The International Sustainability Standards Board (ISSB), established in November 2021, is an independent body that sets global standards for the disclosure of corporate sustainability information. Founded under the IFRS Foundation, it develops standards centered on financial materiality from an investor perspective.
[ISSB (International Sustainability Standards Board) Ⓟ ESG.ONL/ESG Today]
The ISSB was born as the impact of climate change and ESG response on corporate value grew. Previously, companies faced duplicate reporting burdens under various disclosure frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI), while investors found cross-company comparison difficult. Thus, the IFRS Foundation established the ISSB to resolve this confusion and integrate financial reporting with sustainability reporting.
In June 2023, the ISSB published its first international standards: IFRS S1 (General Sustainability Disclosures) and IFRS S2 (Climate-related Disclosures). S1 addresses the overall impact of sustainability-related risks and opportunities on a company’s finances, while S2 contains specific climate change-related disclosure requirements. IFRS S1 and S2, which began application from January 2024, have started to be adopted as standards by major countries including the UK, Australia, and Japan.
Domestically, the Financial Services Commission has announced that it will phase in mandatory sustainability disclosure starting from 2025 for KOSPI-listed companies with assets of KRW 2 trillion or more. The Korea Accounting Standards Board is developing the Korean Sustainability Disclosure Standards (KSDS) with reference to ISSB standards. A draft was released in 2024, and the scope of disclosure entities is scheduled to expand from KOSPI-listed companies starting in 2026.
The ISSB plays the role of guiding capital flows toward a sustainable direction by enhancing the credibility and comparability of corporate ESG information. With the application of disclosure standards as rigorous as those for financial reporting, companies are in a situation where they must build more sophisticated data management systems. For Korean companies participating in global supply chains, understanding and responding to ISSB standards has become an essential task.
by Editor O