The International Sustainability Standards Board (ISSB) was established in November 2021 at COP26 in Glasgow. Its primary mission is to develop high-quality, comprehensive global baseline standards for sustainability-related financial disclosures. The ISSB's main objectives are:
To create standards for a global baseline of sustainability disclosures
To meet investors' information needs regarding sustainability reporting
To enable companies to provide comprehensive sustainability information to global capital markets
To facilitate interoperability with jurisdiction-specific disclosures and those aimed at broader stakeholder groups
The ISSB aims to enhance investor-company dialogue by providing decision-useful, globally comparable sustainability-related disclosures. Its standards are designed to be cost-effective, decision-useful, and market-informed. The ISSB's work is supported by various international bodies, including the G7, G20, IOSCO, and the Financial Stability Board.
By developing these global standards, the ISSB addresses the fragmented landscape of voluntary sustainability-related standards and requirements, which has added cost, complexity, and risk to both companies and investors. The ISSB's approach allows companies to avoid double-reporting by applying its standards, while also meeting jurisdictional requirements that build on the global baseline.
The momentum behind jurisdictional adoption of ISSB Standards has been substantial. As of late 2025, 36 jurisdictions have adopted or are in the process of finalising steps to introduce ISSB Standards into their regulatory frameworks, accounting for nearly 60% of global GDP. The International Organization of Securities Commissions (IOSCO) has formally endorsed ISSB Standards, encouraging their widespread adoption and sending a strong signal to capital market regulators worldwide. This jurisdictional uptake is transforming what was conceived as a voluntary global baseline into a de facto mandatory reporting norm across major capital markets.
The Transition from TCFD to ISSB
As of January 1, 2024, the Task Force on Climate-related Financial Disclosure (TCFD) has been officially disbanded, with its responsibilities transferred to the IFRS Foundation, which oversees the ISSB. The ISSB, as an independent standard-setter, has designed its standards to serve as a foundation for global regulations.
While the ISSB does not directly mandate requirements for any jurisdiction or company, its standards are expected to become the norm. Even without legal mandates, businesses may face increasing pressure from investors, customers, and stakeholders to adhere to these standards. The standards are already influencing voluntary disclosure practices, as evidenced by the CDP Climate Change Questionnaire for 2024, which fully incorporates the ISSB climate standard.
The ISSB standards build upon the TCFD framework, potentially easing the transition for organizations already reporting under TCFD. Moreover, as the ISSB standards are more comprehensive, companies applying them will not only meet TCFD requirements but exceed them. This new era of reporting signifies a major step towards creating a global baseline of sustainability disclosures for capital markets, bringing sustainability reporting firmly into the realm of securities regulation.
For organisations that were already reporting under the TCFD framework, the transition to ISSB Standards should be viewed as an evolution rather than a wholesale replacement. The four core content pillars of IFRS S1 and IFRS S2 (Governance, Strategy, Risk Management, and Metrics and Targets) are directly derived from the TCFD architecture. The principal additions relate to expanded scope (IFRS S1 extends beyond climate to all sustainability-related risks and opportunities), greater specificity in disclosure requirements (particularly around Scope 3 emissions, transition plans, and scenario analysis), and the introduction of industry-based disclosure guidance through the SASB Standards, which are now maintained under the IFRS Foundation. Companies that have invested in building TCFD-aligned reporting processes will find that much of their existing infrastructure can be repurposed to meet ISSB requirements, with targeted enhancements in areas where the ISSB standards go further.
Features of the ISSB Framework
The new sustainability reporting standards introduced by the International Sustainability Standards Board (ISSB) represent a significant advancement over previous frameworks, offering enhanced connection, coverage, and comprehensiveness. These standards aim to guide companies in preparing comparable and assurance-ready disclosures about sustainability risks and opportunities that may impact their prospects, providing investors with more robust information.
Key improvements over the TCFD recommendations include:
Coverage: Unlike the TCFD's climate focus, the ISSB standards address a broader range of sustainability topics. The General Requirements Standard (IFRS S1) directs companies to use existing standards for guidance on non-climate topics. The standards incorporate SASB guidance for industry-specific material topics and allow reference to other frameworks like CDSB, ESRS, and GRI for financially material information.
Comprehensiveness: The ISSB framework takes a more holistic approach to understanding sustainability impacts on enterprise value. Companies must disclose material sustainability risks and opportunities across short-, medium-, and long-term horizons, considering their entire value chain. For climate-related disclosures, the standards require comprehensive reporting on GHG emissions (including Scope 3), financed emissions for certain financial sector activities, detailed board governance, transition plans, targets, and scenario analysis.
Connectivity with financial statements: A distinctive feature of the ISSB framework is its emphasis on the connection between sustainability-related financial disclosures and the entity's general purpose financial statements. IFRS S1 explicitly requires companies to explain how sustainability-related risks and opportunities are connected to the information presented in their financial reports, including their effects on the entity's financial position, financial performance, and cash flows. This "connectivity" principle reflects the ISSB's position as a sister board to the International Accounting Standards Board (IASB), and it reinforces the expectation that sustainability disclosures should not exist as standalone documents but should be integrated into mainstream financial reporting.
