The IFRS’ newly-announced transitional reliefs may reduce the burden on companies preparing for the rollout of enhanced sustainability disclosures in January 2024, according Richard Singleton, finance and sustainability director at Menzies.
The ISSB revealed that it will offer transitional aid to companies as they implement S1 (general requirements) and S2 (climate)
In April 2023, the International Sustainability Standards Board (ISSB) revealed that it will offer transitional aid to companies as they implement S1 (general requirements) and S2 (climate).
This assistance is intended to allow companies to focus on disclosing information related to climate risks and opportunities during their initial reporting year. Starting from the second year, companies will be required to provide comprehensive reports on sustainability-related risks and opportunities, which go beyond climate.
According to Singleton, this indicates that the ISSB is anticipating a lack of readiness among businesses.
“A lot of firms will not have the systems or expertise in place yet to meet the requirements, giving them a longer time frame to work towards,” he said.
“The Scope 3 element is extremely complex, and so this allows entities to spend some time understanding the full extent.”
Scope 3 emissions refer to greenhouse gas emissions that are caused by activities associated with the value chain of a reporting organisation, but occur from sources that the organisation does not own or directly control.
Singleton views are echoed by Laura Tibbetts, associate director of financial accounting advisory services at Grant Thornton. She stated the relief will assist the firms that need it the most without preventing others from reporting.
“We shouldn’t underestimate the challenges this may bring for many organisations who haven’t reported on a broader range of sustainability topics historically. It will take time for organisations to prepare and evolve their current systems and processes.”
Similarly, Singleton noted that he hopes this will allow the reporting to be more consistent throughout the first year, and he believes it is still a “big step forward overall”.
The full package of reliefs companies won’t be required to complete include offering disclosures that encompass risks and opportunities related to sustainability, extending beyond those connected solely to climate
By Greg Noble
Date published May 16,Accountancy Age