The year 2024 marks a significant milestone for the accounting world as it witnesses the first application of ISSB sustainability standards. The International Sustainability Standards Board (ISSB) was established in 2020 with the mission to develop a globally accepted sustainability reporting framework for businesses. Its first standard, the Consultation Draft of the Sustainability Standards was released in 2022 for public consultation. The accounting industry has been eagerly awaiting the implementation of these standards since their announcement.
ISSB sustainability standards
The ISSB sustainability standards will have a transformative impact on how businesses report their non-financial and sustainability information. The standards provide a framework for comprehensive reporting that includes environmental, social, and governance (ESG) factors, in addition to financial information. This will enable investors and stakeholders to assess a company’s long-term sustainability and its impact on the environment, society, and economy. Accountants will play a pivotal role in this paradigm shift as they are the gatekeepers of financial information. They will need to develop new skills and knowledge to manage the increased volume and complexity of non-financial information and develop a deeper understanding of sustainability issues.
Standardisation in sustainability reporting
The ISSB sustainability standards will also bring about standardisation in sustainability reporting. Currently, there is no global framework, resulting in a lack of consistency and comparability in reporting. The ISSB sustainability standards are designed to be used across all industries and sectors globally, creating a level playing field for companies and investors. This will benefit businesses as they will be able to demonstrate their sustainability credentials more effectively to investors and stakeholders, leading to increased investor confidence and potential access to capital.
Audit firms
The implementation of the ISSB sustainability standards will also have implications for the audit profession. Audit firms will need to ensure that non-financial information is subject to the same level of scrutiny and assurance as financial information. This will require changes to audit methodologies, processes, and systems. There is also likely to be an increase in demand for audit services as a result of the increased volume and complexity of sustainability reporting. This presents an opportunity for audit firms to expand their advisory services in the sustainability space.
ISSB sustainability standards will affect various stakeholders
In addition to the accounting profession, the ISSB sustainability standards will affect various stakeholders, including regulators, investors, and businesses. Regulators will need to update their reporting requirements to align with the new standards. Investors will have access to more consistent and reliable sustainability information, enabling them to make informed investment decisions. Businesses will need to assess their reporting capabilities and resource requirements to comply with the new standards.
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