What is ISSB? Sustainability Reporting and ESG Relevance

What is International Sustainability Standards Board (ISSB)?

The International Sustainability Standards Board (ISSB) is a non-profit, independent standard-setting organisation that was founded under the International Financial Reporting Standards (IFRS) Foundation in November 2021. The ISSB was established at COP26 in Glasgow in response to great market needs associated with an international sustainability reporting framework. 

Its main role is to work on ISSB reporting standards that establish a global baseline of financial disclosures related to sustainability. The ISSB reporting framework brings together the already established groups and initiatives, such as:

• Task Force on Climate-related Financial Disclosures (TCFD), 
• Sustainability Accounting Standards Board (SASB), 
• Climate Disclosure Standards Board (CDSB), and
• The Integrated Reporting Framework.

All under a unified set of financial reporting standards aimed at guiding investors and effective capital market operations.

What is ISSB Reporting and Why Does it Matter?

The ISSB reporting is a process of reporting financial information that is related to sustainability in accordance with the requirements of the International Sustainability Standards Board. On 26 June 2023, the ISSB published its first two sustainability disclosure standards:

• IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information)
• IFRS S2 (Climate-related Disclosures).

These standards became effective on 1 January 2024, with the first full-year reporting appearing in 2025. As of October 2025, 40 jurisdictions representing approximately 60% of global GDP have adopted or are implementing ISSB reporting standards.

ISSB fills a serious gap in international capital markets. Before these standards, investors were presented with a disjointed and confusing array of varying frameworks and inconsistencies in disclosures.

ISSB Sustainability Disclosure, Scope & Standards

The ISSB sustainability disclosure refers to sustainability-related information that organisations must report according to the standards provided by the International Sustainability Standards Board (ISSB).

IFRS S1

The IFRS S1 gives general guidelines on ISSB sustainability reporting across sustainability-related environmental, social, and governance matters that are financially material to enterprise value. This standard follows four foundational pillars:

• Governance 
• Strategy 
• Risk Management
• Metrics and Targets 

IFRS S2

IFRS S2 extends on IFRS S1 and has specific ISSB reporting requirements on climate-related risks and opportunities. 

Notably, IFRS S2 already includes all recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which is why organisations that were using TCFD before can leverage the existing frameworks to make ISSB disclosure.

ISSB ESG Alignment and Relevance

Many organisations ask: "Is ISSB a complete ESG framework?" The short answer is no, and that's actually its greatest strength. 

ISSB is particularly concerned with the environmental and social challenges that have a direct effect on your business finances. In contrast to the larger ESG models that take into account all the sustainability issues, ISSB ESG standards pose one fundamental question: “What sustainability risks and opportunities actually impact profitability and the overall long-run company value?”

What’s the Relevance?

This focused approach offers clarity.

• First, it eliminates confusion as to what really matters the most to investors; you are clear as to what sustainability factors are influencing investment decisions. 
• Second, it divides the sustainability ambitions (benefiting the planet) from financial risk management (protecting shareholder value).

This distinction prevents organisations from reporting on every environmental initiative whilst missing critical financial risks. 

However, organisations that have a wider sustainability commitment beyond financial effects are encouraged to complement ISSB with alternative reporting systems, such as the Global Reporting Initiative (GRI), which has a more detailed stakeholder consideration.

ISSB vs Other Sustainability Frameworks

The sustainability reporting environment is full of overlapping frameworks that address different purposes. Understanding ISSB's position within this ecosystem helps organisations navigate strategic disclosure priorities.

Instead of considering these structures as competitors, organisations usually apply a hierarchical approach. ISSB reporting serves as the global foundation, the baseline that communicates investor-material sustainability information across geographies.

Who Should Adopt ISSB Reporting?

Currently voluntary globally, ISSB reporting is quickly becoming a mandatory requirement in major markets. ISSB reporting should be adopted by:

Large Public Companies

These face the strongest imperative to adopt ISSB now. Stock exchange listings in major markets increasingly encourage or require ISSB compliance. Investor relations teams report that major institutional investors explicitly request ISSB-aligned disclosures in capital raising processes.

Multinational Enterprises

These organisations have multi-layered requirements, as they operate in different jurisdictions. Instead of running disjointed systems, multinationals benefit from ISSB reporting as their backbone architecture with regionalisation to meet particular requirements.

Mid-Market and Private Companies

ISSB reporting should also be considered by mid-market and private companies in case of institutional investment, access to capital markets, or acquisition by public companies. More and more, private equity firms and strategic acquirers filter targets in part on ESG maturity; ISSB shows organisational governance sophistication.

Common Challenges in ISSB Reporting

There are several practical challenges that organisations face in implementing ISSB reporting, especially for first-time reporters.

• Evaluating financial materiality

When it comes to estimating the sustainability risks and opportunities that may reasonably impact enterprise value, it may take a lot of judgment and institutionalised procedures.

• Data availability and quality

Sustainability data often spans across systems and functions, and as such, ensuring accuracy and consistency, as well as auditability, is challenging.

• Value chain data gaps

Collecting reliable information from suppliers, partners, and downstream activities remains challenging, especially where data is estimated rather than directly measured.

• Measurement uncertainty

A low amount of visibility in the value chain may bring about uncertainty in measurements, requiring transparent assumptions and explanations.

Key Takeaways on ISSB Reporting

The ISSB reporting narrative offers an inherent transformation of corporate sustainability governance. What began as investor frustration with fragmented disclosure has now become a worldwide movement in the direction of compulsory sustainability reporting criteria.

Those who treat ISSB as a strategic capability today will be better positioned for tomorrow’s capital markets.

Oren provides comprehensive ESG and sustainability reporting solutions purpose-built for ISSB implementation. Our platform helps organisations establish governance frameworks aligned with ISSB standards and consolidate climate and sustainability data across complex value chains. 

Frequently Asked Questions (FAQs)

Q1. What is ISSB in sustainability reporting?

The International Sustainability Standards Board (ISSB) is part of the IFRS Foundation and develops global standards for sustainability-related financial disclosures. Its standards, IFRS S1 and IFRS S2, help organisations report financially material sustainability risks and opportunities to investors in a consistent way.

Q2. What is ISSB reporting, and who needs to comply?

ISSB reporting is the process of reporting financial information on sustainability matters in line with IFRS S1 and S2. Adoption is accelerating, although today, it is mostly voluntary.

Q3. What are ISSB sustainability disclosure standards?

The ISSB standards incorporate IFRS S1, which are general requirements of disclosure in the areas of governance, strategy, risk management, and metrics, and IFRS S2, which are climate-related risks, emissions, scenario analysis, and transition planning.

Q4. How is ISSB different from other ESG frameworks?

ISSB is investor-centric and founded on financial materiality. GRI deals with greater stakeholder impacts, TCFD dealt with climate alone, and SASB provided industry metrics, which are now embedded in ISSB.

Q5. Is ISSB reporting mandatory?

It is not yet mandatory globally, but mandates are emerging. Several countries have announced adoption.

Q6. How does ISSB align with IFRS and ESG reporting?

ISSB is part of the IFRS Foundation, which allows it to be closely aligned with financial statements. It combines TCFD and SASB and supplements models such as GRI as an investor-related baseline.

Q7. What data is required for ISSB sustainability reporting?

ISSB reporting involves information on governance, strategy, risk management, emissions, targets, scenario analysis, and material sustainability risks. Requirements vary by sector.