The guidance, ‘ESRS – ISSB Standards Interoperability Guidance' [pdf, 910kb] aims to illustrate some of the key areas of interoperability and facilitate compliance with the requirements of both sets of standards, regardless of whether the entity starts with European Sustainability Reporting Standards (ESRS) or the standards issued by the International Sustainability Standards Board (ISSB).
The ISSB, together with the European Commission (EC) and EFRAG, have been working closely throughout development of their respective standards in order to achieve a high degree of alignment – particularly focusing on the interoperability of climate-related reporting. As a result of this cooperation, the ESRS and the IFRS Sustainability Disclosure Standards (IFRS SDS) have been developed with:
The ESRS contain 12 specific standards, two cross-cutting standards and 10 topic-specific standards across elements of environmental, social and governance (ESG) topics. This contrasts to the IFRS SDS, which currently contains only two standards: IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and IFRS S2 ‘Climate-related Disclosures’.
Although a high degree of alignment has been achieved during the development of the ESRS and IFRS SDS, the guidance also highlights some differences that reporting entities need to be aware of when they are reporting compliance under both sets of standards.
The guidance is split into four sections.
Comments on general reporting requirements in ESRS and IFRS SDS
This section focuses on general reporting requirements including materiality, presentation and disclosures for sustainability topics other than climate.
Common climate-related disclosures
This section illustrates the high degree of alignment of climate-related disclosures between ESRS and the IFRS SDS and includes a reference table that identifies the corresponding ESRS or IFRS SDS reference. This can be used as a resource to help entities better understand what requirement an existing disclosure fulfils in the other set of standards and facilitates a complete set of disclosures when moving from one set of standards to the other.
ESRS to IFRS S2 (climate): information that an entity starting with ESRS needs to know when also applying IFRS SDS to enable compliance with both sets of standards
This section provides some specific and targeted areas for an entity to consider when it starts reporting under ESRS and then also wants to report compliance with IFRS SDS. It highlights areas where IFRS SDS have additional information where there are no corresponding disclosure requirements in ESRS.
The topics covered in this section are as follows:
IFRS S2 (climate) to ESRS: information that an entity starting with IFRS SDS needs to know when also applying ESRS to enable compliance with both sets of standards
This section provides some specific and targeted points that an entity needs to consider when it initially reports under IFRS SDS and also wants to report compliance with ESRS. This includes specific choices the entity needs to make under IFRS SDS as well as incremental or additional requirements under ESRS.
The featured topics for specific choices entities need to make are as follows:
Incremental and additional requirements
The interoperability guidance contains two tables. The first one lists the disclosure requirements set out in ESRS 2 ‘General Disclosures’ that do not have a corresponding requirement in IFRS S1 or IFRS S2. The second table lists disclosure requirements set out in ESRS E1 ‘Climate Change’ that do not have an equivalent in IFRS S1 or IFRS S2.
We are pleased to see the release of this interoperability guidance which has been highly anticipated by entities. We believe it will provide helpful guidance for entities wishing or required to state compliance with both sets of standards.
