What Is ISSB? Understanding ISSB Standards and IFRS Sustainability Reporting

Sustainability reporting is no longer optional. Around the world, companies face growing pressure to disclose how their operations affect the environment, society, and long-term business value. Investors want more than promises—they want proof. Regulators expect more transparency. Customers and employees are paying closer attention to how businesses behave. What’s missing is consistency.

Right now, ESG reporting is fragmented. Different countries, industries, and frameworks use different standards. This makes it hard to compare data across markets or evaluate a company’s true sustainability performance. Without common rules, investors struggle to assess risk. Regulators can’t enforce disclosures uniformly. And companies waste time juggling competing expectations.

To address this, global regulatory bodies have begun rolling out stricter reporting requirements. The EU’s Corporate Sustainability Reporting Directive (CSRD), U.S. Securities and Exchange Commission (SEC) proposals, and various local mandates are pushing ESG disclosures into the mainstream. But with so many frameworks in play—TCFD, GRI, SASB, CSRD—it’s difficult to align efforts in a way that satisfies all stakeholders and supports investor decisions.

That’s where the International Sustainability Standards Board (ISSB) comes in. Created by the IFRS Foundation, the ISSB aims to simplify and standardize ESG reporting on a global scale. Its two core frameworks—IFRS S1 and IFRS S2—provide clear guidance for companies to disclose sustainability risks and climate-related impacts. These standards are designed to support investor-grade reporting that aligns closely with financial performance, helping businesses tell a more complete and credible story.

Why Global Sustainability Standards Matter

Sustainability reporting has become a key part of how companies communicate with investors, regulators, and the public. But there’s a major problem: the reporting landscape is crowded and inconsistent. Companies are expected to navigate a maze of overlapping frameworks—GRI, TCFD, SASB, CSRD, and more. Each comes with its own structure, terminology, and goals. The Global Reporting Initiative or GRI, for example, focuses on impact materiality and is widely used for stakeholder-focused sustainability disclosures. This patchwork approach creates confusion and duplication, especially for global organizations trying to meet multiple regulatory and stakeholder expectations.

The result? A lack of comparability. Two companies in the same industry might report on climate risk in entirely different ways—using different metrics, timelines, or levels of detail. That makes it hard for investors to assess which companies are truly managing sustainability risks and which are just checking boxes. Regulators face similar challenges when trying to evaluate compliance or enforce disclosure rules.

Without a common standard, ESG data loses value. Decision-makers can’t rely on it to draw meaningful conclusions or allocate capital effectively. Unified frameworks—like those created by the ISSB—are designed to fix this. By setting a global baseline for sustainability disclosures, ISSB helps ensure that the data companies report is clear, comparable, and connected to enterprise value. That’s better for businesses, investors, and the broader economy.

What Is ISSB?

The International Sustainability Standards Board (ISSB) is a standard-setting body established by the IFRS Foundation in 2021. Its mission is to create a consistent, global framework for sustainability and climate-related financial disclosures. By introducing clear guidelines, ISSB helps companies report on environmental, social, and governance risks in a way that’s meaningful to investors and aligned with financial reporting.

The purpose of ISSB is simple but powerful: improve trust, transparency, and comparability in ESG disclosures. With capital markets increasingly focused on long-term value and sustainability risks, ISSB aims to bridge the gap between traditional financial reporting and non-financial data. Its standards—IFRS S1 and IFRS S2—set a baseline for what companies should disclose and how.

ISSB is already gaining traction among large multinationals, ESG reporting teams, investors, and regulators. While adoption varies by region, the standards are designed for broad global use. They’re not just another layer of ESG reporting—they’re built to integrate with existing IFRS financial disclosures, creating a unified reporting structure that ties sustainability risks directly to enterprise value.

By aligning financial and sustainability reporting, ISSB gives companies a clearer way to communicate risk and resilience in a changing world.

Key Takeaways

• ISSB aims to create a single, global baseline for ESG disclosures.
• IFRS S1 and S2 are the foundation of ISSB’s standards.
• The standards are gaining traction worldwide—even if not mandatory yet.
• ISSB builds on existing frameworks like TCFD and connects ESG to enterprise value.
• Tools like Nasdaq Metrio and AI-powered drafting platforms support alignment.

Overview of ISSB Standards: IFRS S1 and S2

The ISSB has introduced two core sustainability standards designed to bring consistency and clarity to ESG reporting: IFRS S1 and IFRS S2.

• IFRS S1 outlines the general requirements for companies to disclose sustainability-related risks and opportunities that could reasonably affect their financial performance. It applies across industries and covers a wide range of sustainability factors—not just climate. The goal is to provide investors with a full picture of how sustainability issues might influence enterprise value over the short, medium, and long term.
• IFRS S2 focuses specifically on climate-related disclosures. It builds on the framework established by the Task Force on Climate-related Financial Disclosures (TCFD), which is already widely recognized and used. Like TCFD, IFRS S2 centers on four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. These pillars guide companies in explaining how climate-related risks are embedded in their business strategy, how those risks are managed, and how performance is tracked.

Together, IFRS S1 and S2 create a structure that helps companies report sustainability information in a way that’s transparent, consistent, and useful to investors. For example, a manufacturer might disclose how water scarcity in a key region could impact its operations and how it plans to mitigate that risk. These insights give stakeholders a clearer view of long-term performance and resilience.

ISSB vs. Other Frameworks

The ESG reporting landscape is full of frameworks, each with a different focus, scope, and audience. Many companies struggle to understand how these frameworks relate to one another—or which one to prioritize. “ISSB doesn’t aim to replace all other standards. Instead, it builds on existing foundations—like the Carbon Disclosure Project (CDP)—to create a global baseline that can work alongside regional or sector-specific requirements.

