The International Sustainability Standards Board (ISSB) has launched a new tool to support regulators in adopting its standards.
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Launched at a workshop held by the International Financial Reporting Standards (IFRS) Foundation in London last week, the development tool aims to simplify the adoption process as jurisdictions move towards globally consistent sustainability disclosures.
ISSB is a standard-setting body established by the IFRS Foundation in November 2021 at the COP26 climate talks to provide investors with information about corporate sustainability risks.
ISSB introduced its first two standards in June 2023, namely, IFRS S1 (general sustainability-related financial disclosures) and IFRS S2 (climate-related disclosures).
The standards aim to create a global baseline for sustainability reporting, ensuring companies disclose material sustainability information that impacts their financial performance.
So far, more than 35 jurisdictions have started the adoption process, including Australia, Japan, Hong Kong, Malaysia, New Zealand, the Philippines and Singapore.
The adoption of ISSB standards in Southeast Asia signals a shift toward more transparent and standardised sustainability reporting, aligning companies with global investor expectations.
As Singapore, Malaysia, and the Philippines take steps to implement these standards, businesses will need to enhance their environmental, social and governance data collection, climate risk disclosures, and reporting frameworks.
Singapore and Malaysia will require listed issuers to report under ISSB-aligned climate disclosure standards from 2025, with large non-listed companies following in 2027. The Philippines will implement mandatory climate reporting rules aligned with ISSB from next year.
However, reporting companies face challenges, particularly in measuring and reporting Scope 3 greenhouse gas emissions, which cover indirect emissions across supply chains. A study by KPMG last year found that Scope 3 emissions reporting in Asia Pacific is low, with only one-fifth of listed firms in Malaysia reporting Scope 3 emissions.
The lack of established methodologies for certain sectors, including financial services, makes compliance complex and resource-intensive. The adoption of ISSB Standards in these countries means increased regulatory scrutiny, but also greater opportunities for industries to attract international investment by demonstrating strong sustainability practices.
How ISSB’s adoption tool works
Building on the concepts outlined in the Inaugural Jurisdictional Guide (IJG), a framework designed to help policymakers navigate the adoption of ISSB standards, the roadmap tool provides a practical application for adopting or using the standards.
Jurisdictions can use the tool in four key areas: the regulatory process for adopting ISSB standards, the entities subject to the requirements, the specific content of sustainability disclosures, and the timeline for implementation, including phased approaches if needed.
In addition to the roadmap tool, the IFRS Foundation has released templates based on the jurisdictional approaches outlined in last year’s IJG.
These templates serve as a reference for jurisdictions and implementation partners, helping them understand how their decisions and outcomes are perceived by stakeholders and communicated by the IFRS Foundation.
