IFRS Sustainability Standards (S1 and S2): Governance Pillar
The emergence of the IFRS S1 and S2 standards as a global baseline to guide sustainability-related disclosures births a new phase in sustainability reporting. The disclosure requirements of S1 and S2 standards are not alien, as commonly used standards like TCFD, GHG protocol and SASB have been integrated into them, with SASB and GHG protocol still supplementing the standards.
Similar to the TCFD, the IFRS S1 and S2 standards are anchored on four core contents: Governance, Strategy, Risk Management, and Metrics and Targets. This factsheet is one of four factsheets that spotlights areas of these core contents. The focus here is Governance, which is the driver of the other core contents (strategy, risk management & metrics and target).
As entities adopt IFRS S1 and S2 for sustainability-related disclosures, aligning existing processes and structures is essential for holistic and transparent disclosures, one of these structures is Governance.
Governance is most pivotal part of any organisation’s sustainability journey, it is the catalyst for transparency, brand reputation and value, and this factsheet provides valuable yet succinct information on the proper management of this focus area in line with S1 and S2 disclosures.
The governing body (Board and Management Team) is responsible and accountable for the overall performance of an organisation, establishing a structure that guides the operations in an entity, and determining the strategic direction of an organisation.
To effectively integrate sustainability in an organisation, the governing body needs to be dedicated to sustainability oversight, including monitoring and managing sustainability and climate-related risk and opportunities in an organisation. The S1 and S2 standards will enhance good corporate governance practices, as it aids entities disclose, aligning with the transparency principle.
Furthermore, these standards:
Provide a global baseline for disclosures, making information more comparable to aid investors make decisions.
Focuses on the disclosure of sustainability and climate-related risks and opportunities
Paved the path to mandatory sustainability reporting in countries like Nigeria
Are the first of sustainability-related standards to be released by the ISSB
Streamlines the use of other standards with the S1 and S2 through interoperability. Currently there is guidance for interoperability with standards like GRI and ESRS
This factsheet spotlights areas that entities must consider aligning their processes, controls and procedures to, for the oversight, monitoring and managing of sustainability-related matters, to adequately disclosure in line with S1 and S2.