For example, the ISSB’s IFRS S2 standard aligns closely with the widely adopted TCFD framework, using the same four-pillar structure. But while TCFD focuses solely on climate risk, ISSB expands that view to include other sustainability factors through IFRS S1. Meanwhile, frameworks like the EU’s CSRD are more comprehensive in scope, covering a broader range of impacts and targeting a different regulatory audience.

ISSB’s strength lies in its connection to financial reporting. It’s designed to help companies disclose sustainability information that directly affects enterprise value—an angle that sets it apart from frameworks like GRI, which emphasize a company’s broader impact on society. SASB, on the other hand, is industry-specific and primarily U.S.-focused. ISSB brings a more universal structure that can be applied globally, across sectors.

Here’s a quick comparison:

By understanding these differences, companies can use ISSB as a foundation and build on it with other frameworks as needed, depending on regional regulations and stakeholder demands.

Who Needs to Comply with ISSB?

Right now, ISSB standards are voluntary in many parts of the world, including the United States. But that’s changing fast. Governments, regulators, and market authorities in multiple regions are beginning to adopt ISSB standards—or align their own sustainability rules with them.

Several countries have already committed to integrating ISSB into their regulatory frameworks. These governments see ISSB as a way to enhance market transparency, attract global investment, and hold companies accountable for material sustainability risks.

Here’s a snapshot of countries actively adopting or aligning with ISSB:

Even where ISSB isn’t mandatory, the momentum is building. Financial regulators are watching closely, and investors increasingly expect companies to use global standards like ISSB to guide their ESG reporting.

Aligning with ISSB early offers a strategic advantage—it helps companies stay ahead of future regulatory shifts, improves reporting quality, and sends a strong signal to stakeholders about commitment to transparency and long-term value creation.

In short: ISSB compliance may not be required everywhere yet, but forward-looking companies are already moving in that direction.

How ISSB Supports Investor-Grade Reporting

ISSB standards are designed with one audience in mind: capital markets. By aligning ESG disclosures with financial reporting principles, ISSB helps companies deliver ESG metrics and disclosures that investors can trust, analyze, and act on. Here's how the standards support high-quality, investor-focused reporting:

Enterprise value focus
ISSB disclosures are grounded in the concept of enterprise value—how sustainability risks and opportunities impact a company’s financial outlook. This lens helps investors identify which issues are likely to affect long-term performance, profitability, or market position. Unlike broader frameworks that focus on social or environmental impact alone, ISSB emphasizes information that’s material to investors. This makes ESG data more actionable for financial analysis and decision-making.

Long-term lens
The ISSB framework encourages companies to report on how sustainability factors play out over time. Instead of short-term snapshots, companies are expected to discuss long-range risks and strategies—like how they’re adapting to climate policy changes or transitioning to low-carbon operations. This future-focused reporting gives investors better insight into a company’s resilience and ability to deliver sustained value.

Consistency
One of the biggest challenges in ESG reporting today is inconsistency. Companies may use different frameworks, definitions, and metrics—even when reporting on the same issue. ISSB aims to fix this by providing a standardized structure for sustainability disclosures. That consistency allows for more reliable comparisons across companies, sectors, and geographies—crucial for investors building diversified portfolios or assessing risk exposure.

Transparency
ISSB raises the bar for what’s expected in ESG reporting. The standards require clear, detailed disclosures that can be audited and verified. This not only boosts the credibility of reported data but also builds trust with stakeholders. Companies that follow ISSB guidelines show they’re serious about accountability and open communication, which can enhance reputation and investor confidence.

Interoperability
ISSB was built to work alongside other major ESG frameworks—not replace them. It aligns with widely used standards like GRI (for impact materiality), CSRD (for EU regulation), and TCFD (for climate risk). This interoperability makes it easier for companies to streamline their reporting, meet multiple requirements, and avoid duplication—especially if they operate in several jurisdictions.

Tools for ISSB and IFRS-Aligned Reporting

Meeting ISSB standards takes more than good intentions—it requires the right tools to manage data, streamline disclosures, and ensure alignment with IFRS S1 and S2. A number of platforms and technologies are built to support companies on this path. Here are some key tools that help teams close the ESG reporting gap:

• Nasdaq Metrio
  Nasdaq Metrio is a comprehensive ESG data platform designed to support sustainability reporting from end to end. It centralizes data collection, tracks key metrics, and streamlines disclosures across frameworks—including ISSB, GRI, and SASB. With built-in mapping to IFRS S1 and S2, Metrio helps companies organize, validate, and report ESG information that’s investor-grade and audit-ready.
• AI assistants for report drafting
  These tools use your internal ESG data to create draft disclosures based on ISSB guidance. They reduce manual effort by generating structured, standards-compliant language that can be reviewed, edited, and finalized by your reporting team. This speeds up the reporting cycle while ensuring consistency and alignment with IFRS S1 and S2.
• Benchmarking dashboards
  Benchmarking tools allow companies to see how their disclosures compare to peers, industry averages, and regulatory expectations. These dashboards can highlight strengths, reveal gaps, and suggest areas for improvement. For companies aiming to meet investor expectations—or prepare for regulatory scrutiny—benchmarking provides a clear, data-driven path forward.

ISSB FAQs

What is ISSB?
The International Sustainability Standards Board is part of the IFRS Foundation. It creates global sustainability disclosure standards.

What are ISSB standards?
ISSB standards include IFRS S1 and IFRS S2—covering general and climate-related sustainability disclosures.

What is the difference between ISSB and TCFD?
ISSB builds on TCFD’s framework but expands beyond climate to include other sustainability factors.

What are IFRS S1 and S2?
IFRS S1 provides general sustainability disclosure guidance. IFRS S2 focuses on climate-related risks and opportunities.