Apr 19, 2023

Sustainability reporting has grown to become an essential part of corporate transparency and accountability ─ specifically within investment management, which is increasingly recognizing the importance of disclosing environmental, social, and governance (ESG) performance and impacts.

However, a lack of consistent standards for measuring and reporting sustainability metrics poses significant challenges for both asset owners and managers. In recent years, we’ve seen growing demand for more standardized sustainability reporting frameworks that would enable better comparability, accuracy, and transparency of sustainability information. As such, the need for harmonized sustainability reporting standards has become a critical issue in the industry, with efforts now underway to develop such frameworks.

Establishing Sustainability Reporting Standards

The International Sustainable Standards Board[1] (ISSB), a global standard-setting board established to develop and issue sustainability reporting standards, is part of the International Financial Reporting Standards (IFRS) Foundation, which oversees the International Accounting Standards Board (IASB). The ISSB aims to develop a comprehensive set of sustainability reporting standards to address growing demand for transparent, comparable, and reliable sustainability information.

The ISSB established the following four key objectives[2]:

  • Develop standards for a global baseline of sustainability disclosures
  • Meet the information needs of investors
  • Enable companies to provide comprehensive sustainability information to global capital markets
  • Facilitate interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups


[1] https://www.ifrs.org/groups/international-sustainability-standards-board/

[2] https://www.ifrs.org/groups/international-sustainability-standards-board/

One of ISSB’s key roles is to develop reporting standards that provide businesses and investors with a common language to communicate sustainability-related information. These standards will cover a range of sustainability-related issues, including climate change, biodiversity, and social issues. The ISSB wants to ensure that these reporting standards are consistent with existing reporting frameworks and compatible with financial reporting standards.

The ISSB is developing two sustainability reporting standards: IFRS S1 General Sustainability-related Disclosures (draft S1) and IFRS S2 Climate-related Disclosures (draft S2). IFRS S1 covers a broad range of sustainability-related disclosures, including a company’s sustainability strategy, governance structures, and environmental and social impacts. IFRS S2 specifically focuses on climate-related disclosures, including a company’s greenhouse gas emissions, climate-related risks and opportunities, and climate-related targets.

As the proposed effective date of January 1, 2024, for IFRS S1 and IFRS S2 approaches (with early adoption permitted), businesses should prepare to comply with these new reporting requirements.

Cutter can support clients as firms ready their ESG frameworks to deliver to these new disclosure standards. We provide a wide range of services to help our clients navigate the complex landscape of ESG investing, including strategy development, data management, and reporting.

1 https://www.ifrs.org/groups/international-sustainability-standards-board/

2 https://www.ifrs.org/groups/international-sustainability-standards-board

Look for more blogs and articles to follow on this topic. In the meantime, reach out to speak with a Cutter consultant or analyst to learn more. Contact us at [email protected].