Investors, policy experts, and advisers have hailed the release last month of the International Financial Reporting Standards (IFRS) S1 and S2 as a step-change in the field of sustainability reporting – not least because it sets a new global minimum baseline.

One of the first to share her optimism about the development was Carol Adams, who chairs the Global Reporting Initiative’s (GRI) Global Sustainability Standards Board (GSSB).

She told IPE: “GRI and the GSSB are keen to collaborate with the IFRS Foundation/ISSB to make reporting simpler for users, avoid duplication and increase the overall level of corporate reporting on corporate impacts, risk and opportunities.”

Adams also underscored the importance of creating an effective and unified sustainability reporting landscape that promotes transparency and accountability around the impact of businesses on the environment, investors, and society.

Echoing Adams’s perspective, James Alexander, chief executive officer of the UK Sustainable Investment and Finance Association (UKSIF), also praised the new sustainability standards.

“We strongly welcome the ISSB’s final reporting standards, which will help to deliver the coherent, global baseline of sustainability disclosures sought by our members,” he said.

He added that “the full, swift adoption by the UK government of the ISSB’s standards represents a natural, next step in the UK’s climate leadership”.

Adam Jacobs-Dean from the Alternative Investment Management Association (AIMA), added: “AIMA is hugely supportive of the ISSB’s work and we welcome the publication of its inaugural standards. We believe these represent a real step forward for sustainability disclosures.

“It is vital that investors can access consistent, comparable and reliable information from issuers to enable them to make informed judgements about the impact of climate-related risks on current and potential investments.”

In March 2022, the GRI and the IFRS Foundation agreed a Memorandum of Understanding that committed them to coordinate their work programmes and standard-setting activities.

The partnership recognises two equal and interconnected sustainability reporting approaches that form “the distinct yet equal importance of financial and impact materiality in sustainability reporting,” GRI CEO Eelco van der Enden said.


The knotty issue of materiality remains, however, a key issue in the ongoing discussion around the new standards.

The ISSB has adopted the IFRS financial reporting framework’s definition of materiality, whereas the GRI starts from the position that a business has to understand its material impacts before it can assess its sustainability-related risks and opportunities.

Carol Adams at GSSB

Carol Adams at GSSB

Adams said: “The GSSB is engaging with the ISSB to develop questions and answers regarding the use of both sets of standards, and to align our work programmes. This will allow a double materiality perspective that meets the needs of reporters and other information users.”

Essentially, the GRI’s collaboration with the ISSB is intended to bridge the gap by supporting alignment and interoperability between their respective approaches and to reduce the reporting burden and duplication as much as possible.

Meanwhile, Emily Pierce, chief global policy officer at Persefoni – a climate management and carbon-accounting platform – also lauded the ISSB’s approach to materiality.

She said: “Markets want a global transformation in sustainability reporting to better support decision-making and drive efficiencies. The ISSB adoption of the IFRS definition of materiality is what will make the standards a transformational tool – one that can be implemented by securities regulators around the globe to meet market needs.”

Pierce, a former lawyer with the US Securities and Exchange Commission, added that although the SEC’s climate-related financial disclosure proposal are more focused than the ISSB’s, the two do not conflict.

“The SEC is focused on enhancing and standardising disclosures about climate-related risks,” she said. She also believes that any differences are “incremental.”

She also saw common ground in the push-and-pull relationship between single and double materiality. “Single and double materiality should not be at odds – they are two different lenses that are applied for different, yet complementary, objectives,” she explained.

“Rather than a debate, the markets need a dialogue about how to make the two lenses work together – companies will need to navigate the differences, and investors need to understand them,” she added.

Despite the widespread support for the new standards, there was, however, some criticism of the standards – particularly the ISSB’s single-materiality model.

Laurent Le Pajolec, a board member at Kreston Global member firm EXCO A2A Polska, said the ISSB’s reliance on single materiality risks failing “to consider how an organisation’s actions – including indirect emissions – impact the wider environment”.

The standards were, he explained, “limited in their ambition when compared to the CSRD project”, which has adopted double materiality.

He added: “The new ISSB standards risk institutionalising corporate ‘greenlighting’, where companies highlight small green features to divert attention from their environmentally damaging activities, in lieu of more rigorous, scientific reporting mechanisms.”

Following their release, the standards are set to undergo an assessment by the International Organization of Securities Commissions, which, if positive, will potentially open the door for their adoption by jurisdictions around the world.

Additionally, the ISSB has committed to support the implementation of the new standards. As part of this push, the board has also released a proposed methodology for updating the legacy SASB standards that it is now responsible for maintaining.

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