Proportionate application: The ISSB has designed its standards to be applied in a manner appropriate to a company's circumstances. Requirements are proportionate to the range of capabilities and varied sustainability reporting experience of companies worldwide. For instance, certain requirements include provisions for companies to use "reasonable and supportable information available without undue cost or effort," and transition reliefs have been built into IFRS S2 for areas such as Scope 3 emissions disclosure and the use of greenhouse gas measurement methodologies.
International Sustainability Standards Board (ISSB) Standards
The International Sustainability Standards Board (ISSB) has issued its inaugural global sustainability disclosure standards - IFRS S1 and IFRS S2. These standards are set to take effect for annual reporting periods beginning on or after January 1, 2024, with earlier application permitted provided both standards are applied simultaneously.
IFRS S1, titled "General Requirements for Disclosure of Sustainability-related Financial Information," establishes a framework for entities to disclose material information about all significant sustainability-related financial risks and opportunities. The standard requires companies to provide disclosures on governance processes, strategy, risk management, and performance metrics related to sustainability issues.
IFRS S2, known as "Climate-related Disclosures," specifically focuses on climate-related risks and opportunities. This standard aims to provide investors and other stakeholders with decision-useful information regarding a company's climate-related financial impacts. These standards are designed to create a global baseline for investor-focused sustainability reporting, which individual jurisdictions can build upon. The ISSB's goal is to enhance trust and confidence in company disclosures about sustainability to inform investment decisions.
In December 2025, the ISSB issued targeted amendments to IFRS S2 to address specific implementation challenges identified during the first year of application. These amendments include clarifications on Scope 3 Category 15 greenhouse gas emissions (particularly regarding derivatives and certain financial activities), flexibility in the use of classification systems for disaggregating financed emissions, and reliefs related to greenhouse gas measurement methodologies. The amendments are effective for reporting periods beginning on or after January 1, 2027, with early application permitted. This responsive approach to implementation feedback demonstrates the ISSB's commitment to maintaining standards that are both rigorous and practically workable.
Looking ahead, the ISSB has also confirmed its intention to undertake standard-setting on nature-related risks and opportunities, drawing on the Taskforce on Nature-related Financial Disclosures (TNFD) framework. This signals a clear trajectory: ISSB Standards will progressively expand beyond climate to address the full spectrum of sustainability-related risks and opportunities that are material to investors.
The ISSB standards (IFRS S1 & S2) build upon the TCFD framework;
Key Questions for Businesses (ISSB Consideration)
Governance:
How does your organization structure responsibility for sustainability and climate-related issues at the board and management levels?
What processes ensure the competence of those overseeing climate-related matters?
How frequently are climate issues discussed at the highest levels of your organization?
Strategy:
What climate scenarios have you considered in your long-term planning?
How do you anticipate climate change affecting your products, services, and market positioning?
What steps are you taking to capitalize on climate-related opportunities while mitigating risks?
How do you incorporate climate considerations into your financial forecasting and capital allocation decisions?
Risk Management:
How have you integrated climate risk into your overall enterprise risk management framework?
What tools and methodologies do you use to assess and quantify climate-related risks?
How do you prioritize climate risks relative to other business risks?
Metrics and Targets:
What key performance indicators do you use to track progress on climate-related goals?
How do you calculate your Scope 1, 2, and 3 emissions, and what challenges have you encountered in this process?
For financial institutions: How do you measure and report on financed emissions?
What percentage of your assets or operations are exposed to significant climate-related risks?
What climate targets have you set, and how do these align with recognized frameworks or science-based methodologies?
Beyond the questions listed above, organisations preparing to report under ISSB Standards should also consider how to address the following areas, which receive heightened emphasis under IFRS S1 and S2 compared to the TCFD framework:
Transition plans: What is your organisation's plan for transitioning to a lower-carbon economy, and how does this plan affect your business model, strategy, and financial planning?
Climate resilience: How resilient is your strategy to different climate-related scenarios, including a scenario consistent with a temperature increase of 1.5 degrees Celsius above pre-industrial levels?
Current and anticipated financial effects: What are the current and anticipated financial effects of climate-related risks and opportunities on your financial position, financial performance, and cash flows?
Industry-specific disclosures: What industry-specific sustainability metrics, as identified through the SASB Standards, are most relevant to your organisation's sector, and how do you measure and report on them?
Conclusion
The establishment of the ISSB and the issuance of IFRS S1 and IFRS S2 represent a watershed moment in the evolution of sustainability reporting. For the first time, the global capital markets have access to a common language for sustainability-related financial disclosures, backed by the institutional credibility of the IFRS Foundation and endorsed by securities regulators worldwide through IOSCO.
For organisations, the practical implications are clear. The transition from TCFD to ISSB Standards is not optional for companies that wish to remain credible in the eyes of investors and regulators. With 36 jurisdictions moving toward adoption, targeted amendments already being issued to support implementation, and the ISSB's research agenda expanding into nature and human capital, the direction of travel is unambiguous. Companies that begin building their ISSB reporting capabilities now, drawing on their existing TCFD foundations and investing in the data infrastructure needed to meet the expanded requirements, will be significantly better positioned as these standards become embedded in regulatory frameworks across the world's major capital markets.
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