How reliefs for IFRS sustainability disclosure standards aid adoption

The deliberate location of the ISSB follows considerations around the application of similar IASB accounting principles for sustainability reporting.

One of these well-established principles is the provision of transition reliefs to organisations to aid the smooth and less onerous adoption of new accounting standards.

The IFRS sustainability disclosure standards IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) are no exceptions in this regard.

They provide specific transition reliefs when adopting the new standards.

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The reliefs offer practical support to organisations that choose to apply them and ensure that they do not incur undue cost or effort to comply. Here are some of the reliefs:

The ‘climate-first’ reporting relief: As the name suggests, it allows organisations to disclose only climate-related risks and opportunities in the first annual reporting period of applying IFRS S1.

Therefore, while an organisation might have identified multiple material sustainability topics (risks and opportunities), it can choose to only disclose on climate risk in the first year of adoption.

Another important relief for consideration is ‘comparative disclosures’ relief — with this relief, organisations are permitted not to provide comparative information in the first annual reporting period in which an organisation applies IFRS S1 and IFRS S2.

The ‘timing of reporting’ relief permits organisations in the first annual reporting period to report their sustainability-related yearly financial disclosures after they publish their financial statements, contrary to the IFRS S1 requirement that organisations publish both disclosures at the same time.

Other notable reliefs related to greenhouse gas (GHG) emissions include the first annual reporting period for organisations from disclosing scope 3 emissions and the allowance in IFRS S2 for organisations to measure their emissions using alternative methods to the GHG protocol standard methodology.

Organisations should consider these reliefs to provide practical benefits as they adopt the IFRS sustainability disclosure standards.

The writer is a partner at PricewaterhouseCoopers. He is an author who writes and speaks widely on corporate reporting topics.