The International Sustainability Standards Board (ISSB) has introduced the IFRS Sustainability Disclosure Taxonomy, an essential tool aimed at enhancing the transparency and comparability of sustainability-related financial disclosures. This initiative supports the global effort to integrate sustainability metrics into mainstream financial reporting, offering a standardized framework for companies to disclose their ESG (Environmental, Social, and Governance) performance data in a structured, machine-readable format.
The IFRS Sustainability Disclosure Taxonomy is based on the requirements outlined in IFRS S1 (General Requirements for Sustainability-related Financial Disclosures) and IFRS S2 (Climate-related Disclosures). By adopting this taxonomy, companies are expected to tag sustainability data in a standardized manner, enabling investors and other stakeholders to easily search, extract, and compare disclosures across different industries and jurisdictions. This will ultimately promote consistency, transparency, and comparability of ESG data, aligning with global best practices in sustainability reporting.
A key feature of the taxonomy is its compatibility with the IFRS Accounting Taxonomy, ensuring a seamless integration of sustainability data with financial disclosures. It is also designed to support interoperability with other taxonomies, such as those developed by the European Financial Reporting Advisory Group (EFRAG), facilitating global consistency in ESG reporting
The ISSB’s initiative is significant as it ensures that companies worldwide can adopt a standardized approach to sustainability disclosures, streamlining the process for reporting and analysis. Moreover, the taxonomy is informed by market feedback, ensuring it meets the needs of both preparers and users of ESG data
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