The four core content pillars of the ISSB [International Sustainability Standards Board] standards provide the disclosure requirements for organisations when preparing sustainability reports. These pillars are governance, strategy, risk management and metrics and targets.
When applied appropriately, these pillars enable the organisation to provide comprehensive reporting on decision-useful information for investors. Each core content pillar of the ISSB disclosure standards, as defined in IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information, reflects an expectation of best-in-class sustainability practice.
Consequently, organisations can use these core content pillars to guide key aspects of their sustainability implementation journey. Some of the ways these disclosure requirements could inform management action include the following.
The governance pillar gives guidance on the roles and responsibilities of the board of directors and management. Organisations can use this to inform the assignment of sustainability responsibilities to the board and management.
These governance disclosures make clear that sustainability should be on the board’s agenda, alongside its other governance roles. The strategy pillar ensures organisations have assessed the impact of sustainability across their cash flows.
It implies that organisations are expected to model (quantitatively or qualitatively) the impact of specific sustainability material topics (risks and opportunities) on their financial performance over time, and to build resilience through scenario planning to ensure they withstand shocks and disruptions in their operating environment.
The risk management pillar helps organisations to understand the need to incorporate sustainability risks into their existing enterprise risk management framework.
Organisations are expected to improve their risk management by making it more comprehensive by including material sustainability risks.
The metrics and targets pillar can also inform management to embrace accountability for delivering the set sustainability goals and targets.
It ensures organisations link their targets to the strategic priorities for business growth and have metrics that improve confidence and reliability in sustainability performance reporting.