ISSB’s digital taxonomy to help investors assess sustainability disclosures

The International Sustainability Standards Board (ISSB) has published the Sustainability Disclosure Taxonomy, which aims to help investors analyse sustainability disclosures efficiently.

The digital IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy) will enable investors to search, extract and compare sustainability-related financial disclosures as ISSB establishes its global baseline of standards.

The taxonomy has been developed to help support dialogue between companies and investors and it neither introduces new requirements nor affects a company’s compliance with the standards.

Informed by market feedback, the taxonomy enables companies to consistently tag information prepared using ISSB Standards.

The taxonomy reflects IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, IFRS S2 Climate-related Disclosures and their accompanying guidance.

The launch comes after investors called on the board earlier this year to build on the foundation laid by the board’s first two sustainability standards, IFRS S-1 and S-2, rather than starting new projects.

Designed to be consistent with the IFRS Accounting Taxonomy so that companies can provide a holistic digital financial reporting package to investors, the ISSB Taxonomy can also be used with other digital taxonomies.

“As jurisdictions around the world are considering the adoption or other use of ISSB Standards, the publication of the ISSB Taxonomy only a few months after the effective date of our inaugural Standards is critical to support capital market transparency and efficiency and enable companies and investors to digitally process sustainability-related financial disclosures provided through use of the ISSB Standards,” said ISSB chair Emmanuel Faber.

“Furthermore, we have taken steps to ensure the ISSB Taxonomy can help facilitate interoperability with other taxonomies when necessary – for example, to facilitate interoperability with the taxonomy being developed by EFRAG [European Financial Reporting Advisory Group] – enabling all companies and investors to immediately more effectively identify disclosures required by the ISSB,” Faber added.

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