The IFRS Foundation announced the release of a new guidance document, aimed at supporting companies beginning reporting using the International Sustainability Standards Board’s (ISSB) climate-related standard to disclose information on their climate-related transition, and on their transition plans.

The new guidance follows the IFRS Foundation’s assumption of responsibility for the Transition Plan Taskforce (TPT) framework last year, in a move designed to help to harmonize sustainability reporting requirements for companies. Launched in 2022, the TPT released its Disclosure Framework in October 2023, aimed at providing a “gold standard” for companies to develop and report on their climate transition plans. The IFRS Foundation said that its new guidance builds on the materials developed by the TPT.

The IFRS Foundation’s International Sustainability Standards Board was launched in November 2021 at the COP26 climate conference, 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. Recently, the IFRS Foundation announced that 36 jurisdictions have moved to adopt or otherwise use the new ISSB standards, including 17 that have already finalized their approach to using the standards.

According to the IFRS Foundation, the new guidance is intended to be used by jurisdictions adopting or otherwise using ISSB Standards. The publication is aimed at supporting entities applying the IFRS S2 climate standard, which does not require companies to have transition plans, but does require reporting on material information about sustainability-related risks and opportunities, including information about climate-related transition risks. The standard also requires companies to provide information about a transition plan if it has one.

The new guidance focuses on enabling entities to provide high-quality information about their climate-related transition, and covers disclosures about any transition plans they have, including both mitigation and adaptation plans. The publication notes that it is necessary under the standard to disclose if an entity has set a strategy for its transition to a lower-carbon or climate-resilient economy, and provides guidance on disclosures about entities’ climate-related transitions.

Sue Lloyd, International Sustainability Standards Board (ISSB) Vice-Chair, said:

“This guidance document addresses the fragmentation of disclosures about transition plans—which is costly for both preparers of information and investors—and provides inspiration for entities who are applying IFRS S2 when making disclosures about their climate-related transition plans. This guidance aims to help preparers determine what information is relevant to disclose regarding their strategy and goals related to their climate-related transition.”

Click here to access the guidance.