How to prepare for ISSB sustainability disclosure in 2025

What is the ISSB?

The ISSB’s two core standards are:

• IFRS S2 – Climate-related Disclosures
• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information

These aim to give investors consistent, decision-useful information across jurisdictions and industries and help businesses naturally connect their climate impacts to their financial objectives.

“At the heart of it all, the IFRS disclosures are designed to serve as a global baseline for sustainability reporting — a foundational framework that enables consistent, comparable, and investor-relevant disclosures across markets.”

Erin Knowles, Senior Manager, Position Green

For companies, aligning with this baseline supports transparency, builds trust with capital providers, and reduces the burden of navigating multiple overlapping disclosure regimes. For jurisdictions, adopting or aligning with these standards helps attract capital, ensure regulatory coherence, and position national frameworks within a globally interoperable system. 

Up until recently, there has been a fragmented reporting landscape. We are now seeing increasing consolidation through the coordinated efforts of framework and standard developers., This global baseline is essential for improving the quality and utility of sustainability-related financial information at scale.

ISSB in 2025: Where adoption stands now

As of mid-2025, 36 jurisdictions have adopted or are working toward adopting the ISSB standards. These include:

Nigeria, Malaysia, Sri Lanka: Official pathways announced for phased adoption

Australia: Australian Sustainability Reporting Standards (ASRS) require mandatory S2 disclosures for large entities; voluntary S1

Canada: CSDS 1 and CSDS 2 introduced, aligned with ISSB standards (However, it is important to note that adoption is currently currently paused by Canadian Securities Administrators).

Hong Kong: Hong Kong Financial Reporting Standards (HKFRS) S1 and S2 finalized, phased implementation under way

Singapore: ISSB-based climate disclosure rules under public consultation

Global adoption is increasing because the standards are structured, investor-oriented, and interoperable with other frameworks like TCFD and SASB.

The ISSB adopted the TCFD framework as the foundation for IFRS S2, embedding its four-pillar structure to ensure continuity for companies and investors. IFRS S1 and S2 were also designed for interoperability with frameworks like the EU’s European Sustainability Reporting Standards (ESRS), enabling companies to meet multiple disclosure requirements through a single, global baseline.

For more on this subject, check out our guide on interoperability between ESRS and ISSB here. 

What companies are expected to disclose

The ISSB standards require companies to disclose sustainability information that is financially material—that is, information that could influence enterprise value and investor decision making.

Key components of disclosure include:

• Governance: Who oversees sustainability risks and how often?
• Strategy: What are the key climate-related risks and opportunities facing the business?
• Risk Management: How are these risks integrated into broader risk frameworks?
• Metrics and Targets: What data is being tracked, and what targets have been set?

Additionally, it is handy to know the following in relation to your emissions data:

• Scope 1 and 2 emissions are mandatory
• Scope 3 is strongly encouraged, but not yet required for all reporters
• Climate resilience scenarios must be disclosed

Common challenges companies are facing

Here are the most common hurdles organizations encounter when preparing for ISSB reporting:

1. Disconnect between sustainability and finance teams

Sustainability data often sits outside financial systems. Many companies struggle to integrate this data with enterprise reporting or financial controls.

“It’s not just the reporting—it’s the processes around review and sign-off that finance expects but ESG teams aren’t used to.” – Webinar participant

2. Data quality and traceability gaps

Organizations often lack documentation around how ESG figures were calculated or where the source data came from. Companies often need to restructure how they collect and manage data to ensure emissions disclosures are transparent, traceable, and credible.”

“One of the hardest parts is showing that your emissions figures aren’t just a black box — especially when the underlying data is scattered across systems, inconsistently tracked, and not designed for carbon accounting.” – Erin Knowles, Senior Manager, Position Green

3. Misunderstanding financial materiality

Many teams try to report broadly rather than focus on financially material sustainability issues. This creates unnecessary work and dilutes strategic focus.

4. Scenario analysis readiness

Few companies have embedded climate scenario planning into strategy processes. ISSB pushes companies to disclose how their business performs under different warming pathways—a step that requires global context, modeling skills, and governance attention.

How to get started

If your company is preparing to align with ISSB, you can begin by organizing your process into four phases:

Phase 1: Assess materiality

Identify sustainability risks and opportunities that are likely to affect cash flow, access to capital, or cost of capital. Focus on financial relevance.

Phase 2: Review current data and systems

Take stock of what data is already being collected. Identify coverage gaps, traceability weaknesses, or systems not integrated with finance.

Phase 3: Build internal roles and workflows

Establish who is responsible for what—between finance, sustainability, operations, and compliance teams.

Phase 4: Create disclosure structures

Set up documentation, review processes, and governance for reporting. Start small and iterate.

Final thoughts

ISSB reporting is gaining traction because it connects sustainability risk directly to financial health. For businesses aiming to stay competitive in capital markets, aligning with these standards is both a strategic and operational advantage.

It’s also an invaluable system for internationally operating businesses, who need to be prepared for compliance with European standards like ESRS.

And if you’re interested in discussing how you can enable a data-driven ISSB strategy, that helps prepare you for compliance regardless of where you operate, chat with a sustainability expert today!