The IFRS Foundation has published new educational material to assist companies in disclosing the anticipated financial effects of sustainability-related risks and opportunities, in line with the ISSB Standards. The guidance also explores how this aligns with the European Sustainability Reporting Standards (ESRS).
What’s in the guidance
The resources, introduced by ISSB member Jenny Bofinger‑Schuster, provide deeper insight into how companies can report both current and anticipated effects including those expected in the short, medium, and long term on their financial position, performance, and cash flows.
To ensure transparency, the ISSB requires companies to offer a blend of qualitative and quantitative disclosures. However, the standards allow firms to omit quantitative data if:
- The effects are not separately identifiable
- The measurement uncertainty is prohibitively high
- The company lacks the skills, capabilities, or resources to estimate those effects
The aim is to strike a practical balance between the informative value for investors and the feasibility for companies.
EU alignment and ESRS revisions
The guidance also addresses the alignment or interoperability between ISSB Standards and the EU’s ESRS framework. Currently, ESRS mandates both qualitative and quantitative disclosures, though initial reliefs apply (e.g., companies need not disclose anticipated effects in the first year, and quantitative details may be deferred for three years).
Proposed revisions to ESRS (July 2025) introduce two paths:
- Option 1: Introduce proportionality mechanisms similar to those in ISSB Standards—such as allowing qualitative-only disclosures—but without including the “skills and resources” relief.
- Option 2: Make quantitative disclosures optional altogether.
Experts caution that Option 1 would improve interoperability and reduce the reporting burden, while Option 2 risks undermining comparability and leaving investors without critical forward-looking data. It may also force companies to produce separate reports to meet both ISSB and ESRS requirements.
What’s next
The IFRS Foundation invites companies and stakeholders to consult these materials for guidance and clarity. The ESRS revisions remain open to feedback, with companies encouraged to submit comments ahead of the consultation deadline on 29 September 2025.
