The two standards "will help to improve trust and confidence in company disclosures about sustainability to inform investment decisions," the ISSB said in a news release.
The standards were well received by investors. They provide a "critical common language on sustainability disclosure" for issuers of all size, said David Atkin, CEO of the Principles for Responsible Investment in London, in an emailed statement.
ISSB Investor Advisory Group leaders who are executives at the Canada Pension Plan Investment Board and Norges Bank Investment Management said in a separate statement that the data generated by the standards will support price discovery and capital formation, while also helping companies communicate sustainability information to their investors.
S1 is a set of disclosure requirements for companies to cover sustainability-related risks and opportunities faced over the short, medium and long term, while IFRS S2 covers specific climate-related disclosures to be used with IFRS S1. Both standards fully incorporate Task Force on Climate-related Financial Disclosures recommendations.
ISSB officials will meet in July to set an effective date for voluntary standards, which will need to be enacted by respective jurisdictions. An ISSB jurisdiction working group that will coordinate with the International Organization of Securities Commissions will collaborate on encouraging widespread adoption. PRI, the London Stock Exchange Group and other groups are calling for policymakers around the world to introduce mandatory ISSB disclosure no later than 2025.
Andrew Ninian, director of stewardship, risk and tax at the Investment Association in London said in an emailed statement that with its members investing in companies around the world, "the creation of a global baseline of sustainability reporting standards is an important step" as investors increasingly incorporate material sustainability issues into their assessments of companies' long-term value.
Emily Pierce, chief global policy officer and associate general counsel at sustainability consultant Persefoni, called the standards "a once-in-a-generation opportunity to catalyze comparable sustainability disclosures across the globe." The ISSB climate standards managed to find a balance between investors' desire for information in Scope 3 emissions and challenges faced by companies to report it, she said.