The International Sustainability Standards Board (ISSB) launched its first two sustainability-related standards in June 2023, effective for annual reporting periods on or after Jan. 1, 2024. The standards could form the basis of a consistent sustainability disclosure framework for companies and investors around the world. In this quarterly article, we bring you the latest global developments in the uptake of the ISSB’s standards.
Since the ISSB issued its first two global sustainability standards in June 2023, jurisdictions around the world have stated their intention to adopt the standards or align reporting frameworks with them. Adoption of the standards is gaining traction: As of March 31, 2025, 15 jurisdictions have adopted the standards on a voluntary or mandatory basis with reporting starting as of Jan. 1, 2024, or Jan. 1, 2025, and 21 other jurisdictions are planning to adopt them in the future. Some of those jurisdictions in the process of adoption have finalized the creation of ISSB-aligned standards but have set a reporting date later in 2025 or in future years. For example, Pakistan is phasing in the standards from July 1, 2025, while Hong Kong’s sustainability standards will be effective for reporting as of August 2025.
How is the ISSB rolling out its standards?
The ISSB has made the implementation of the IFRS S1 and IFRS S2 standards its priority in 2025. In January, the board agreed to propose four amendments to IFRS S2 and publish an exposure draft in the second quarter of 2025 following feedback from market participants about the challenges they were facing in applying the standard.
- IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information: Companies are required to disclose sustainability-related risks and opportunities.
- IFRS S2 Climate-related Disclosures: Companies are required to disclose specific metrics such as greenhouse gas (GHG) emissions, climate-related physical and transition risks and scenario analysis.
The amendments would permit entities to exclude disclosures of some Scope 3 emissions, which are the emissions that occur up and down a company’s value chain, related to derivatives, investment banking and insurance and reinsurance underwriting. A company would also be granted relief from using the global warming potential (GWP) values from the Intergovernmental Panel on Climate Change (IPCC), the UN body that assesses climate change science, if a jurisdiction requires the company to use another set of GWP values. Similarly, IFRS S2 requires companies to disclose GHG emissions according to the GHG Protocol Corporate Standard, but the amendments would allow companies to use another method if required by their jurisdiction. The amendments would also provide exemptions for using the Global Industry Classification Standard (GICS) for disaggregating financed emissions by industry.
The board will also continue its work on developing the Sustainability Accounting Standards Board (SASB) standards. SASB is now part of the IFRS Foundation, and its standards form an integral part of the ISSB’s standards for industry-specific disclosures. For example, IFRS S2 guidance on industry-specific climate-related metrics is based on the SASB standards, according to the ISSB.
The board is also planning to publish drafts of its amendments to nine of the 77 industry-specific SASB standards at the end of the second quarter of 2025. Several of the standards are related to the extractives sector, including oil and gas, coal operations, construction materials, iron and steel producers and metals and mining; another standard relates to processed foods.
The ISSB is planning to publish drafts of amendments to three other SASB standards by the fourth quarter of 2025, including electric utilities and power generators, agricultural products and the meat, poultry and dairy industries. The ISSB decided to publish these three drafts later in 2025 to gather more information from stakeholders in emerging markets and developing economies about these specific industries in their jurisdictions. The ISSB said it may propose additional amendments to SASB sector-specific standards in the third quarter of 2025.
What guidance is the IFRS giving on ISSB adoption?
On March 26, 2025, the ISSB launched a roadmap development tool aimed at guiding jurisdictions in adopting or using the ISSB standards. The tool is designed to help jurisdictions set objectives and measure their progress toward adoption. It can also provide companies with a plan for implementing the standards, as regulators develop their regulatory frameworks, the ISSB said. The tool complements a set of templates to help regulators assess how well their jurisdictional approach will help them achieve their objectives and how well it will be understood by market participants and other stakeholders.
The development tool outlines the regulatory process for jurisdictions, for example, examining whether legislation or new sustainability requirements need to be introduced. It also sets out information about how regulators can determine which companies should be subject to the disclosure requirements, what jurisdictional modifications might apply and whether additional disclosure requirements would be needed, depending on a jurisdiction’s objectives. The tool also aims to help regulators decide which disclosures should be required in financial reports and whether sustainability reports should be published at the same time as financial reports.
The ISSB has also provided further guidance for companies to use the standards. On Jan. 30, 2025, it published a guide to clarify which elements of IFRS S1 are applicable if a company chooses to disclose only climate-related information in its first annual reporting period. The guide explains that under IFRS S1, companies are permitted to disclose information on only climate-related risks and opportunities in their first year of reporting to give them more time to prepare for reporting on other sustainability-related risks. The guide sets out jurisdictional and voluntary reporting considerations and describes how to apply IFRS S2 in addition to IFRS S1 requirements when a company takes a “climate-first approach.” The document explains how companies should report material risks, strategy, timing of reporting, metrics and targets and location of disclosures, among other topics.
How are regulators adapting the standards to their jurisdictions?
Ultimately, the standards will only take effect for corporate reporting if jurisdictions adopt them. The International Organization of Securities Commissions (IOSCO) endorsed the ISSB standards a month after their initial publication, signaling support for adoption in the 130 jurisdictions it represents. The organization is also providing guidance to regulators in integrating the standards into local rules and regulations to encourage alignment with the ISSB standards and minimize different applications of the standards across jurisdictions. It has also created a network to support its members in adopting the standards.
Some jurisdictions have been taking different approaches to adopting and applying the standards, but there is a general trend toward aligning standards as closely as possible with those of the ISSB following calls from investors for greater consistency.
