to establish a global baseline for sustainability-related financial disclosures, providing a unified framework for reporting on sustainability risks and opportunities. While they promise to streamline environmental, social, and governance (ESG) reporting by offering consistent requirements across jurisdictions, they also introduce pressure for companies to act, adapt, and align.
In a recent webinar hosted by the London Stock Exchange Group, our Founder & CEO, Anj Chadha broke down what the ISSB means for corporates, where the challenges lie, and what action is needed now.
The Reporting Shift Is Real & Rapid
The shift from voluntary ESG initiatives to regulated, investor-grade reporting is no longer hypothetical. We're now operating in a different regulatory environment. This isn't about publishing a glossy PDF once a year, it's about integrating sustainability into your financial narrative.
This integration is where ISSB makes its mark. IFRS S1 focuses on general sustainability-related disclosures, while IFRS S2 is climate-specific. Both prioritise financial materiality and are rooted in the principles of the Task Force on Climate-related Financial Disclosures (TCFD).
For leaders used to box-ticking or siloed sustainability efforts, the ISSB standards represent a mindset shift. This is more than a sustainability team issue, it’s board-level one.
Materiality: Focus on What Matters Most
One of the most significant changes is the approach to materiality. ISSB standards are built on enterprise value: what's material to investors and essential for long-term value creation.
Companies will need to stop trying to cover everything under the sun. ISSB forces you to zoom in on the sustainability risks and opportunities that actually move the needle for your business and your stakeholders.
This focused approach means ESG teams need to collaborate more closely with finance, risk, and strategy not just for data collection but for strategic framing.
The Readiness Gap
Few companies are truly ready to implement ISSB-aligned reporting. The gap is technical as well as cultural.
There’s still a big disconnect between where companies think they are and what credible ISSB reporting actually looks like. Some businesses lack the infrastructure for consistent data collection. Others are underestimating the governance and oversight that financial-grade reporting demands.
ISSB needs proper systems, assurance processes, and leadership buy-in.
Global Alignment But Local Nuance
While the ISSB promises global comparability, local regulators are moving at different speeds. For example, the UK is consulting on how to incorporate ISSB into its sustainability disclosure requirements, while jurisdictions like Canada and Singapore have already committed to adoption.
Businesses operating across markets can’t afford to wait for perfect alignment. Start with your most material markets, look at what's likely to be mandatory, and build from there.
For companies already reporting under TCFD or SASB, there’s a head start. ISSB builds on those foundations. But that doesn’t make it plug-and-play.
What Leaders Should Do Now
Our three-step approach for business leaders:
Assess Your Baseline
Understand where you are today. Do a gap analysis. Look at governance, data quality, and who owns what.
Align Internally
Bring finance, legal, risk, and sustainability together. ISSB is as much about internal coordination as external disclosure.
Start With Strategy
Don't chase metrics for the sake of it. Start with how sustainability affects your business model and value chain — that’s what ISSB wants to surface.
ISSB is a catalyst. It’s forcing companies to treat ESG with the same rigour as financial reporting. The businesses that embrace that now will be the ones that win investor trust later.
Navigating this shift won’t be easy but it's an opportunity to build clarity, credibility, and competitive edge in a changing market.
We’re doing a FREE ISSB gap analysis: sign up here https://www.esg360.io/esg360air-issb-assessment