The road to interoperability: Latest guidance on ISSB and ESRS alignment

The IFRS Foundation and the European Financial Reporting Advisory Group (EFRAG) have released interoperability guidance to demonstrate the significant alignment achieved between the International Sustainability Standards Board’s IFRS Sustainability Disclosure Standards (ISSB Standards) and the European Sustainability Reporting Standards (ESRS), particularly in terms of materiality, presentation, and disclosures for sustainability topics other than climate.

The guidance aims to simplify the process for organisations reporting in alignment with both the ISSB Standards and ESRS (as mandated under the Corporate Sustainability Reporting Directive). It describes the process for an organisation to implement both sets of standards, including a thorough examination of the alignment in climate-related disclosures.

As discussed in our Getting Ready Series (slaughterandmay.com), a series of factsheets to help businesses to get ready for the wave of upcoming ESG regulatory developments, interoperability and equivalence are key themes in sustainability reporting at the UK, EU and global level. 

The guidance will be helpful for organisations wrestling with how best to address their reporting under two similar-but-different disclosure frameworks.

The guidance comprises four sections:

• Section 1 discusses the general reporting requirements in both the ISSB Standards and ESRS. It outlines the compatibility of the standards regarding materiality, presentation, and disclosures on non-climate-related sustainability topics.
• Section 2 provides a detailed analysis, in a tabular format, of the climate-related disclosure requirements of both the ISSB Standards and the ESRS, paragraph by paragraph.
• Section 3 lists reporting elements and points to consider for those organisations starting with the ESRS to provide additional disclosures to comply with the climate-related disclosure requirements in the ISSB standards.
• Section 4 lists reporting elements and points to consider for those organisations starting with the ISSB Standards to provide additional disclosures to comply with the climate-related disclosure requirements under the ESRS.

Our Sustainability team is working with a range of clients across different sectors and geographical footprints on preparing for, and implementing, reporting in alignment with the ESRS and ISSB Standards.  We welcome this important tool in assisting organisations in mapping their data sets and reporting frameworks.