Experience level: 
Intended Audience: 
Maria Angelica Farfan Lievano


At the end of 2021, the IFRS Foundation, which is in charge of developing the current International Accounting Standard through IASB, launched the International Sustainability Standards Board (ISSB). This was after a public consultation that received general support around the world, as it would take advantage of their experience in financial standards allowing them to apply it to sustainability standards. This new institution developed two exposure drafts called ‘S1 General Requirements for Disclosure of Sustainability-Related Financial Information’ and ‘S2 Climate-Related Disclosures Requirements’. In this paper, we analyze these exposure drafts in light of the sustainability accounting literature, studying their pros, cons, and future perspectives. This is relevant for the accounting community because its background is mainly in financial information, whereas sustainability and nonfinancial information disclosures are becoming more important and demanded by society. Today, the accounting community needs extra guidance to be prepared for the incoming new standards and to be able to participate in future public consultations. Because of the novelty of these ISSB documents, this manuscript is an exploratory and descriptive study. We mainly use documentary analysis of the exposure drafts, the most relevant sustainability accounting literature and other documents emitted by the institutions involved in the emissions of these new standards, such as the Value Reporting Foundation and the Task Force on Climate-Related Financial disclosures. There are several sustainability initiatives that companies currently use to report their sustainability objectives and results. However, in the ISSB public consultation, the need for a standardized set of information that guides the companies in the preparation of their sustainability reports was evident. This standardization will also support the assurance of this kind of information because auditors currently find it difficult to verify nonfinancial information in the absence of a strong set of sustainability standards. In our preliminary analysis, we found that the focus of the new sustainability standards is expected to be more financial than environmentally or societally care oriented. That is, the environmental or social issues that will be considered by companies will be those that affect the assessment of enterprise value by investors and creditors (the main users of financial information) and the future cash flows. This implies that sustainability information that does not affect financial value directly is outside the scope of those standards. We argue that decision makers should think more about how to reduce the sustainability impact of economic activities and about disclosing relevant sustainability information to a wider range of stakeholders. In the future, it will also be necessary to develop a subset of standards for small and medium enterprises and not only for large companies that participate in financial markets since all companies should be overt about their contribution to sustainability. The ISSB prototypes are closer to the literature of financial environmental information than to the environmental or ecological accounting literature that is oriented to the preservation of life and the control and supervision of the different kinds of resources used or affected by a company.