PECULIARITIES OF SUSTAINABILITY DISCLOSURES UNDER IFRS S1, IFRS S2
Abstract
The article is focused on the international sustainability disclosure standards IFRS S1 and IFRS S2 (ISSB standards). It provides a critical analysis of the requirements of these standards to the content of disclosures, which should enable users to assess the impact of sustainability-related risks and opportunities on the company's cash flows, access to finance and cost of capital in the short, medium and long term. The core content elements that should be presented in sustainability reporting - governance, strategy, risk management, as well as metrics and targets - are discussed in detail. It is emphasized that the use of sustainability-related financial information is greatly facilitated by the ISSB Taxonomy, which provides for the presentation of data in a structured digital format. It is concluded that corporate reporting in accordance with IFRS S1 and S2 provides such important benefits as increased credibility of investors, better access to financial resources at a lower cost, improved reputation and image, as well as more efficient internal operational and functional processes such as risk management, strategic planning, forecasting and others, which ultimately contribute to the creation of value in the long term. Moreover, the implementation of ISSB standards requires companies to fully integrate ESG elements into their strategy and business processes and means a significant transformation of sustainability reporting, especially for the companies without experience in applying the TCFD Recommendations and SASB standards. Companies will also need to invest in data collection and management tools, special software, hire additional ESG staff and train their employees. The authors conclude that the expected in the near future implementation of IFRS S1, S2 standards in the relevant national regulatory requirements of many countries, the general trend of transition from voluntary to mandatory sustainability reporting, makes the application of these standards for domestic companies, in particular those operating in international markets, not only desirable but even indispensable.
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