Jurisdictions planning to adopt the standards with modifications for their local market include Japan. The Sustainability Standards Board of Japan (SSBJ) on March 5, 2025 issued its three sustainability disclosure standards aligned with the two ISSB standards. The SSBJ divided IFRS S1 into two separate standards, the General Standard for disclosures of sustainability-related risks and opportunities and the Application Standard with requirements for sustainability-related financial disclosures. A third standard resembling IFRS S2 focuses on climate disclosure. All three standards are to be applied at the same time.
Following feedback from investors, the SSBJ tweaked its standards to be in line with those of the ISSB, but differences do remain, according to a comparison document published by the SSBJ. For example, in the disclosure of location-based Scope 2 emissions, which are the emissions related to a company’s purchased energy, companies are required to provide additional information about either contractual instruments or market-based emissions under the SSBJ standards. The SSBJ standards also require companies to disclose the units of presentation for amounts in their disclosures, such as metric tons of CO2, while the ISSB standards do not explicitly require such information. There are also differences in reporting Scope 3 emissions: The SSBJ requires companies to report disaggregated Scope 3 emissions by categories according to the Greenhouse Gas Protocol Scope 3 standard.
Unlike the ISSB standards, the SSBJ standards do not prescribe when companies should start reporting. The Japanese board said it developed the standards on the assumption that companies listed on the Tokyo Stock Exchange’s Prime Market would eventually be required to apply them under Japanese securities laws. The SSBJ said it will continue to monitor its own standards and those of the ISSB and will consider any necessary changes to ensure comparability.
How do the ISSB standards compare with those in other jurisdictions such as the EU?
The EU widened the reach of its sustainability reporting regulations for companies through the reform of its Non-Financial Reporting Directive to create the Corporate Sustainability Reporting Directive (CSRD), which began phasing in from Jan. 1, 2024, but has since been delayed as part of an effort to simplify the EU’s sustainability reporting rules. Companies in the scope of the CSRD are subject to a set of sustainability standards called the European Sustainability Reporting Standards (ESRS). The ISSB published inoperability guidance in May 2024 in conjunction with the European Financial Reporting Advisory Group, a technical advisor to the European Commission, to support companies in applying both sets of standards and to demonstrate to what extent both sets of standards align.
The EU’s Omnibus proposals for simplifying the CSRD and revising the ESRS are the latest development in the EU landscape of sustainability reporting. The European Commission’s Omnibus Simplification Package, proposed on Feb. 26, 2025, would drastically reduce the number of companies in scope of the CSRD and simplify the ESRS. The first part of the Omnibus package, which delays the applicability of CSRD and other rules, was finalized April 14, 2025. The proposals’ details will be subject to a legislative process that could take several months, and it is not yet clear how simplified ESRS would differ from the ISSB standards.
ISSB Chair Emmanuel Faber said on the ISSB’s March podcast that the board remains “committed to working in close cooperation with our European counterparts to maintain and possibly further enhance alignment between ESRS and ISSB’s global baseline of sustainability disclosures.”
“We believe that the interoperability mechanism that we have jointly published with EFRAG could further be simplified without taking any of its substance; therefore, we look forward to engaging in this process in the next several months,” he said.
Investors, companies, market regulators continue to advocate for the global alignment of sustainability disclosure standards and that will form an important aspect of the ISSB’s work in the coming months, he said.
In the US, the Securities and Exchange Commission’s climate disclosure rules published in March 2024 appear unlikely to go into effect. In March 2025, then-Acting SEC Chairman Mark Uyeda said in a press release the SEC is stepping back from defending its climate disclosure rules in ongoing litigation against the rules, which had been paused shortly after they were finalized to allow legal challenges to proceed. Uyeda and Paul Atkins, who was sworn in as the new chairman of the SEC in April, have both criticized the climate rules as an overreach of the SEC’s powers and creating unnecessary reporting burden on businesses.
The rules, which have yet to be formally rescinded but remain stayed, require companies registered under its mandate to disclose at least some material climate-related information, such as risk management practices and risks to their strategy or financial performance. Some larger companies are required to disclose Scope 1 and Scope 2 GHG emissions if the companies deem those emissions to be material. The SEC acknowledged at the time there were “similarities” between the ISSB standards and its final rules but said it would not recognize the ISSB standards as an alternative reporting regime for the time being.
Predating the SEC rule, California approved a law in October 2023 that would require large companies doing business in the state to begin reporting Scope 1 and Scope 2 emissions in an annual report starting in 2026, with Scope 3 reporting beginning in 2027. An amendment to the law signed in September 2024 gave the California Air Resources Board (CARB) more flexibility in developing the reporting rules companies will follow to comply with the law but did not change the compliance dates for emissions reporting. CARB announced on Dec. 5, 2024, it would “exercise its enforcement discretion” in the first year of reporting to allow companies more time to prepare for the new rules.
What future standards is the ISSB considering?
The board is also continuing its research on risks and opportunities related to biodiversity, ecosystems and ecosystem services (BEES) as well as human capital. The research on BEES shows investor interest in nature-related reporting is “nascent but rapidly developing,” consistency and comparability of BEES-related data is “poor” and regulation and policy are key drivers of investor interest, the board said in a March 2025 presentation. Topics of interest for human capital vary depending on sectors and jurisdictions, the ISSB said. Human capital is a broad topic that includes complex issues, ranging from working conditions, involuntary labor, health, safety and wellbeing to diversity and inclusion, pay and benefits, recruitment and retention and workforce composition, the ISSB said. The consistency and comparability of human capital-related information that companies currently disclose are “poor,” the board said.
The ISSB aims to move to the next stage of its research in the first half of 2025. The result of the research may lead to thematic or industry-based standard setting, new guidance on applying nature, biodiversity or human capital disclosures or education materials on how existing standards are relevant to these topics, the ISSB said.