IFRSS1GeneralRequirementsforDisclosureofSustainability-relatedFinancialInformationIFRSS2Climate-relatedDisclosuresJune2023EffectsAnalysisIFRS®SustainabilityDisclosureStandardsEffectsAnalysis|IFRSS1GeneralRequirementsforDisclosureofSustainability-relatedFinancialInformationandIFRSS2Climate-relatedDisclosures|June2023|2ThisEffectsAnalysisaccompanies,butisnotpartof,IFRSS1GeneralRequirementsforDisclosureofSustainability-relatedFinancialInformationandIFRSS2Climate-relatedDisclosures.WhatisthepurposeofthisEffectsAnalysis?ThisEffectsAnalysisdescribesthelikelybenefitsandcostsofIFRSS1andIFRSS2.Thebenefitsandcostsarecollectivelyreferredtoas‘effects’.TheInternationalSustainabilityStandardsBoard(ISSB)gainsinsightintothelikelyeffectsofnewIFRSSustainabilityDisclosureStandardsthroughitsexposureofproposalstostakeholdersandthroughitsanalysisandconsultationwiththem.ThisdocumentdescribestheISSB’sconsiderationsoftheeffectsofIFRSS1andIFRSS2.BackgroundTheISSBwascreatedtodevelopstandardsthatwillestablishacomprehensiveglobalbaselineofsustainability-relatedfinancialdisclosuresforcapitalmarkets.IFRSS1andIFRSS2arethefirsttwoIFRSSustainabilityDisclosureStandardsdevelopedbytheISSB.JurisdictionalauthoritiesdecidewhethertorequirecompaniestoapplyIFRSSustainabilityDisclosureStandards,whicharedesignedtoworkwithanyaccountingstandardsusedtopreparefinancialstatements,includingIFRSAccountingStandards.1TheISSBdoesnothavetherighttomandatetheapplicationofIFRSSustainabilityDisclosureStandards.Companiescanchoosetoapplythem.GlossaryManytermsusedinthisdocumentarespecifictosustainability-relatedmatters.SeetheGlossaryonpage69fordefinitionsofthoseterms.1Inthisdocument,theterm‘company’referstoanentitythatprovidessustainability-relatedfinancialdisclosures.Inthisdocument,companiesandpreparersareusedinterchangeably.EffectsAnalysis|IFRSS1GeneralRequirementsforDisclosureofSustainability-relatedFinancialInformationandIFRSS2Climate-relatedDisclosures|June2023|3ExecutivesummaryTheInternationalSustainabilityStandardsBoard(ISSB)aimstodevelopstandardsthatwillprovideacomprehensiveglobalbaselineofhigh-qualitysustainability-relatedfinancialdisclosurestomeettheinformationneedsofusersofgeneralpurposefinancialreports(primaryusers).2Thesestandards,whicharereferredtoasIFRSSustainabilityDisclosureStandards,setoutrequirementsfordisclosuresaboutacompany’ssustainability-relatedgovernance,strategy,riskmanagementandmetricsandtargets.IFRSS1andIFRSS2arethefirsttwoIFRSSustainabilityDisclosureStandardsdevelopedbytheISSB.IFRSS1andIFRSS2IFRSS1setsoutoveralldisclosurerequirementsforsustainability-relatedfinancialinformation.IFRSS2setsoutdisclosurerequirementsforclimate-relatedfinancialinformation.WhyhastheISSBdevelopedIFRSS1andIFRSS2?Thefragmentedlandscapeofsustainabilityreportingcomprisesbothvoluntarystandardsandgrowingrequirements,addingcost,complexityandriskforcompaniesandinvestors.Investorsfinditdifficulttoobtaindecision-useful,reliableandcomparablesustainability-relatedinformationtoassisttheminunderstandingsustainability-relatedrisksandopportunitieswhenmakinginvestmentdecisionsandcomparingcompanies.TheISSBexpectscompaniesthatapplyIFRSS1andIFRSS2willbenefitfromusingaglobaldisclosurebaselinethat:•improvesinteroperabilityamongothersustainabilityreportingframeworks,helpingcompaniesstreamlinetheirsustainabilityreportingprocesses;and•enables...