The IFRS Foundation and EFRAG have released Interoperability Guidance.
The document is designed to reduce complexity, fragmentation, and duplication for companies applying both the ISSB Standards and the ESRS.
It describes the alignment of general requirements including key concepts such as materiality, presentation, and disclosures for sustainability topics other than climate; and provides information about the alignment of climate disclosures and what a company starting with either set of standards needs to know to enable compliance with both sets of standards.
The interoperability guidance material demonstrates high alignment between IFRS Sustainability Disclosure Standards and ESRS. It offers practical support for companies for efficient compliance.
The International Accounting Standards Board (ISSB) aids in climate-related information, identifying risks, opportunities, value chain scope, financial effects, transition risks, physical risks, and measurement approaches.
The ISSB Standards permit entities to provide qualitative information about current and anticipated financial effects but do not mandate an equivalent disclosure requirement for Scope 3 emissions.
The ESRS offers reasonable reliefs for reporting value chain information, including Scope 3 emissions and estimating information using all reasonable and supportable data.
ESRS 1 mandates entities to use reasonable, supportable information for estimates, but not require quantification if it doesn’t meet qualitative usefulness criteria.
Commissioner for Financial Services, Financial Stability and Capital Markets Union Mairead McGuinness said:“The Commission’s guidance on sustainability reporting aligns with EU and international standards, reducing the reporting burden for EU companies by ensuring interoperable frameworks across different jurisdictions.”
EFRAG Sustainability Reporting Board Chair Patrick de Cambourg said: “We have issued practical guidance on interoperability, demonstrating a commitment to international convergence of sustainability-related disclosures on climate and other critical matters, demonstrating its full support for global momentum in this crucial space.”
EFRAG Sustainability Reporting Technical Expert Group Chair Chiara Del Prete said: “The guidance outlines the ability of ESRS preparers to report on climate in compliance with ISSB Standards, reducing duplication of reporting and supporting stakeholders in implementation challenges. It also outlines the potential for ESRS to report on other matters.”
ISSB Vice-Chair Sue Lloyd said: “The interoperability guidance aims to provide practical help to companies applying ISSB Standards and ESRS, as jurisdictions worldwide adopt or use these standards.”