![]() There is no indication of adoption by the U.S. Several countries – including Canada, the UK, Japan, and Australia – have indicated they intend to legislate sustainability disclosure standards based on IFRS S1 and/or IFRS S2. These standards remain voluntary until codified into country-level regulation. IFRS S2 sets out specific climate-related disclosures and is designed to be used with IFRS S1. Both fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), and incorporate elements of the SASB Standards (which consolidated into the IFRS Foundation in 2022). IFRS S1 provides a set of disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.The International Sustainability Standards Board (ISSB) of the IFRS Foundation has released its first two sustainability disclosure standards: Instead, the TCFD worked closely with IFRS in the development of its IFRS S2 Climate-related Disclosures standard, and has now announced it will effectively transfer its functions over to the IFRS. The TCFD, by contrast, was a task force set up within the Financial Stability Board and thus not a standalone entity that could be subsumed into the IFRS Foundation. Before consolidation, the SASB Standards, Integrated Reporting Framework, and CDSB were maintained by standalone entities that could be cleanly merged/consolidated into the IFRS. The reason that the TCFD was not consolidated into the IFRS Foundation was a procedural matter. The TCFD was not consolidated into the IFRS Foundation, leaving many to believe that the TCFD would continue to issue climate-related reporting recommendations separate to the IFRS’ work. ![]() ![]() Last year the SASB Standards, Integrated Reporting Framework, and Climate Disclosure Standards Board were consolidated into the IFRS Foundation to support the development of global standards through the ISSB. This announcement should put a widely-held misunderstanding to rest. As such, the FSB noted that the Standards mark “the culmination of the work of the TCFD”, which was established in 2017 at the request of the Financial Stability Board. The newly-issued IFRS S1 and IFRS S2 sustainability disclosure standards fully incorporate the recommendations of the TCFD. The Financial Stability Board (FSB) has asked the International Sustainability Standards Board (ISSB) of the IFRS Foundation to take over the monitoring of companies’ progress on climate-related disclosures from the Task Force on Climate-related Financial Disclosures (TCFD). ![]()
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