Sustainability has become a key part of how businesses operate, whether we’re ready for it or not.
You might think environmental, social, and governance (ESG) concerns are just for large corporations or publicly traded companies, but that’s no longer the case.
Even if you are not required to follow International Financial Reporting Standards (IFRS) yet, it’s a good idea to get familiar with the new IFRS S1 and S2.
These standards could influence how businesses of all sizes approach sustainability in the future.
What are IFRS S1 and S2?
In June 2023, the International Sustainability Standards Board (ISSB) introduced two new sustainability reporting standards:
- IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information
- IFRS S2: Climate-related Disclosures
The Government is reviewing these standards, with plans to approve them by March 2025.
The goal? To create a unified approach to sustainability reporting so businesses can clearly show how they’re managing ESG-related risks and opportunities.
Once approved, these standards will be part of a wider Sustainability Disclosure Reporting framework and will be key for how UK-listed companies share their sustainability efforts with investors.
What’s next?
If all goes as planned, the Financial Conduct Authority (FCA) will require public companies to follow these standards by March 2025.
The Government is also considering whether private companies, including SMEs, should adopt them too.
They’ll look at the costs for smaller businesses but balance that with the benefits to investors and the economy as a whole.
There’s also talk of introducing a ‘green taxonomy’ to clarify what qualifies as environmentally sustainable.
Curious how these IFRS standards might impact your business, or looking to step up your ESG reporting? We’re here to help – get in touch with us today!
