The IFRS Foundation announced today the publication of a new guide aimed at helping companies to identify and disclose material information about sustainability-related risks and opportunities that could have an impact on their short- or long-term cash flows, access to finance or cost of capital, and to assess materiality.

According to the IFRS Foundation, the new guide comes as “investors and global capital markets are increasingly demanding this information to inform investment decision making.”

The IFRS Foundation’s International Sustainability Standards Board was launched in November 2021, with the goal to develop IFRS Sustainability Disclosure Standards to provide investors with information about companies’ sustainability risks and opportunities. The IFRS released the inaugural general sustainability (IFRS S1) and climate (IFRS S2) reporting standards in June 2023.

A key focus area of the new publication, according to the IFRS Foundation, is guiding companies in understanding IFRS S1’s concept of sustainability-related risks and opportunities, including how they can arise from a company’s dependencies and impacts.

The guide also focuses on the materiality process, including highlighting how companies applying the ISSB standards can benefit from utilizing processes already in place from making materiality judgements when preparing financial statements, particularly those in the IFRS Accounting Standards.

Additionally, the new guide provides companies with considerations to take into account to drive connectivity between sustainability-related financial disclosures and financial statements, as well as considerations for companies applying ISSB Standards alongside the European Sustainability Reporting Standards (ESRS) or Global Reporting Initiative (GRI) Standards.

In its statement announcing the release of the new guide, the IFRS Foundation said:

“IFRS S1 explains that a company both depends on resources and relationships—such as human, intellectual, financial, natural, manufactured and social—throughout its value chain, and also affects those resources and relationships. This can contribute to the preservation, regeneration and development, or to the degradation and depletion of these resources and relationships. It is a company’s dependencies and impacts on those resources and relationships that might give rise to sustainability-related risks and opportunities that could reasonably be expected to affect its prospects.”

Click here to access the new guide.